Hurricane Katrina Now Affecting Medicaid, Medicare and Social Security Legislation

Senate Majority Leader, Bill Frist (R-Tenn.), says that $10 billion in cuts to Medicaid requested by the Bush administration will have to be weighed against the need to provide health care to victims of Hurricane Katrina. Thousands of people have lost health insurance through their employer, so the demand on Medicaid may grow, according to an article in the Palm Beach Post. In May, the House and Senate passed a budget resolution to reduce Medicaid spending by $10 billion over five years. Frist said that Congress should still look at reducing Medicaid costs by considering changes that would eliminate waste, fraud, and abuse, but not by cutting back on care.

While cuts to Medicaid may not be made, the costs associated with Hurricane Katrina are having the opposite effect on efforts to reverse a scheduled 4.3 percent reduction in Medicare physician payments. According to the Kaiser Daily Health Policy Report, several Senate staffers have questioned whether Congress will be willing or able to reverse the payment reduction because reversing the pay reduction would cost between $153 billion and $183 billion over 10 years. However, many doctors have said they will no longer treat Medicare recipients if the cuts go through.

Hurricane Katrina is also having an effect on proposed reforms to Social Security. According to an article in the Washington Post, Republican Congressional Committee Chairman, Thomas Reynolds (R-N.Y.), will recommend that the party drop efforts to restructure Social Security. He told a group of Republicans that now that Congress had Hurricane Katrina legislation to deal with, it would be difficult to mount an effective public relations campaign to restructure Social Security.

Meanwhile, the Senate is moving to provide Medicaid coverage to survivors of Hurricane Katrina. Senate Finance Committee Chair Chuck Grassley (R-Iowa) and Senator Max Baucus (D-Mont.) have introduced a bill to temporarily extend Medicaid coverage to displaced residents of Louisiana, Mississippi, and parts of Alabama. According to the Kaiser Daily Health Policy Report, the bill would require the federal government to pay 100 percent of Medicaid costs for five months, with an option to extend coverage for an additional five months. In addition, the federal government would pay through 2006 100 percent of the costs for Medicaid beneficiaries in the affected states. Other provisions in the bill would eliminate asset tests, establish a fund to help survivors with private health insurance bills, and eliminate penalties for missed application deadlines for survivors.