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Governors weigh tax credits, seniors' assets as Medicaid fix

NEW YORK -- The nation's governors, weighing changes they want Congress to make in the Medicaid program, are considering a proposal to restrict the common practice of seniors giving away their assets so the government pays for nursing home care.

The governors also could recommend that the poor pay a share -- or a greater share -- of their healthcare bills, according to a draft statement being circulated among them.

The proposals, which could be teamed with a suggested tax credit for long-term care insurance, are part of a 12-page working draft of a statement that could be taken to Congress and the Bush administration. Leaders of the effort say the governors should have a united position in the debate over how to rein in costs of the state-federal healthcare program for the poor.

Governors have not yet agreed on the recommendations, and it's unclear whether a majority will, according to interviews with governors, state Medicaid officials, aides, and healthcare professionals who have been involved or apprised of the discussions and seen the document.

The governors involved emphasized that they hope to balance cost savings through efficiencies such as electronic medical records and state purchasing pools with other changes that would add costs to Medicaid beneficiaries or providers, or deny some people services.

Reaching agreement has been elusive. The talks began in January, before President Bush proposed cutting Medicaid-spending growth by an estimated $40 billion over 10 years. Governors united to oppose cuts, but they have not publicly gone farther on other ways to save money.

''We're three steps forward and four steps back," said Governor Mike Huckabee, an Arkansas Republican who, along with Mark R. Warner, Democrat of Virginia, is leading the effort.

The basic problem, he said, is that every tweak in Medicaid would have a different impact in each state, causing more woes for some than others.

The House budget would cut $20 billion over five years; the Senate refused any cuts and called for a study commission. Governors hope to take part in the federal debate, but are leery of proposing changes that might be used simply to save dollars rather than improve the system.

''There's deep concern that Congress and the administration will come up with a number that they should save, and it will drive policy. And it should be the other way around," said Governor Tom Vilsack, an Iowa Democrat who said Medicaid, not Social Security, is the most pressing issue right now.

''You can add a few bucks to my Social Security check, and I'll be pleased as punch," he said. ''But if I can't afford healthcare, what good is it going to do?"

Medicaid has grown faster than inflation and is estimated to cost more than $300 billion this year. The program will serve roughly 53 million people.

Medicaid now pays for two of every three nursing home patients in the country. It pays for one out of three births. It has become the leading payer of mental health services and the leading payer of services for people with HIV or AIDS. One of nine people in the country are on Medicaid.

Warner and several governors would not make their document public but discussed the ideas in general, while aides and others involved in healthcare, who asked to remain anonymous because the draft is still in discussion, described the proposals in more detail. They include:

Making it more difficult for senior citizens to transfer their assets to relatives or others so that they fall within Medicaid eligibility requirements and the program would then pay for a nursing home. One proposal would allow states to examine a person's finances at greater depth in the interest of seeking repayment for government-provided care. The president, too, proposed making it more difficult for seniors to transfer their assets.

Adding deductibles or copayments for medical care for Medicaid recipients, forcing patients to share costs, and discouraging misuse of the system.

Trying to discourage businesses from dropping health insurance or otherwise shifting employees to Medicaid, possibly through tax credits that would encourage low-income people to hold onto private health insurance.

''We start with the premise that the pain ought to be shared," Warner said in a public talk this month with Kaiser Family Foundation, a nonprofit healthcare group.

Cuts should be balanced with constructive policies, like a tax credit for long-term-care insurance that would give seniors other ways to pay for nursing homes.

In Congress, some who argue for a larger reappraisal of the program said the governors' recommendations may be crucial.

''We need to get some big ideas on Medicaid," said Representative Heather Wilson, Republican of New Mexico, who authored a letter in the House that won support from 44 GOP members seeking a study commission on Medicaid rather than the cuts in the House budget plan.

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