Bush Plans Flexible Medicaid Caps

President Bush plans to give states new power to cut health benefits offered through Medicaid, the health insurance program for the poor, in hopes that they will offer coverage to those with no insurance at all.

Bush will outline his plans in his weekly radio address today, and Health and Human Services Secretary Tommy G. Thompson will flesh out the details when he meets with the nation’s governors later today, according to two officials, one at the White House and another who works closely with the governors.

Bush also will encourage states to cover parents through the Children’s Health Insurance Program, the official said, speaking on condition of anonymity.

Bush’s plan for Medicaid would not affect the poorest Americans, whom states are required to serve. Rather, it would give states new flexibility to create health benefit packages for others with low incomes, known as “optional groups.”

Medicaid serves about 40 million Americans, including 12 million who fall into the optional category.

The Bush plan is based on one proposed by the National Governors’ Assn. in February, which came under immediate criticism from advocates who fear that states will slash important benefits for low-income people who rely on the program. Governors argued that states could cover more people if they had the power to offer each person a more modest--and less expensive--set of benefits.

Medicaid serves poor children and their parents, as well as the elderly and the disabled. It’s paid for with a combination of state and federal dollars, with states writing their own rules within federal guidelines.

Under current rules, states are required to cover the poorest Americans, with other low-income groups optional. If states opt to include extra people, though, they must offer them the Medicaid package of benefits. And they can only ask participants to pay a minimal amount toward their coverage.

And under current rules, some benefits--such as prescription drugs, dental care and eyeglasses--are optional. But if a state includes a particular benefit, it generally must offer it to everyone in the program.

Under the Bush plan, people who are automatically eligible for Medicaid would continue to receive the full benefit package. But states could create less-generous packages for other groups and offer the extra services selectively.

Specifically, they could offer a private-sector plan that is offered to state employees, the White House official said.