Governors draft proposals recommending ways to cut Medicaid

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Limiting asset transfers that allow individuals to qualify for Medicaid and increasing the use of "reverse mortgages" to fund long-term care are two ways Congress can trim Medicaid spending, according to the National Governors Association and the National Conference of State Legislatures.

These two bodies have drafted proposals that recommend ways for federal lawmakers to cut Medicaid spending by $10 billion over the next five years. They plan to submit final proposals to Congress later this year. Congress called for $10 billion in Medicaid cuts over five years in its 2006 budget resolution

Other provisions include: raising co-payments for Medicaid services; providing incentives and penalties to encourage individuals to be more responsible for their own healthcare; and enabling states to develop different benefits packages for different populations or in different parts of the state.

The proposals were drafted by separate working groups of governors and state legislators. Some elements resemble parts of President Bush's 2006 budget proposal but also reject the president's measures that could create cost shifting to the states. The NGA's draft is "for comment only," according to NGA officials.