States Get OK To Cut Physician Compensation Under Medicaid

To be followed by a mysterious shortage of doctors

WASHINGTON — 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 will soon 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 as 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 may encourage wavering Republican governors to go along with the expansion because it gives them a tool to help control costs.