Douglas administration is forced to drop proposed Medicaid cuts

02/25/09 5:59PM By Bob Kinzel
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AP Photo/Toby Talbot
Administration Secretary Neale Lunderville
(Host) The Douglas administration has been forced to drop its plans for cuts in some of the state's Medicaid health insurance programs.

To qualify for more than $250 million in federal stimulus money, the state will not be allowed to pass higher costs on to Vermonters.

VPR's Bob Kinzel reports:

(Kinzel) The Douglas Administration is finding some unpleasant surprises in the language of the new federal stimulus law as it wades through the details of the plan.

The law provides states with a huge amount of additional Medicaid money over the next two years to help states avoid making painful cuts to this program. But if states accept the money they can't implement any steps that will discourage eligibility in Medicaid.

Last month, the Douglas Administration proposed higher premiums, deductibles and co- payments for various Medicaid programs as part of their overall budget cutting plan.

Administration Secretary Neale Lunderville says it's now clear that these actions aren't allowed if Vermont wants to get the stimulus funds:

(Lunderville) "There are a few proposals that we put forward before the federal bill came out which we would not be able to proceed on we're not going to push ahead with $2.3 million in reductions if it means jeopardizing over $250 million in new federal money.

House Speaker Shap Smith says he's pleased by this development because he thinks the governor's proposed cuts were directly at odds with the goals of the stimulus package:

(Smith) "So that Vermonters wouldn't go without health care so Vermonters wouldn't go without their prescription drugs...I mean that is the purpose of the stimulus package and we shouldn't be counteracting that by decisions we're making in the budget process."

The House last week rejected the Administration's plan to eliminate a prescription drug subsidy program for low income elderly people. Smith says this new development shows that the House made the right decision:

(Smith) "Which would explain why we've been taking the time to see what happened in the stimulus package before we made budget decisions that could actually have some bad impacts for Vermonters."

But Secretary Lunderville says he's concerned that lawmakers will use this stimulus decision to avoid making other critical health care cuts:

(Lunderville) "There are other ways to bend the curve on Medicaid a lot of other proposals that we put forward and we certainly hope that the Legislature doesn't use this development as another excuse not to make tough choices in the coming months to balance the budget and put the state back on the path of economic recovery."

Speaker Smith also announced the formation of a special oversight panel that will closely monitor how the federal stimulus money is being spent in Vermont. The panel will have 3 members; one from the House, one from the Senate and one from the Administration.

For VPR News I'm Bob Kinzel in Montpelier.

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