Statement of Administration Policy: H.R. 3595 - Medicaid Moratorium Amendments of 1991

(SENT 11/14/91)
(House Rules) and SENT to House 11/19/91
(Waxman (D) CA and 135 others)

The Administration strongly opposes H.R. 3595. If it were presented to the President, his senior advisers would recommend a veto.

H.R. 3595 would extend through September 30, 1992, the moratorium on Medicaid regulations pertaining to the use of provider- specific taxes and donations to increase Federal funding for State Medicaid programs. The current moratorium would otherwise expire on December 31, 1991. The moratorium would be broadened to preclude any regulation on these issues, rather than barring only final regulations, as does current law. H.R. 3595 would also allow voluntary contributions to be used as the State share for Medicaid through December 31, 1992. In addition, a new and permanent moratorium would be applied to any regulation changing the treatment of intergovernmental transfers of funds as a source of the State share of Medicaid costs.

H.R. 3595 is unacceptable legislation because:

—   State spending through these schemes, if unchecked, could increase the Federal deficit — adding as much as $40 to $50 billion for FYs 1992 through 1996.

—   The bill violates the Budget Enforcement Act of 1990 (BEA) It designates the provisions of the bill as emergency requirements under the BEA and prohibits the added costs from being counted under the pay-as-you-go provisions of the BEA. In addition, H.R. 3595 includes a "directed scorekeeping" provision that specifies the dollar amounts that are to be used in estimating costs under the bill. The President has stated previously that he would veto any legislation that contained such a provision.

—   The moratorium on provider-specific taxes and donations has already been extended twice. Congress and the States have been on notice since 1988 that the Federal Government was planning to act in this area. Yet Congress has twice extended the moratorium, declaring that more time is needed to examine the issue. During this time, the number of States with provider-specific taxes, donations programs, or both has skyrocketed to over 40 States. Last year's moratorium resulted in at least a tenfold increase in Federal funding associated with States' use of provider tax and contribution programs. Many more billions of dollars would be spent under another moratorium.

—   A permanent moratorium on changing the treatment of intergovernmental transfers is unnecessary. The Health Care Financing Administration (HCFA) is not eliminating the use of traditional intergovernmental transfers in Medicaid. Under the HCFA regulation, public funds transferred between different levels of local government will continue to be matched by the Federal Government.

State donation and provider-specific tax programs, if unchecked, will undermine a basic premise of the Medicaid program — that States have a stake in the costs. The Administration cannot condone the alteration of the Medicaid program through financing mechanisms that go beyond the conventional matching rate, structure. States are accountable for the appropriate management and financing of their programs and the Federal Government is responsible for holding them accountable.