Leavitt Proposes Clean-Up of Medicaid

President Bush will propose about $140 billion in new spending over the next decade to help more people get health insurance, Health and Human Services Secretary Mike Leavitt (search) said Thursday.

Of the total, he said, $10 billion would go toward covering more children through Medicaid and the State Children's Health Insurance Program (search), which focuses on children of the working poor.

Leavitt said an additional 12 million to 14 million Americans could get access to health insurance over the next 10 years.

The government estimates that 45 million people currently lack health insurance. Of those, 8.4 million are children, according to the latest census figures.

Meeting with reporters, the new health secretary outlined some of his goals. "The job here the president has given me is to help Americans live longer and healthier but to do it in a way that allows us to maintain our economic competitiveness," he said.

The department says that Medicaid (search) is expected to grow at a rate that will exceed 7 percent a year over the next 10 years.

Leavitt said there are ways to wring nearly $60 billion in savings in the program over 10 years. Those include:

--$15 billion, by changing the formula that Medicaid uses to purchase drugs -- from average wholesale price to something closer to the average sale price. This would require a new law.

--$4.5 billion, by no longer allowing middle-class people to shift their assets and have Medicaid pay for nursing home care.

--$40 billion, by preventing states from using accounting "gimmicks," such as double-dipping, to maximize their reimbursement.

Double-dipping (search) is when states overpay providers, get the overpayment returned to them and spend the same dollars a second time.

Most states have employed these "gimmicks," but Leavitt declined to say which ones. He said that, where he was governor for 11 years, was not one of those states.

Leavitt said he understood that governors are under pressure to meet their budgets. But he said the practice of shifting this money -- described as a shell game in which the federal government repays states for money that supposedly was spent -- is unfair.

Leavitt has recently spoken to several governors on the issue. He described the conversation as "awkward" but necessary.

The National Governors Association (search) has acknowledged problems with the states' stewardship of Medicaid, including the transfers of money between them.

"We agree that maintaining the status quo in Medicaid is not acceptable," the group said in a letter. "However, it is equally unacceptable in any deficit reduction strategy to simply shift federal costs to states."

The group did not want to comment until reviewing details of the budget.

Medicaid, paid jointly by Washington and the states, is expected to cost the federal government about $190 billion this year.

Bush's budget proposal will be released Monday. He has said he will look to control popular benefit programs to save money. Programs such as Medicaid are among the biggest and fastest-growing parts of the budget, but are also popular and difficult for politicians to cut.