Bush administration issues veto threat on Medicaid bill

The Bush administration made clear Wednesday that it would oppose legislation blocking seven new rules that reduce Medicaid spending by about $13 billion over the next five years.

The rules would affect a variety of health care providers, from hospitals to rehab centers for the developmentally disabled to school-based clinics. A bill moving through the House would block the rules from going into effect until March 2009.

Supporters of the moratorium say the rules shift more costs onto states and the poor at a time when they can least afford it. But the administration says the rules prevent states from improperly shifting health costs onto the federal government.

Health and Human Services Secretary Mike Leavitt stated the administration's view in a letter to leaders of the House Energy and Commerce Committee. He said the legislation "puts billions of dollars of federal funds at risk, and may turn back progress that has already been made to stop abusive state practices."

Leavitt warned that the president's senior advisers would recommend that the bill be vetoed.

The letter was sent before the House Energy and Commerce Committee considered approval of the legislation. Despite the veto threat, Rep. John Dingell, D-Mich., the committee's chairman, and Rep. Joe Barton, R-Texas, the ranking Republican, both voiced their support for the moratorium.

"There is little support outside the four corners of HHS for these actions," Dingell said.

Barton said he supported some of the proposed regulations, but not others.

"I hope that in the time period while the moratorium is in place, we can work together not just on a committee level, but with the administration, to find a way to fine-tune some of the regulations and see if they can go into effect at some point in time," Barton said.

A vote by the full committee was expected late Wednesday.

Hospital groups have sued the federal government in an effort to void two of the rules sought by the administration. Hospital administrators say the changes, which include eliminating payments to teaching hospitals for medical education, would make it harder to care for the poor and uninsured.

School officials say another rule, which prevents them from billing for transporting children from home to school and back, would make it harder to ensure that children get proper medical care. Such care frequently includes speech and physical therapy.

Delaying the rule for one year would cost about $1.6 billion. Lawmakers would pay for that through improved verification of the financial assets of Medicaid applicants and participants, and by borrowing from a reserve fund set up to help pay for fixes to physicians' reimbursement rates. The fund would be replenished in 2014.

Medicaid is the state-federal partnership that provides health coverage and nursing home care to the poor.