What a surprise, right? The "Medicare Modernization Act," that gives us the new pharmaceutical benefit may cost the states money.
The simple version:
- Lots of Medicaid clients are also Medicare clients.
- Lots of these "dually eligible" folks are sick and use lots of pharmaceuticals.
- This is especially so for those in nursing homes
- So when the Federal government created the new pharmaceutical benefit, it recognized that it would be paying for drugs that were previously being paid for under Medicaid. That would simply have shifted the cost from states to the Federal government
- To offset that effect, the new law includes a provision (tenderly called the "clawback") that establishes a formula by which the states pay the Federal government
Turns out the formula works against some states generating a net cost. It may even create the biggest disadvantage for states that had created the most cost-effective programs.
There may even be Constitutional issues regarding the Federal government's requiring states to pay for a Federal benefit in which they do not otherwise participate.
Maybe the Governors could take some lessons from county officials in New York.