Gov. Tom Vilsack said federal officials have promised Iowa a waiver that will head off a threatened $66 million cut in federal spending for Medicaid, the program that provides health care to the poor and disabled.
The pledge came this week in a letter from Health and Human Services Secretary Michael Leavitt, declaring, "We are eager to partner with you in carrying out Iowa's program." A copy of the letter was obtained by The Associated Press.
Like many states, Iowa had used its ability to transfer money between accounts to leverage additional federal Medicaid dollars. Faced with growing deficits, federal Medicaid officials had put the states on notice that the finance scheme would no longer be allowed.
"It would have meant $66 million fewer federal dollars to the state and, in real terms, it would have meant services would be cut or curtailed for thousands of people," Vilsack said in an interview late Wednesday with the AP.
Vilsack said a bipartisan group of lawmakers and state officials went to Washington a week ago with a new financing plan that not only allows the state to hold on to the money, but also expands health coverage to more of Iowa's uninsured.
The state proposed a $66 million increase in funding to Broadlawns Medical Center in Des Moines and University Hospitals and Clinics in Iowa City, which currently provide millions of dollars in charitable care to patients not eligible for Medicaid.
"We, in effect, would have expanded the coverage to thousands of Iowans," Vilsack said. "It would allow us to test market ideas about providing more coverage for fewer dollars."