Proposal assumes healthcare costs will rise just 5.6%

Massachusetts has tamed the Medicaid budget beast, Governor Mitt Romney said yesterday, but advocates and analysts questioned whether the state can hold Medicaid growth to 5.6 percent while fulfilling Romney's pledge to enroll tens of thousands of the uninsured.

Yesterday Romney proposed a budget for fiscal 2006 that increases Medicaid spending by $384 million over this year's projected spending, to $7.29 billion. At the same time, he said the program, which provides health coverage for the poor and disabled, would cover 60,000 more people.

''Medicaid has been the Pacman of our state budget," eating a larger and larger share in years past, Romney said during a State House press conference. But he said the administration has held Medicaid spending below budget for the second year in a row by restricting use of expensive prescription drugs and instituting other economies.

Budget officials said Medicaid planned to return $200 million unspent this year and would carry over $327 million from this year's budget into the next. Costs for the program are split 50-50 with the federal government.

But the Massachusetts Taxpayers Foundation, a nonpartisan group that monitors state spending, questioned whether the budget was realistic.

''Can you continue to hold overall spending at half the rate of healthcare inflation?" asked Michael Widmer, president of the foundation. ''Can you do it while adding 60,000 people to the rolls? We can't say it's impossible, but it's clearly a very ambitious goal."

Advocates from Health Care for All asked why Romney's budget didn't include money to enroll all 106,000 of the uninsured he has said are eligible for Medicaid. Late last year, Romney proposed a plan to cover the state's 460,000 uninsured through a multipronged effort that leaned heavily on expanding Medicaid enrollment.

''The governor has missed an important opportunity to advance his stated goals for healthcare reform," said John McDonough, executive director of Health Care for All. ''It looks like they're saying one thing and doing another."

In addition, McDonough said he wished Romney had restored some benefits, such as dental care for adults, that were cut in the last few years.

In fiscal 2002, the Medicaid budget rose 13 percent, becoming a driving force in the state's financial crisis and consuming 28 percent of the state budget. But the administration and the Legislature tightened eligibility, dropped thousands from the program, and cut dental coverage for adults and eyeglass coverage for seniors. They also limited payments to hospitals and nursing homes providing care for Medicaid enrollees, and they encouraged doctors to use the least expensive prescription drugs. Spending increases slowed to 6 percent in fiscal 2004 and to about 5 percent this year, according to the Taxpayers Foundation.

This year's budget proposal puts Massachusetts in the same ballpark as other states, according to the Kaiser Commission on Medicaid and the Uninsured. The commission said many states are planning to increase Medicaid spending by about 5.5 percent.

Nationally ''Medicaid is doing better at holding down costs than private insurers," said Diane Rowland, executive director of the commission. ''And Massachusetts has historically done a very good job of looking at how to contain drug costs and utilize managed care to keep the program in check."

Late yesterday, federal officials finalized a waiver of Medicaid rules that will guarantee Massachusetts nearly $600 million in US matching funds, which will help fund the budget. Federal Medicaid administrators had questioned whether Massachusetts was entitled to the money.

For next year, the state is projecting 3 percent growth in Medicaid enrollment. The state secretary of Health and Human Services, Ronald Preston, said the 60,000 new enrollees would probably be offset significantly by others dropping out of the program.

In addition, Preston said, the proposed budget retains a cap on enrollment in one part of Medicaid, the MassHealth Essential program for the long-term unemployed. With federal approval, a cap was raised yesterday from 36,000 to 44,000 and will continue at that level next year. However, the expansion will cover only a small portion of the nearly 33,000 people without insurance who might qualify, part of the 106,000 Romney has said he wants to enroll. Last month, the program hit the 36,000 cap and began putting people on a waiting list.

''Since the Legislature had this program capped, we kept it capped," Preston said yesterday. ''We weren't endeavoring to solve this problem in this budget."

Despite the overall increase, the Medicaid budget does include some proposed cuts, including $43.5 million saved by delaying rate increases for nursing homes. In addition, it counts on saving about $10 million when Medicare begins some drug coverage in 2006.

The budget also includes a $106 million cut in payments to hospitals that provide care to uninsured patients, which drew fire from hospital officials.

''Once again, the governor has proposed . . . far less than required for the services that hospitals provide to the patients," said Joe Kirkpatrick, vice president of healthcare finance for the Massachusetts Hospital Association.

Seniors get a boost in the budget, because the administration committed to funding the Prescription Advantage drug insurance program even after the Medicare drug benefit takes effect. The state insurance program will supplement Medicare benefits.