The Bush Administration's Fiscal Year 2004 Budget: Analysis of Key Health Care Provisions

Publication Date: February 2003

Publisher: Families USA

Author(s):

Research Area: Health

Type: Other

Abstract:

Medicaid and SCHIP Restructuring/Fiscal Relief: The President's proposal, "the State Health Care Partnership Allocation," ties fiscal relief for the states to the restructuring of Medicaid and SCHIP: States that accept the fiscal relief ($12.7 billion over 7 years) will have to enter into an agreement with the federal government to block grant Medicaid and SCHIP. This block grant will combine all federal Medicaid and SCHIP funds (including Disproportionate Share Hospital, or DSH, funds) and give them to states in two funding streams: one for acute care and one for long-term care. The amount that a state receives will be based on its FY 2002 expenditures; it will increase annually based on a pre-defined rate. The President's proposal specifies a continued financial commitment on the part of states, often referred to as a "maintenance of effort" (MOE) requirement. Like the federal contribution, the state MOE would also be increased annually, but the rate is designed to grow more slowly than the federal contribution. Under the new plan, states participating in the "State Health Care Partnership Allotment" program would not be subject to existing federal rules regarding the benefit package, cost-sharing, enrollment, and other features of the program. These federal rules provide essential protection to ensure that Medicaid beneficiaries get the care they need. Although there would be some protection for "mandatory" beneficiaries, states will be able to design individual programs for "optional" beneficiaries. Cost: This proposal is budget-neutral over 10 years.