From today’s Wall Street Journal Political Diary E-mail…

Jerry Brown’s Medicaid Blues

Democratic Governor Jerry Brown of California may finally understand how frustrated Republicans feel when they try to negotiate in good faith with President Obama.

Strapped with a $13 billion deficit last year, Mr. Brown sought to squeeze $1.6 billion of savings out of the state’s Medicaid program. Since more than half of the state’s Medicaid dollars come from the federal government, Mr. Brown had to request waivers from Health and Human Services Secretary Kathleen Sebelius to implement many of his cost-saving solutions. While Ms. Sebelius last year signed off on a 10% rate cut to providers, which was projected to save the state about $600 million, she drew a line in the sand on the governor’s request to charge Medicaid recipients a co-pay for drugs ($3) and doctor visits ($5).

The co-pays would save the state more than $300 million a year, but the Obama administration reasoned that they would deter recipients from seeking treatment and thus restrict health-care access. While in Washington, D.C., for the National Governors Association’s winter meeting earlier this week, Mr. Brown lobbied Obama senior advisor Valerie Jarrett and Ms. Sebelius again for a waiver but didn’t sound too optimistic about his prospects. The governor said that Ms. Sebelius had raised “legal issues” about charging co-pays and indicated that there were other ways to reduce Medicaid costs, which she didn’t specify.

Trouble is, the Obama administration won’t countenance limiting eligibility or introducing incentives that encourage doctors and patients to use health resources more judiciously. In fact, the president’s health-care law expands Medicaid rolls and encourages people to use more resources by limiting out-of-pocket costs on many services. Ms. Sebelius may have in mind further cutting reimbursement rates to providers, which has been the go-to solution for many cash-strapped states. However, a federal district court earlier this month blocked Mr. Brown’s proposed 10% rate cut to providers on the premise that it would cause doctors to drop patients and thereby limit health-care access. Litigation over provider cuts in 2008 and 2009 is also pending in the Ninth U.S. Circuit Court of Appeals.

Mr. Brown kvetched to the media earlier this week that “the fact is you only have so much money, and that’s why I’m asking for waivers in the Medicaid program.” Most Republican governors would tell him to get in line. However, they might also ask him why he doesn’t support block-granting Medicaid, which would allow states to administer the program with much more limited federal interference.

— Allysia Finley

This entry was posted on Friday, March 2nd, 2012 at 11:24 am and is filed under Blog Posts.