The squeeze is on.

Ever have the experience when you were wearing a belt that seemed tight enough already but, to impress a date, you cinched it up another notch?

Regardless if you'd care to admit to that, it's a feeling that you might want to start getting used to, at least for the balance of this year. That seems to be the only conclusion one can draw from the Medicaid warfare taking place on Capitol Hill. It started with a thunderous artillery blast from the U.S. Senate, with an early budget resolution calling for an $11 billion cut in Medicaid during the next five years. It might end with a whimper this June 30, when a $20 billion add-on passed last year, with $10 billion earmarked for long-term care, expires.

At press time, Congress had whittled down the proposed cut to a little more than $2 billion, with little apparent hope for further reduction. Meanwhile, nursing home lobbyists were campaigning, with equally little hope, for a renewal of the add-on.

Last year's massive tax cut is coming home to roost. Both political parties agree that it has to be paid for some way, somehow, to keep the federal budget deficit from smothering our children. Right now, nursing homes stand to be among the principal payers.

But that's only one battle in the Medicaid war. Another struggle rages on over intergovernmental transfers, or IGTs--those increasingly popular but peculiar attempts by states to use a provider tax to increase the federal match. Legislation was adopted four years ago to phase them out by 2009. Meanwhile, the Centers for Medicare and Medicaid Services (CMS) is attempting to wean states off them as soon as possible, either by trading them off for block grants with a 10-year expiration date, or submitting to intense federal audits of their use.

Personally, I find it difficult to avoid the impression that a federal phase-out from participation in social/healthcare programs has been the Bush administration's goal all along. The giant Medicare prescription drug bill was a sort of final flinging of money at the private sector, with untold consequences for the remainder of the program--although, on the PPS front, prospects seemed good that nursing homes would retain the $1 billion that survived last October's Medicare add-on crash over the "cliff."

Early in the year the American Health Care Association released a study indicating that states already were underfunding Medicaid by more than $4 billion a year--no surprise to facilities that have been seeing their per diems coming in at less than cost for years. True, nursing homes have survived the state budget squeezes of the past couple of years in pretty good shape, with surprisingly few drastic cuts. In other words, it could have been worse.

This is the year it could get worse. If you think your budgetary belt is tight enough already, exhale sharply, notch it up--and try to hang on a while longer.

BY RICHARD L. PECK, EDITOR-IN-CHIEF