Government

Attorney General Abbott Files United States Supreme Court Complaint Over Medicare Drug Program Payments

Complaint asserts that state payments demanded by the federal government violate state sovereignty; Texas predicts net losses of $100 million over four years

From the Office of Greg Abbott, Attorney General of Texas

March 3, 2006

AUSTIN—Texas Attorney General Greg Abbott today filed a complaint on behalf of Texas and several states in the U.S. Supreme Court, asserting the federal government has usurped states’ sovereign powers and violated the Constitution by mandating direct payments to the federal government to fund the new Medicare prescription drug program.

The program, known as Part D of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, became effective in January and applies to coverage of outpatient prescription drugs for Medicare recipients through various health plans. The drug benefit program also covers those who are Medicaid-eligible in Texas and, overall, is expected to reach 323,000 Texas seniors and those with disabilities.

“Texas and other states have been forced to relinquish control over how we plan and budget taxpayer dollars to support Medicare’s federal drug benefit program for seniors,” said Attorney General Abbott. “The federal government has placed what amounts to a direct tax upon Texas and other states in violation of the U.S. Constitution, which prohibits Washington from interfering with essential functions of state government.”

The Part D drug benefit program as it is currently being implemented can seriously harm Texas taxpayers over time. Promoted by the U.S. Department of Health and Human Services as saving the states money over the long-term, the practical application of the program is projected to result in net losses to Texas of approximately $100 million from 2006-2009.

“This so-called Medicare ‘clawback’ formula, whereby states are called on to fund a benefit offered by the federal government, will have some states like Texas wallowing in red ink for several years,” Attorney General Abbott added. “Washington must be fair to the states while allowing the new program to succeed to the benefit of seniors.”

Texas was joined by attorneys general from Kentucky, Maine, Missouri and New Jersey. In addition, Arizona, joined by nine other states, filed a friend-of-the-court brief supporting the lead states. The states supporting the brief are Alaska, Connecticut, Kansas, Mississippi, New Hampshire, Ohio, Oklahoma, South Carolina and Vermont.