Medicare projected to stay solvent through 2006

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(Host) Vermont lawmakers on Tuesday got some good news on the state’s health care budget. A fiscal analyst says the state trust fund that covers the Medicaid program will be solvent through fiscal year 2006. A year ago, experts had predicted the program would be in the red. But then the federal government stepped in to help.

VPR’s John Dillon reports:

(Dillon) The tax cut bill that cleared Congress this spring also included money to help the states. Vermont will get about $50 million in unrestricted funds under that bill. And the bill also boosted the federal reimbursement rate for Medicaid programs.

Medicaid pays for health care for the elderly, the poor and the disabled. The federal government has paid about 62% of the cost, with Vermont picking up the rest. The tax law change will mean the feds will pay 68%, which means another $34 million for the state.

Steve Kappel is an analyst with the Legislature’s Joint Fiscal office.

(Kappel) “Well prior to this, the health access trust looks like it was going to be solvent through the end of FY ’05. And with this new money, it looks like it will be solvent through the end of FY ’06. So another year of solvency.”

(Dillon) But, Kappel says it still looks like the fund will face a $35 million deficit by fiscal year 2007.

State Senator Jim Leddy (D-Chittenden County) chairs the health access committee. He says the federal help for Medicaid doesn’t buy Vermont much time.

(Leddy) “The $34 million of federal monies tied to Medicaid is one time. So I think we need to be careful. We can be grateful for that, but we need also to recognize that it’s only going to be there for one year.”

(Dillon) Vermont could also see potential savings from a prescription drug bill now in Congress. The legislation sets up a partial federal pharmacy benefit under Medicare, the program that provides coverage for the elderly.

But Leddy was critical of the legislation. He says it doesn’t go far enough to cover the cost of pharmaceuticals for senior citizens. And he says the legislation bars the federal government from negotiating lower prices for the program from the drug companies.

(Leddy) “As a benefit, it is almost non-existent. It truly is. And the fact that the federal government in this bill could not negotiate best prices on behalf of the senior citizens of this country with the pharmaceutical industry is an insult.”

(Dillon) Leddy’s committee also heard from officials in Maine about their prescription drug program, which recently survived a Supreme Court challenge from the drug industry.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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