WASHINGTON – Problems with the new Medicare drug benefit could erode states' finances if they have to wait too long to get reimbursed from insurers and the federal government for drug costs incurred during the program's troubled start, some governors say.
The pledge that states would be reimbursed is one of the main issues governors plan to raise with the president and his Cabinet at a White House meeting Monday.
Under the prescription program, the federal government is relieving states of the cost of buying medicine for poor elderly people and the disabled under Medicaid. In exchange, states will make monthly payments to Washington to help cover the cost of the benefit.
Many states were upset they had to make this payment at all; some are suing to stop it. On top of that expense, states have bought medicine for hundreds of thousands of poor people who were not switched over correctly when the Medicare program began Jan. 1. These people might have gone without their medicines without the states' help.
The federal government cannot have it both ways, asking states to make their regular payment and also cover the cost of the early glitches, said Maine Gov. John Baldacci, a Democrat. So far, Maine has paid for 115,000 prescriptions that were supposed to be covered through the program.
"We've put out $5.9 million, and for a small state like Maine, that's a lot," Baldacci said in an interview while attending the National Governors Association's winter meeting. "We can't be expected to pay back what we haven't saved. So we want partnerships developed. We're all tied in this together."
Many members of Congress have demanded reimbursement for states that are paying for drugs on an emergency basis.
The administration has opposed legislative fixes, saying it can handle the matter more quickly. It says private plans will reimburse states for costs that the insurers were supposed to cover. Also, the federal government will cover administrative costs, plus the difference between what states paid for the drugs and the payments they get from private plans.
"We're going to ensure that you're reimbursed by the plans for the money that you have paid on their behalf, and any administrative costs that you may have put forward," Health and Human Services Secretary Mike Leavitt told the governors on Saturday.
Leavitt did not discuss the timing of that reimbursement, and most of his speech to the governors focused on the need to prepare for a potential flu pandemic.
The drug bill for some states could be substantial.
California said it will seek reimbursement for $150 million. New York has paid an estimated $115 million to help older people get medicine. Some states, however, are not seeking a penny because they had little extra expense.
Gov. Mike Huckabee, R-Ark., and the association's chairman, said he gets the sense the drug program is working more smoothly, though Arkansas had spent $6 million on an emergency basis.
"We were one of the states that had some real hiccups in the first weeks," Huckabee said.
He believes Arkansas will save money in the long run as a result of the program.
"I'm not going to defend the whole program because there were clearly mistakes made. The mistakes were unintentional, but they still had real-life impact," Huckabee said.
"But I also don't want it to get lost that more people are getting prescription drugs than ever before, and they're really getting them at a better price than they've ever had them before," he said. "The net result is a plus, not a negative."
Federal officials also project that states will come out ahead once they're reimbursed. They say the monthly payments that states make to the federal government under the new program won't be as high as the expenses they would have incurred under Medicaid.
Gov. Joe Manchin, the Democratic governor from West Virginia, said states are doing better financially because of improving economies, but governors do have budget concerns about the drug benefit. He said he expects several governors to share those concerns with Leavitt.
Manchin did not have an estimate for how much West Virginia has unexpectedly had to pay in the program's first months.
"We have a heck of a cost to bear here," Manchin said. "It's affecting all of our budgets. We're right in the middle of a (legislative) session right now. This is what we're watching and working on right now."
Arizona is out only about $2 million, said Gov. Janet Napolitano. But she wants to know when the state will get that money back.
"That's what we would like to take up with the secretary," Napolitano said. "... We haven't been reimbursed for the Katrina expenses either. We're tallying things up."
Some governors said they weren't that concerned about getting reimbursed for stepping in during the program's early weeks. Gov. Phil Bredesen, D-Tenn., said his state didn't need to help out because problems were rare in his state.
Under the program, about 42 million older people and the disabled are eligible to enroll in a private plan designed to subsidize prescription costs.