COST REDUCTION IN MEDICAID PROGRAM 861

The Governor said while he has contemplated such an undertaking
by private enterprise for some time, the project has taken on an added
sense of urgency because of recent reports from the State Comptroller
of a potential revenue shortage.

"It has become imperative that we take every step possible to avoid
burdening our citizens with additional taxes, " Governor Agnew said.
"This can be a major step toward achieving that objective by bringing
into the State government the methods and practices of modern busi-
ness procedures. "

NEWS RELEASE ON COST REDUCTION IN
MEDICAID PROGRAM

June 13, 1968

Governor Agnew announced today that he is taking the following
steps in implementing the recommendations of the Ad Hoc Health
Committee to reduce costs of the Medicaid program in the most
effective and fair manner.

The cutback in the State program became necessary in the budget
presented by the Governor to the 1968 Legislature, but he delayed
making the changes which will become effective July 1 until the last
possible moment to see if the State revenue picture would improve.

The Governor said that since the State revenue picture has worsened
instead of improved, it will be necessary to make the following changes
in the program effective July 1, 1968:

The dropping of approximately 22, 000 from a total program en-
rollment of 280, 000 eligibles necessitated by the recent Social
Security amendments which forced this rollback. These 22, 000
are the persons with the highest incomes in the program and
include about 7, 000 who are over 65 and have Medicare pro-
tection.

The introduction of a co-payment and deductible principal for
the medically indigent which essentially coincides with the same
arrangement as exists under Medicare — (1) $40 for each hos-
pital admission; (2) a $1 co-payment for doctors and outpatient
visits; (3) 70$ for each prescription.

The Ad Hoc Health Committee headed by Dr. Russell Nelson, the
President of Johns Hopkins Hospital, has been working on this prob-
lem since last January when it became apparent that the State would
not be able to absorb the full impact of the costs of the program.