States fight Medicare contributions

A war is shaping up over funding for the Medicare Prescription drug benefit, which goes into effect January 2006. The New York Times reports that a growing number of states are questioning the gains they are likely to receive from the benefit and saying they will not help foot the bill for the program. Under the rules states will have pay for drug costs for "dual eligibles" under Medicare Part D. According to the Times, "states have concluded that they will lose money because they must give back most of the savings and will incur new administrative costs."

In New Hampshire, lawmakers passed a budget which explicitly rules out payments to the program. Texas Gov. Rick Perry (R) vetoed his state's scheduled $444 million contribution to the program last week and sent a letter to other governors urging them to do the same.

- see this story from The New York Times
- see this story from The Washington Post