Senate Panel Kills Growth of Medicaid for Children

WASHINGTON — In a stunning reversal, the Senate Finance Committee Tuesday night killed a $16-billion bipartisan proposal to significantly expand Medicaid as a way to cover half the nation’s 10 million uninsured children.

The vote came after a furious, eleventh-hour lobbying campaign against the measure by governors and state officials who demanded greater flexibility on how to spend the funds--and despite a strong expression of support for the proposal from President Clinton earlier in the day.

In another health care-related vote, the committee approved, 18 to 2, a proposal that would for the first time require wealthier Medicare recipients to pay higher deductibles for the program’s Part B, the voluntary coverage plan for doctors’ services.

Currently, all Medicare recipients must pay $100 in such annual deductibles. But under a proposal offered by Sen. Bob Kerrey (D-Neb.), recipients would be required to pay more if their annual income is more than $50,000.

Individuals with incomes above $50,000 and couples above $75,000 would have to pay $540 of their annual physician fees, per person. The deductibles would rise to a maximum of $2,160 per person for individuals with incomes above $100,00 and couples above $125,000, Kerrey said.

“The idea is to establish a program that doesn’t provide a subsidy for those who don’t need to be subsidized.” Kerrey said.

The panel continued working into the early hours of today.

In killing the Medicaid expansion proposal, a majority of the members of the powerful Finance Committee also signaled their intention later in the week to back a competing plan. That proposal would give states broad latitude in deciding how to spend the $16 billion over a five-year period--precisely the type of “block grant” approach that Clinton denounced in his Tuesday letter to the committee.

As defeat became apparent, disappointed proponents of the Medicaid expansion measure predicted that many uninsured children would go uncovered under the block-grant approach because many states will spend the funds for unrelated programs.

Efforts to provide medical coverage to uninsured children suffered a second setback a short time later. Sen. Orrin G. Hatch (R-Utah) lost a bid to increase the federal tax on cigarettes by 43 cents a pack as a way to provide coverage to 5 million uninsured children.

Still, the twin defeats do not necessarily sound the death knell for what seemed like a powerful force in Congress this year to provide for uninsured children--a legacy of Clinton’s ambitious but ill-fated drive in 1993-94 to overhaul the nation’s $1-trillion-a-year health care system.

Hatch and his co-sponsor, Sen. Edward M. Kennedy (D-Mass.), were not surprised by their defeat and they vowed to bring up the measure again in a different forum.

On the Medicaid expansion proposal, offered by Sens. John D. “Jay” Rockefeller IV (D-W.Va.) and John H. Chafee (R-R.I.), the lobbying campaign by the states was so strong--and proved so persuasive--that four members of the Finance Committee who had signed on as co-sponsors ended up voting against the measure. They were Sens. John B. Breaux (D-La.), Alfonse M. D’Amato (R-N.Y.), Bob Graham (D-Fla.) and Richard H. Bryan (D-Nev.).

One specific and vociferous objection from the governors was a provision in the Chafee-Rockefeller bill requiring states to provide continuous, 12-month coverage once a child is enrolled in Medicaid. Governors said that requirement would add greatly--and unnecessarily--to the program’s cost because most children average nine months or less on Medicaid in any given year.

The controversy over how best to insure children is a result of the recent five-year balanced-budget agreement between Clinton and congressional leaders. It set aside $16 billion for the effort without specifying how to achieve that goal.

The Hatch-Kennedy proposal, while similar in aim, is a separate proposal entirely.

Last week, the House Commerce Committee approved a “block grant” measure similar to that being offered by Finance Committee Chairman William V. Roth Jr. (R-Del.), which apparently now enjoys the support of a majority of the panel’s members.

But Clinton in his Tuesday letter said that the House bill “will not result in meaningful coverage for many uninsured children.”

Proponents of the block-grant approach, such as Sen. Phil Gramm (R-Texas), however, said that states should be given maximum flexibility to experiment with ways to extend coverage to uninsured children.

He said that he and like-minded senators “rejoice that we might have 50 different plans” emerge as a result of the $16-billion block-grant approach.

Chafee and Rockefeller were not unmindful of the appeal of the block-grant approach. Their proposal allotted $4 billion of the $16 billion for block grants, with the remainder going for Medicaid expansion, which would have come with numerous strings attached on coverage requirements.

By contrast, Roth’s proposal would give states the unequivocal option of choosing block grants or Medicaid expansion. And there seems little doubt which option most, if not all, the states would select.

And unlike the House bill, Roth’s proposal does set some requirements for states. For instance, to receive the federal funds under either option, states would have to cover all children up to age 19 who are living in families under the federal poverty level.