While thousands of destitute Katrina survivors are reportedly being turned away from Medicaid, the White House has refused to support the bipartisan Emergency Health Care Relief Act (S. 1716) designed to provide federally funded health care to those affected by the disaster.
The Administration continues to promote the existing process through which states can apply for waivers under section 1115 of the Social Security Act. The Administration claims that the waivers are more workable and will result in full compensation to the states receiving the influx of hurricane survivors who are eligible for Medicaid.

Supporters of S. 1716, sponsored by Senate Finance Chairman Charles Grassley (R-IA) and ranking Finance Democrat Max Baucus (D-MT), point out that the waiver process is unnecessarily cumbersome in an emergency situation and that the waivers do not expand the eligibility rules of the Medicaid program for Katrina survivors. Under Medicaid rules, a person must fall in one of five categories to be eligible: children, pregnant women, parents of dependent children, seniors or people with severe disabilities. Childless adults under 65 years of age who do not have a very severe health conditions cannot access Medicaid under the waivers no matter how poor they are.

There are reportedly thousands in Louisiana and in states where survivors have relocated who are denied Medicaid for this reason, some of whom are lacking needed medications. (See two recent reports from the Center on Budget and Policy Priorities: Edwin Park, “Failing to Deliver,” http://www.cbpp.org/9-29-05health.pdf ; Donna Cohen Ross, “Many Katrina Survivors Seeking Medicaid in LA Shelters Remain Without Coverage,” http://www.cbpp.org/10-12-05health3.pdf .)

Advocates have also pointed out that the states hit by the hurricane are in fiscal ruin that is only exacerbated by the waiver policy. The administration has forced Louisiana, Mississippi and Alabama to sign IOUs to pay their normal proportion of Medicaid costs for those survivors who are now residing in another state and receiving Medicaid there under a waiver. The hurricane-affected states also have increased numbers of people eligible for Medicaid still within their borders, putting new demands on the program, and yet the administration’s waiver policy offers no funding assistance.

To address these issues, the Emergency Health Care Relief Act (S. 1716)

.  streamlines the application procedures;

.  makes Medicaid available to any Katrina survivors with below-poverty incomes (or up to twice that level for pregnant women and children) for at least 5 months;

.  provides full federal funding for these benefits;

.  provides full federal funding for the State Children’s Health Insurance Program (SCHIP) in the three affected states through the end of 2006;

.  provides compensation to health care providers serving evacuees and provides support to individuals to allow them to continue private insurance formerly received through their employers.

Senator Grassley, whose committee was tasked with finding $10 billion in spending cuts in the budget resolution passed in April (H. Con. Res. 95), has reportedly warned of a “domino effect” that would result if S. 1716 is not passed. He stunned a packed hearing room on September 28 by suggesting that his committee would be unable to make the $10 billion in cuts that are to be included in the budget reconciliation bill if the Katrina Medicaid legislation is not enacted. Over a week later a GOP Finance Committee aide suggested the failure of S. 1716 could lead to the failure of the planned reconciliation bill to cut spending, which in turn would mean there is less money available to fund the tax cuts that are to be included in a second reconciliation bill.

The Katrina Medicaid legislation is thought to have wide support in the Senate, but Senators John Sununu (R-NH) and John Ensign (R-NV) blocked the bill from coming to the Senate floor. There is a good chance the bill might pass if Majority Leader Bill Frist (R-TN) were to call it to the floor.

Meanwhile, Senator Baucus has refused to work with Chairman Grassley on finding cuts unless the Katrina Medicaid legislation is approved. If Grassley has to depend entirely on Republican Finance Committee members to approve the reconciliation cuts, his success will hinge on persuading moderates Olympia Snowe (R-ME) and Gordon Smith (R-OR), who have indicated that they oppose any cuts in Medicaid that would harm beneficiaries.

To get out of this difficulty, Chairman Grassley is now making plans to insert the Katrina Medicaid legislation into his reconciliation bill. But this approach requires additional spending cuts to pay for the Katrina provisions – cuts that would not be needed if the Katrina bill were passed as emergency legislation, which of course it is. S. 1716 was originally estimated to cost $9 billion, but Grassley has whittled it down to $6.1 billion. If $6 or more billion is added to the reconciliation bill, the total cuts will have to be at least $16 billion to net the $10 billion required by the budget resolution. Chairman Grassley has identified cuts in Medicare and reduced the amount to be cut from Medicaid in an attempt to win enough votes to get the bill out of committee. But it remains unclear whether the numbers and the votes add up.

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