Monday, August 22, 2005

Medicaid Cuts Could Be Difficult in September

The August rumor mill is in full swing in Washington, DC, and the latest news is that Senate Finance Committee Chairman Chuck Grassley (R-IA) is considering finding the required $10 billion in cuts from programs under his jurisdiction from outside the Medicaid program.

The Finance committee must create a reconciliation bill cutting $10 billion from mandatory programs and send it to the Budget committe by September 16. This is one of the main parts of the overall $34.7 billion reconciliation bill cutting entitlement programs agreed to earlier this year in the budget resolution.

The reconciliation instructions do not specify to which programs the cuts must be made, but it was generally understood that Medicaid would receive the majority if not all of the $10 billion in cuts. Yet two Republicans on the committee - Senators Gordon Smith (OR) and Olympia Snowe (ME) - are promoting a plan to reduce the Medicaid cuts by as much as half and making the rest of the required cuts to the Medicare program. Some observers are worried such an action would open a pandora's box - allowing both Democrats and Republicans to offer amendments targeting the controversial Medicare prescription drug benefit.