June 15,2005

Opening Statement of the Honorable Chuck Grassley, Chairman Hearing, “The Future of Medicaid: Strategies for Strengthening American’s Vital Safety Net”

Opening Statement of the Honorable Chuck Grassley, Chairman
Hearing, “The Future of Medicaid: Strategies for Strengthening American’s Vital Safety Net”
Wednesday, June 15, 2005

Welcome to our hearing on the future of Medicaid in which we are going examine ways tostrengthen the nation’s health care safety net. First, I’d like to welcome our witnesses and thank them forjoining us today. In particular, I would like to thank Governor Huckabee and Governor Warner for beinghere today. While Medicaid is a program financed jointly by state and federal dollars, the states have theprinciple responsibility for running this very important program. It is for this reason that the bipartisanproposals by the nation’s governors are of such importance and it is these proposals that are the focus oftoday’s hearing.

We are here today to begin a process to strengthen Medicaid. We are at an important juncture withMedicaid, and we need to take decisive action to protect this vital safety net program for the people whoneed it. Medicaid has overtaken Medicare as the largest health care program and it is rapidly growing asa share of state budgets – doubling since 1990 while education spending has remained flat. States fromMissouri, Tennessee, California, Mississippi and my own state of Iowa are struggling under growing costs.Between 1998 and 2003, combined federal and state spending on Medicaid grew by more than 55 percent.When you take into account CBO’s forecast for the next ten years, combined Medicaid spending from 1998through 2015 will grow by more than 275 percent. Spending in the year 2015 will be almost triple whatit was in 1998. Many states have already had to take drastic measures to address these growing fiscalpressures.

With a bipartisan voice, the nation’s governors have placed Medicaid on the forefront of theiragenda. We’ve been hearing from the nation’s governors – both Republicans and Democrats --since thebeginning of the year. Their message has been clear -- if we don’t work together to control the growth ofMedicaid spending right now, these growing fiscal pressures will force states to take even more farreachingsteps to control costs. My hope is that today we begin the process of finding common ground tomake good decisions for Medicaid’s beneficiaries and the program’s financial future. It can be done if wework together.

The causes are complex. More people are accessing Medicaid services. Health care is becomingmore expensive. We need to more carefully scrutinize how we pay and how much we pay for Medicaidservices. We need to examine whether we are paying too much for prescription drugs. Any ideas weconsider should not jeopardize the coverage of optional beneficiaries just because they are optional ratherthan mandatory. I think we can come up with policies that improve Medicaid’s fiscal health withoutjeopardizing that coverage and in fact, we must. To my friends who don’t want us to find any savings inMedicaid, I hope you’ll reconsider your position. If we don’t find ways to relieve some of the financialpressures the states are facing, we end up jeopardizing the coverage of the very needy people we seek toprotect. If the states don’t get relief, they’re going to have to make some difficult decisions to keep theirschools funded and their budgets balanced — decisions that will jeopardize the coverage of currentMedicaid beneficiaries. I believe that’s why the governors have united to tackle this difficult issue as theywill testify today. We have a responsibility to be good stewards of the Medicaid program. We need tospend the next few months making good decisions about how to preserve and strengthen the Medicaidprogram for the people who truly need it.