Governors receive latitude on Medicaid Clinton opens ways to reduce costs

February 02, 1993|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau Washington Bureau Chief Paul West and staff writer Tom Bowman contributed to this article.

WASHINGTON -- President Clinton granted the nation's governors long-sought extra freedom to run their budget-breaking Medicaid programs yesterday, moving to fulfill his campaign pledge of closer federal-state cooperation.

Mr. Clinton also hinted in discussions with the governors that he might introduce an economic stimulus package costing $30 billion -- a figure that far exceeds estimates last week by administration officials.

The governors said they were grateful for the relaxation of rules affecting Medicaid, the program for the needy and the disabled that is the fastest growing portion of their budget. The changes will enable states to make cost-saving innovations in the programs -- such as enrolling recipients in preventive health plans to forestall expensive emergency treatment -- with less federal interference.

"For years and years, governors have been screaming for relief from the cumbersome process by which the federal government has micromanaged the health care system affecting poor Americans," Mr. Clinton said. "We are going to try to give them that relief so that for lower costs we can do more good for more people."

To the applause of the govenors, the president said: "This will be one big step on the road to giving this country the kind of health care system it needs."

Maryland Gov. William Donald Schaefer said the Medicaid rules changes would be of "immeasurable help" to Maryland. Mr. Schaefer, a Democrat who endorsed President George Bush for re-election, described yesterday's meeting with Mr. Clinton as "one of the best" he had attended with a president.

Maryland Health Secretary Nelson J. Sabatini said the state plans to ask for federal waivers that would allow him to use Medicaid funds for home-based elderly care, which is less expensive than a nursing home stay. Another proposal would allow Maryland to shop around for less expensive care for elderly and disabled residents, two Medicaid groups that account for the highest portion of costs.

The governors said they were encouraged that their relationship with the Clinton White House was off to a good start.

"There was a spirit that was very bipartisan," said Colorado's Democratic Gov. Roy Romer, chairman of the National Governors Association.

The governors' meeting with Mr. Clinton lasted 3 1/2 hours, an hour longer than scheduled, as they debated health care, welfare reform and the economy. Mr. Clinton described the meeting as "a model of everything I want my relationship with our governors to be."

On the economy, Mr. Clinton told the governors that his stimulus package would probably be around $30 billion, more than the $15 billion to $20 billion generally anticipated to be part of the economic program he will outline to Congress Feb. 17.

Half the amount would come from the private sector, he said, apparently referring to the impact of the investment tax credits and capital gains tax cut he is expected to introduce to strengthen business activity. The other half would come from job-creating public spending programs.

George Stephanopoulos, White House communications chief, said later that a $30 billion stimulus was "within the range the president has been considering." But he said no final decision on the size of the stimulus had yet been taken.

The focus of the White House session with the governors was health care reform, and the governors won immediate concessions from Mr. Clinton on Medicaid.

Medicaid, which will cost the states $61 billion this year, now ranks second to education in total state outlays. According to Mary Dingrando, senior staff associate with the National Association of State Budget Officers, Medicaid accounted for 4 percent of nationwide state spending in 1970 and increased to 14 percent in 1990. Under the current system it is projected to reach 25 percent in 1994, she said.

In an effort to slow the runaway cost of the program, Mr. Clinton, governor of Arkansas for 12 years and a frequent critic of heavy-handed federal regulation, ordered changes in what he called the "Byzantine and counterproductive" methods applied when the states seek relief from federal red tape.

He ordered the easing of the waiver system through which states obtain relief from federal regulations to take their own initiatives.

In three immediate orders, Mr. Clinton:

* Limited the Health Care Financing Agency to a single request for further information or clarification from a state seeking a waiver. In the past, the HCFA has been able repeatedly to ask states for more detail, delaying decisions for up to years.

* Told the HCFA to give automatic approval for waivers from states seeking to adopt successful initiatives introduced under waiver by other states. Previously, each state's application was reviewed independently, even if it was based on another's state's proven experience.

* Authorized new negotiations between the HCFA and the governors on regulations governing taxes that states can levy on health care providers and on the reimbursement system for health care providers serving a disproportionate share of a state's Medicaid population. These moves were designed to give the governors greater fiscal freedom to meet health care needs in their individual states.

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