The Obama administration said Monday that states could cut
Medicaid payments to many doctors and other health care providers to
hold down costs in the program, which insures 60 million low-income
people and soon will cover many more under the new health care law.
The administration's position, set forth in a federal appeals court in California, has broad national implications because it comes as the White House is trying to persuade states to expand Medicaid as part of the new law.
The statement of federal policy infuriated health care providers and advocates for low-income people. But it might encourage wavering Republican governors to go along with the expansion because it gives them a tool to help control costs.
In a brief filed with the United States Court of Appeals for the 9th Circuit in San Francisco, federal officials defended a decision by California to cut Medicaid payments to many providers by 10 percent.
Kathleen Sebelius, the secretary of the Department Health and Human Services, approved the cuts in 2011 after finding that beneficiaries would have "adequate access" to the wide range of services covered by Medicaid.
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