Congress Narrowly Passes Budget With Medicaid Cuts

WASHINGTON–Congress has approved a budget plan that calls for
slashing Medicaid by $10 billion over five years.

The $2.6 trillion budget, which passed Thursday by a vote of
214-211 in the House and 52-47 in the Senate, calls for the first
cuts to the state-federal health program for the poor and other
entitlement programs since 1997.

An earlier version of the budget included $20 billion in
Medicaid savings over five years, but a compromise was reached by
Senate and House negotiators just hours before the vote. A number
of lawmakers, led by Sen. Gordon Smith, R-Ore.–who fought to take
the program completely off the chopping block–had threatened to
vote against the entire budget if Medicaid cuts were too deep.
Earlier this year, Smith sponsored an amendment to the Senate’s
budget proposal to delay any Medicaid cuts by a year and create a
commission to study long-term reforms to the program. The original
budget proposal in the House left Medicaid cuts intact.

In talks to resolve budget differences, negotiators agreed to
form the commission, which is expected to suggest wholesale changes
that are needed to produce Medicaid savings and put the program on
sustainable financial footing. The panel will recommend its first
round of changes by Sept. 1. With the commission’s study, Medicaid
funding reductions would not take effect until 2007, allowing the
commission more time to work with state governors, many of whom
have already been trimming the program in their own budgets.

The Congressional Budget Office has estimated that without any
cuts, the federal government would spend $191 billion on Medicaid
next year and more than $1.1 trillion for the five years covered by
the budget.