Originally published March 31 2005
New Medicare drug program will likely cost some states more, experts say
by Mike Adams, the Health Ranger, NaturalNews Editor
A new Medicare prescription drug program that President Bush says will save money for state Medicaid systems will actually cost states more, some experts say. The system will be designed to save states money based on their 2003 Medicaid expenses. But many states have significantly reduced their Medicaid costs since 2003.
The New York Times on Friday examined how some state officials are concerned that the Medicare prescription drug benefit, which was intended to reduce states' prescription drug costs, might actually cause states to lose money because the monthly payments states must make to the federal government could exceed any savings.
Prescription drug coverage for dual eligibles -- people covered by both Medicaid and Medicare -- will shift from Medicaid to Medicare when the new drug benefit takes effect in 2006.
Since states previously paid all of those costs, the Bush administration said that states under the new benefit will save 10% on drug costs.
However, officials from a number of states said savings will not be realized because their clawback payments will be based on state outlays from 2003.
Over time, state clawback payments will decline to 75% of prescription drug costs for dual eligibles, but the inflation factor will limit savings.
States' Perspective Ohio Medicaid director Barbara Coulter Edwards estimated that the state will have to pay $340 million to the federal government in 2007, $55.7 million more than savings the state expects to receive under the benefit.
Iowa Department of Human Services Director Kevin Concannon said, "I'm thrilled for the people who will get drug coverage and low-income subsidies.
That may not be constitutional under the doctrine of federalism, as recently articulated by the Supreme Court and lower federal courts."
Implications According to the Times, some attorneys and state officials have questioned the legality of requiring the states to subsidize the federal payments.
The Supreme Court previously has ruled that a federal law can be "unconstitutionally coercive" if it "commandeers the legislative processes of the states" and forces them to carry out a federal program.
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