Federal government won’t pay for part of health insurance program

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(Host) The federal government has refused to pay for part of a state program that will cover Vermonters without health insurance.

The decision means the state faces a projected $10 million deficit in two years in its new Catamount Health plan.

Governor Jim Douglas was disappointed by the news, and wrote President Bush asking him to reconsider.

VPR’s John Dillon has more:

(Dillon) Vermont was counting on a waiver from the federal government to help pay for the Catamount health plan.

The waiver would let the state use federal Medicaid money to help cover the insurance costs for those who make up to 300% of the poverty level.

But now the feds have told the state it can only use the money for those up to 200% of the poverty level. Joshua Slen, the director of the state office of health access, says the decision means red ink for Vermont.

(Slen) “Financially what that means is that instead of having in 2010 a $15 million surplus in the Catamount fund, we’re projecting a $10 million deficit in the Catamount fund.”

(Dillon) Slen briefed lawmakers on the news on Tuesday. He said the decision affects about half the people projected to be covered by Catamount.

Lawmakers were stunned to hear that the Catamount fund had suddenly swung from projected surplus to projected deficit. Lamoille Senator Susan Bartlett chairs the Senate Appropriations Committee.

(Bartlet) “We need the administration to come back and we need to work on a plan so we need to know what to do. And all the work on implementation, we’re absolutely committed to those goals. But it’s a big bump in the road.”

(Dillon) The Douglas Administration says it remains committed to the Catamount plan, which is scheduled to launch this fall.

And Administration Secretary Michael Smith had strong words for the federal government. He said states are the leader in health care reform, but they need some cooperation from Washington.

(Smith) “I find it incredibly frustrating that they want to impose roadblocks to meaningful reform. Washington needs to either lead, or get out of the way.”

(Dillon) Smith said the Vermont waiver request appeared to be caught up in a debate in Washington. The Bush Administration is opposed to using Medicaid money to expand children’s health care programs for families that make up to 300% of the poverty level.

(Smith) “I was not expecting this. There are some Washington politics that this is getting caught up on.”

(Dillon) Governor Douglas has written a letter to President Bush asking him to reconsider the decision. Both Douglas and Smith point out that the waiver to cover those up to 300% of poverty would not cost the feds any more money since the entire Vermont Medicaid budget is under a federal cap.

For VPR News, I’m John Dillon in Montpelier.

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