- The Washington Times - Sunday, August 5, 2001

President Bush yesterday announced an initiative that gives states more flexibility with government health insurance programs, such as Medicaid and the State Children's Health Insurance Program (SCHIP), so they can expand coverage for the uninsured.
"Medicaid spending is rising dramatically. But the number of low-income Americans without insurance remains high. Clearly, this important program needs reform," Mr. Bush said in his weekly radio address, which was taped Friday and broadcast yesterday.
"Yet, states have great difficulty reforming their Medicaid program because of complex and cumbersome federal requirements," the president said, adding:
"Today, we are changing that. My administration will adopt new rules that empower states to propose reforms tailored to the needs of their citizens in return for this flexibility, we will ask the states to help ensure that their programs broaden coverage for low-income Americans."
Mr. Bush announced the changes, which will not require congressional approval, at the end of a week in which the House approved a compromise patients' rights bill that had the White House's blessing.
"This legislation is welcome news for patients. And I want to continue this momentum" with a "new initiative to expand health insurance for the uninsured by making the Medicaid program more accessible," Mr. Bush said.
The new flexibility being offered to states will not affect the poorest Americans, who are automatically eligible for Medicaid coverage. Their benefits will remain unchanged.
But the new federal rules would give states the authority to reshape the package of benefits offered to some 12 million low-income Americans, in which the states they live in have added to their Medicaid programs.
Under current Medicaid rules, if states decide to include extra people, they must provide them with the full costly Medicaid package of benefits. And they can only ask participants to contribute a minimal amount toward their health care coverage.
In a telephone interview yesterday, Kevin Keane, a top aide to Health and Human Services Secretary Tommy G. Thompson, disagreed with wire service reports that said the redesigned health insurance plan would lead to cuts in the health care coverage of the 12 million Americans affected by the president's proposal.
"Could states cut benefits?" Mr. Keane said from the National Governors' Association (NGA) summer conference in Providence, R.I., where the Bush plan was receiving bipartisan praise.
He acknowledged there could be a possibility of some cuts, but said he believes it's "highly unlikely" anyone would lose coverage.
Mr. Keane said that states will be encouraged to cover parents through SCHIP, earmarked for families who earn too much income to be eligible for Medicaid but not enough to pay for health insurance on their own.
However, at the kickoff of the NGA's summer conference, Democratic Gov. Howard Dean of Vermont, told the Associated Press that, under the new plan, benefits provided to those with higher incomes might be treated more like private insurance, with deductible levels and co-payments.
The Bush administration's new initiative is based on a similar measure the NGA proposed in February that came under attack at that time from advocates for the poor.
The policy approved by the governors in February said: "States should have more flexibility with optional benefits and optional populations."
It went on to say the "all or nothing structure of the Medicaid program" requires changing so that states could offer a more modest package of benefits to people with higher incomes.
In another development yesterday, Terry McAuliffe, chairman of the Democratic National Committee, sharply criticized the patients' rights bill that passed the Republican-controlled House late this week and said it will not be the final word on the issue.
In the Democrats' weekly radio address, Mr. McAuliffe called the measure "imposter legislation" that "benefits HMOs and stacks the deck against American consumers."
He pledged that Democrats will fight for a more extensive bill when Congress returns from its summer recess.
Mr. Thompson, interviewed on CNN's "Evans, Novak, Hunt & Shields," said Mr. Bush will not compromise further on the House-passed patients' rights measure, which caps damage awards for those denied medical coverage by their health insurers at $1.5 million.
"There are going to be some changes made. There's no question about that but I don't see any further compromises," said Mr. Thompson in the pre-taped interview.
* This article is based in part on wire service reports.

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