States rail against Medicare "clawback" provision

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Many states, including Texas New Hampshire and Ohio, have launched protests against annual payments they are scheduled to pay the federal government to help finance the Medicare Part D drug benefit.

The purpose of the 2003 Medicare law, in part, is to relieve states of prescription drug costs for low-income beneficiaries. But many states believe they will lose money because they must relinquish most of the savings and will incur new administrative costs.

State contributions to the Medicare trust fund are known as clawback payments. They will total $124 billion from 2006 to 2015, the Congressional Budget Office estimates.

States are expected to begin making payments in January, the same month that the drug benefit is set to begin. Gov. Rick Perry (R), vetoed a $444 million appropriation covering the Texas contribution for the next two years. In New Hampshire, the new state budget stipulates that it will not make payments to the Medicare program unless a court determines they are constitutional.