President Bush today spoke to the nation's governors, saying that he would work with them to reduce the costs of Medicaid, which has been increasingly straining state budgets. From the Post this afternoon:

Before the White House meeting, governors said they opposed Bush's proposal to cut some $40 billion from the system. They also wanted the ability to experiment in order to lower costs. Many were encouraged by parts of the administration's budget proposal that would give states more flexibility.

"We want Medicaid to work," Bush told the governors before a brief, private question-and-answer session. "The system needs to be reformed and we want to work with governors."

But the one detail Bush emphasized was his plan to cut federal dollars in an effort to stop state Medicaid accounting practices that the administration contends cheats taxpayers.

Many state leaders say the money derived this way is essential. Federal officials say it artificially inflates health care prices to bring in more federal cash, which states sometimes use for other purposes.

Restraining the growth of Medicaid payments is a big issue for states, who have seen the program begin to take up over 20% of their budget each year.