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Fireworks Display -- A Republican Governor Begin

Fireworks Display -- A Republican Governor Begin

July 4, 2005

Happy 4th everyone! Here's a surprise. Today's New York Times describes a fast brewing revolt by Republican governors and other state officials against a key part of the Medicare Prescription Drug Law, passed in 2003, scheduled to start in Jan. 2006. A number of states are revolting against a requirement that they must reimburse the federal government a large portion of drug costs for "dually eligible" seniors -- those who qualify for Medicare and Medicaid, and have had Medicaid cover their drug costs for many years.

The inelegant term in the law is the "clawback." (Fed officials have been ordered not to use that word.) Since states would get windfall savings when the feds begin covering drug costs next year, the law requires them to pay back 80% of expected savings from the new law each year. This appears to be the first time the feds have required states to write checks to them. The "clawback" formula is complex, and many states may owe more than 80%, (even more than 100%) especially states that have done a good job on prescription drug cost containment, such as Massachusetts.

Who's leading the charge? Remember the Alamo! "Texas is leading the charge against the requirement, which states see as more onerous than the mandates imposed on them by the 2002 education law, the No Child Left Behind Act. Gov. Rick Perry, a Republican, has vetoed a $444 million appropriation covering the Texas contribution for the next two years. In his veto message and in a letter to other governors, Mr. Perry said he objected to the federal requirement in principle and to the way it was being interpreted by the federal Medicare agency. 'For the first time," Mr. Perry said, "state governments would be expected to directly finance federal Medicare benefits with state tax dollars. In effect, states will be billed on a monthly basis for the cost of federal services.' ... In New Hampshire, the state budget enacted last week stipulates that 'no payments shall be made to the federal Medicare program, unless a court has determined that the provisions' of the federal law, 'popularly known as the clawback, are constitutional.'"

Here's a prediction. Implementation of this convoluted atrocity of a law -- beginning in October -- will be the domestic equivalent of the Bush Administration's Iraq reconstruction fiasco. The biggest fireworks this year will not be on the 4th.