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CMS Preliminary Release on FY 2006 Budget

Today, CMS Administrator Mark B. McClellan, MD, Ph.D. released preliminary information on Medicaid proposals that will be included in the President's FY 2006 Budget submission.

Along with the President's proposals to spend over $125.7 billion over ten years to expand insurance coverage to millions of Americans through tax credits, purchasing pools, and Health Savings Accounts, the President's Budget will also help restore fiscal responsibility to the Medicaid program while providing greater flexibility for states. To improve access to care for many uninsured Americans, the President is also proposing $2.038 billion -- an increase of $304 million in FY 2006
-- for the Nation's Community Health Centers.

The President proposes to give states more flexibility in the Medicaid program in order to enable states to increase coverage for the same Federal dollars. The President's proposal does this by providing states flexibility in three key areas: (1) providing flexibility in the acute care coverage for optional families and children (while making no change in acute care coverage for people with disabilities); (2) providing flexibility in the provision of long-term care services for the elderly and the disabled to give them more choices to receive care in the community rather than in institutions; and (3) providing new options for the funding of uncompensated care to support more coordinated approaches to provide care and coverage for the uninsured. These areas for increased flexibility are based on substantial evidence from approaches tried by states that demonstrate that states can cover more people if we provide more flexibility to get better results.

The Budget includes several proposals to provide coverage, including the Cover the Kids campaign to enroll more children in Medicaid and SCHIP, and the extension of the Qualified Individual (QI) and transitional medical assistance programs. Community based care options for the disabled would be expanded through the President's New Freedom Initiative. The Budget also details program integrity proposals that strengthen the federal-state partnership while guaranteeing beneficiaries get the coverage they need.

Taken together, the President's Medicaid proposals -- both new spending and reductions resulting from program integrity indicatives -- will save the Federal Budget an estimated $45 billion over a ten year period.

This is significantly less than the inaccurate claim of $120 billion in reductions reported in the press. Over the 10-year period FY 2005 - 2014, Federal expenditures in the Medicaid baseline for medical assistance payments are projected to be $73 billion lower than previous estimates. Actual Federal Medicaid outlays increased 9 percent in 2004, compared to the prior estimate of 11 percent. Revising Medicaid baseline projections is a common practice as new or revised state data is provided. This reduction in the baseline is not a result of any proposed policy changes.