Senate Committee Scraps Medicaid Expansion Deal

WASHINGTON -- In a stunning reversal, the U.S. Senate Finance Committee killed a $16 billion bipartisan proposal to significantly expand Medicaid as a way to cover half the United States' 10 million uninsured children.

The vote came Tuesday night after a furious, 11th-hour lobbying campaign against the measure by governors and state officials who demanded greater flexibility on how to spend the funds -- and despite a strong expression of support for the proposal from President Clinton earlier in the day.

In killing the Medicaid expansion proposal, a majority of the members of the powerful Finance Committee also signaled their intention later in the week to back a competing plan. That proposal would give states broad latitude in deciding how to spend the $16 billion over a five-year period -- precisely the type of "block grants'' approach that Clinton denounced in his Tuesday letter to the committee.

As defeat became apparent, disappointed proponents of the Medicaid expansion measure predicted that many uninsured children would go uncovered under the block-grant approach because many states will spend the funds for unrelated programs.

Still, the defeat does not necessarily sound the final death knell for what seemed like a powerful force in Congress this year to provide for uninsured children -- a legacy of Clinton's ambitious but ill-fated drive in 1993 and 1994 to overhaul the nation's $1 trillion-a-year health care system.

On the Medicaid expansion proposal, offered by Senators John D. Rockefeller IV of West Virginia, and John Chafee of Rhode Island, the lobbying campaign by the states was so strong -- and so persuasive -- that four members of the Finance Committee who had signed on as co-sponsors ended up voting against the measure. They were Senators John Breaux of Louisiana; Alphonse D'Amato of New York; Bob Graham of Florida, and Richard Bryan of Nevada.

One specific and vociferous objection from the governors was a provision in the Chafee-Rockefeller bill requiring states to provide continuous, 12-month coverage once a child is enrolled in Medicaid. Governors said that requirement would add greatly to the program's cost because most children average nine months on Medicaid in any given year.

The controversy over how best to insure children is a result of the recent five-year, balanced-budget agreement between Clinton and congressional leaders. It set aside $16 billion for the effort without specifying how to achieve that goal.

Last week, the House Commerce Committee approved a "block grant'' measure similar to that being offered by Senate Finance Committee Chairman William Roth, which apparently now enjoys the support of a majority of the panel's members.

But Clinton in his letter said that the House bill "will not result in meaningful coverage for many uninsured children.''

Proponents of the block grants approach, such as Senator Phil Gramm of Texas, however, said that states should be given maximum flexibility to experiment with ways to extend coverage to uninsured children.