Bush to Revisit Changes in Medicaid Rules
By ROBERT PEAR

WASHINGTON, Feb. 22 — After strenuous protests from governors of both parties, the Bush administration said Sunday that it would reconsider tough new rules on the financing of Medicaid that could limit the states' ability to provide health care for millions of poor people.

Tommy G. Thompson, the secretary of health and human services, conveyed the administration's decision to governors here for the winter meeting of the National Governors Association.

Though formal sessions of the association focused on issues that cut across party lines, like Medicaid, education and highway construction, presidential politics dominated many conversations among governors.

Democratic governors expressed alarm at the loss of jobs, especially those in manufacturing, and the growth of the federal budget deficit in the past three years, while Republicans insisted that the economy was bouncing back.

"President Bush does not appear to have an understanding of the pain caused by unemployment," said Gov. Tom Vilsack of Iowa, chairman of the Democratic Governors Association. Gov. Jennifer M. Granholm of Michigan, a Democrat, said Mr. Bush's tax cuts were not producing new jobs in her state.

Gov. Bob Taft of Ohio, chairman of the Republican Governors Association, said: "Consumer confidence is up. The stock market is up. All economic indicators are moving in the right direction." Another Republican, Gov. Mitt Romney of Massachusetts, tried to dispel the perception that his party saw the shift of service jobs from the United States to other countries as part of some global economic strategy. "We are concerned any time any job leaves our shores and goes somewhere else," Mr. Romney said.

State officials say soaring Medicaid costs have put them in a fiscal vise, as revenue collections have been stagnant in recent years.

Federal officials did not withdraw the proposed Medicaid rules but promised to consult governors and to solicit public comment for 60 days before enacting the restrictions.

The restrictions would give federal officials sweeping new power to review state decisions on Medicaid spending and the sources of revenue used by states to pay their share of Medicaid costs.

Medicaid provides health benefits to 50 million people a year and is financed jointly by the federal government and the states. But federal officials say states have used creative bookkeeping and other ploys to obtain large amounts of federal Medicaid money without paying their share.

The proposed changes have touched off an uproar among state officials. Gov. Dirk Kempthorne of Idaho, a Republican who is chairman of the National Governors Association, said the federal government was imposing "new administrative requirements and new costs on the states."