Wilson Blasts Plan for Medicaid Payment Cap

An imminent Clinton administration proposal to cap reimbursement payments to states under the Medicaid program drew fire Monday from Gov. Pete Wilson and other state executives meeting in Washington.

In a White House gathering, President Clinton told the governors that his budget, to be delivered to Congress on Thursday, seeks a per-capita spending cap for Medicaid, which provides health care to the nation’s poor, blind and disabled elderly.

At the same time, the president appealed to the governors for patience as his administration seeks to work out the mechanics of the proposal.

But Wilson, in an interview with The Times, complained that the administration proposal would be “extremely unfair” to California and “would punish us for having done a good job of managing” the program.

A cap set by the state’s current level of spending per patient “could produce a tremendous hardship,” Wilson added. That is so, say experts, because new patients coming onto the state’s rolls are likely to be more costly to treat than those currently in the program.

The administration formula would not reflect that, and the state, rather than the federal government, would be stuck with the added cost.

Wilson’s comments came as the National Governors’ Assn. prepared to endorse a resolution stating the governors “adamantly oppose a cap on federal Medicaid spending in any form.” On Monday, Senate Majority Leader Trent Lott (R-Miss.) added his voice to the opposition, telling governors in a speech, “I never liked the idea.”

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The flap comes as the White House prepares to submit a new budget to Congress--a spending plan that would require big savings to wipe out the deficit by the year 2002 while still cutting taxes and boosting selected spending in education and other areas.

Clinton sought to strike a conciliatory note with the governors.

“I know that many of you have concerns about welfare reform or Medicaid spending or education or the environment, transportation,” Clinton said in the White House East Room.

“I want every one of you to feel that you can always call this White House and you will have someone, even if we don’t always agree, who understands your concerns and will do his best to address them,” he said.

The conciliatory words were part of the theme Clinton plans to emphasize tonight in his State of the Union address, when he asks members of Congress “to cross party lines” in dealing with the nation’s problems. The administration signaled Monday that it would accept the invitation of Lott to meet soon with GOP leaders on this year’s legislative agenda.

For his part, Lott also sounded a conciliatory note, saying that Congress will give the Clinton budget a different form of welcome this year than it has in the past. “We’re not going to pronounce it dead-on-arrival,” Lott said, adding that lawmakers instead would “roll up their sleeves” and find ways to work with the White House on many initiatives.

But for all the talk of cooperation, the Medicaid spending-cap proposal is certain to face strong opposition from GOP lawmakers, who control both chambers of Congress, and from most governors.

Opposition is fiercest in states like California that have already found ways to curb the cost of treating Medicaid patients. Largely by pressing patients into managed-care plans, California has driven down its cost per patient to one of the lowest in the nation, spending almost $9.8 billion on nearly 5 million patients.

But under the cap in Clinton’s budget, such efficiencies would be the basis for any future payments. States like New York, with much higher per-patient costs, would be better compensated for each new Medicaid case they take on. With a Medicaid caseload almost half California’s size, New York spends about 50% more.

“It is largely an equity issue,” said Tim Ransdell, executive director of the California Institute, a Washington-based bipartisan think tank that advises the state’s congressional delegation. “For each new patient, many other states’ coffers would receive far more money than California would.

“And we would then be subsidizing an equivalent patient--or even someone with fewer medical difficulties than a Medicaid patient in California--with our federal tax dollars,” Ransdell said.

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White House aides said Monday that Clinton wants to travel to state legislatures to push a range of programs, including cooperative, federal-state efforts in education, welfare and other areas.

But the governors’ meeting demonstrated how difficult it can be for a federal government trying to cut costs for various programs to have the same objectives as state governments that have the burden of running those programs.

Clinton suggested Monday, for example, that he may steer federal transportation funds in a way that would benefit welfare recipients who lack ways to get to work. Under welfare reform legislation passed last year, states will impose firmer work requirements for beneficiaries, and access to mass transit has become a concern.