Republicans Reject ‘Grand Bargain,’ Negotiations Continue, NAPH Hospital Action Needed - July 12, 2011

Over the weekend, Republican negotiators backed away from a $4 trillion “grand bargain” deficit reduction deal, citing their desire to avoid any tax increases. Instead, they are proposing a $2 trillion to $2.5 trillion deal with no additional taxes. In a press conference on July 11, President Obama reiterated the need for both sides to budge from their ideological divide and find compromise. The President emphasized the seriousness of this issue and has made it clear he is not willing to sign any short-term extenders of the debt limit – President Obama stressed that the time to solve this problem is now.

Medicaid cuts of as much as $100 billion are on the table. NAPH is concerned that a “blended” Federal Medical Assistance Percentage (FMAP) with across-the-board cuts and cuts to provider taxes will be used as a potential source of savings in the debt limit legislation. The National Governor’s Association recently sent a letter to President Obama expressing concern over a “blended” FMAP and how that will ultimately result in a cost-shift to already cash-strapped states. NAPH urges its members to contact their congressional delegations as soon as possible on these issues. NAPH has materials available to help guide these discussions.

Last week, NAPH President & CEO Bruce Siegel attended a meeting with White House staff to discuss Medicaid’s position in the debt negotiations. The meeting was attended by representatives from a dozen or so advocacy groups that have an interest in the Medicaid program. Representing the White House, Deputy Chief of Staff Nancy Ann DeParle, Director of National Economic Council Gene Sperling, Deputy Assistant to the President for Health Policy Jeanne Lambrew, and others attended the meeting. Administration officials were clear that Medicaid would be subjected to some cuts in the debt limit legislations, but pointed out the cuts would not nearly be as drastic as the cuts proposed by House Republicans. Dr. Siegel and the other advocacy group representatives stressed that the proposed cuts cost-shift to states and would further harm America’s fragile economy. Administration officials validated NAPH’s concern about the inclusion of FMAP “blending” and provider tax cuts. NAPH will be meeting with additional White House officials this week to discuss these issues further and urge the Administration to make changes and cuts, if it is unavoidable, to Medicaid in a way that has a minimal impact on states, providers and, most importantly, beneficiaries.