Obama’s Medicaid budget spares program deep cuts

WASHINGTON – President Barack Obama’s budget next week will steer clear of major cuts to Medicaid, including tens of billions in reductions to the health care plan for the poor that the administration had proposed only last year.

Big cuts in the federal-state program wouldn’t go over too well at a time when Health and Human Services Secretary Kathleen Sebelius is wooing financially skittish Republican governors to expand Medicaid coverage to millions who now are uninsured. That expansion in the states is critical to the success of Obama’s health overhaul, which is rolling out this fall and early next year.

The president’s budget is to be released Wednesday.

Perhaps half the nearly 30 million people gaining health insurance under the law are to be covered through Medicaid. But the Supreme Court last year gave individual states the right to reject the expansion. A principal argument against the expansion in state capitals is that Washington cannot be trusted to keep its promise of generous funding for new Medicaid recipients.

In recent weeks, senior White House officials have gone out of their way to reassure activists that Medicaid will be protected in the budget.

“Since generous federal funding for the Medicaid expansion is the key inducement for governors to decide to expand their programs, the administration does not want to undermine that inducement by cutting federal Medicaid funding,” said Ron Pollack, executive director of Families USA, an administration ally helping to promote new coverage benefits that take effect next year under the law.

White House officials aren’t commenting, but Obama’s budget would set up a clear contrast with the Republican-led House. The GOP budget would turn Medicaid over to the states and sharply reduce future spending from currently projected levels. It would also repeal the expansion of Medicaid, along with the rest of Obama’s health care law.

As far as curbs on Medicare, the other major federal health care program, Obama seems to be searching for compromise with Republicans.

Medicaid, the program for the poor, covers about 60 million people, roughly one in five Americans. It’s a diverse population that includes many low-income youngsters and their mothers but also the frailest seniors in nursing homes. The program is different in every state. Nationally, Washington pays an average of 58 cents of every dollar in Medicaid benefits. Total Medicaid costs are well over $400 billion a year.

Under Obama’s overhaul, Medicaid would be expanded to bring in low-income adults, mainly people with no children at home but also some parents. In states that accept the expansion, those making up to 138 percent of the federal poverty level – about $15,400 for an individual – would be entitled to receive Medicaid. The federal government would pay 100 percent of the expansion’s cost for the first three years, starting in 2014. Washington’s share would gradually phase down to 90 percent.