Reform Medicaid

Here’s a worthwhile primer on Texas’s Medicaid enrollment growth and the increasing percentage it makes up of Texas’ budget.

Due to federal health care reform, in 2014 all states will be required to provide Medicaid services for all citizens at or below 133 percent of FPL with Medicaid services. At present, Texas Medicaid does not cover childless adults, and has stiffer income requirements than 133 percent of FPL for some services. Exhibit 4 show current Medicaid eligibility categories as well as required changes for 2014.

Medicaid in Texas is on track to increase from 14% of the budget in 2001 to 37% in 2023. A graph is available here.

While the disagreement over the Medicaid mandate to the states was not the largest issue discussed at the Supreme Court this week, one moment during debate deserves attention – the contention by Justice Breyer that the federal government would be “unreasonable” to withdraw the entirety of Medicaid funding to a state over their unwillingness to accept the additional expansion under President Obama’s law. Attorney Paul Clement responded:

MR. CLEMENT: And if I could just add one thing just to the discussion is the point that, you know, this is not all hypothetical. I mean, in — there was a record in the district court, and there is an Exhibit 33 to our motion to summary judgment. It is not in the joint appendix. We can lodge it with the Court if you’d like.

But it’s a letter in the record in this litigation, and it’s a letter from the secretary to Arizona, when Arizona floated the idea that it would like to withdraw from the CHIP program, which is a relatively small part of the whole program.

And what Arizona was told by the secretary is that if you withdraw from the CHIP program, you risk losing $7.8 billion, the entirety of your Medicaid participation.

The letter Clement cites is Exhibit 33 here.

A group of House Republican members including Reps. Rokita, Huelskamp, Broun, and Ohio’s Jim Jordan, head of the Republican Study Committee, introduced a comprehensive Medicaid reform measure this week. An excerpt from their press statement on the bill, titled the State Health Flexibility Act:

“The status quo in Medicaid is unfair to the poor and to our children. Waste and fraud run rampant. The poor are promised care but often struggle to find a doctor. And our children will be taxed to pay off the debt incurred for programs that do not work like they should. ObamaCare makes all of these problems even worse. The State Health Flexibility Act frees the states from Washington’s one-size-fits-all dictates so they can design programs around the needs of their own citizens, yet it does not cut a single penny from current funding. We must take this opportunity to make Medicaid more affordable, more accountable, and provide better care to the people who need it most.”

The members maintain that under the State Health Flexibility Act, each state will have a far greater opportunity for innovation and experimentation under an overall cap on funding:

• Federal funding for Medicaid and CHIP will be combined into a single block grant. States may spend their own funds at whatever level they choose.
• The states will have sole authority to determine eligibility, benefits, provider reimbursement rates, and to improve the quality of care and access to vital services.
• States may use up to 30% of their federal funding to support other welfare programs, including Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), and Food Stamps if the need is greater in those areas.
• Each state may use a portion of its block grant to establish a Rainy Day Fund to prepare for potential spikes in program enrollment that might arise from periods of high unemployment or other unforeseen circumstances.
• States will no longer be forced to wait months and sometimes years negotiating waiver-requests from HHS in order to implement their own reform ideas.

Read more details at the RSC’s site.

There’s a podcast interview here with Beverly Gossage concerning Kansas Gov. Sam Brownback’s new Medicaid plan.

Kenneth Artz reports on the plan here:

Over the past ten years, Kansas’ Medicaid budget has grown about 7.5 percent year—a rate consistent with the growth in other states, but one that lawmakers say cannot be sustained. To improve outcomes and reduce costs, Gov. Sam Brownback, a Republican, has proposed a method of privatizing the system, which serves about 350,000 Kansans.

Brownback’s administration promises the plan, named “KanCare,” will achieve the savings without reducing coverage for the disabled, the elderly, or poor families, and without cutting payments to doctors, hospitals, clinics, and nursing homes.

Read the rest at The Heartlander.

In Washington state, providers are facing Medicaid cutbacks, this time on Emergency Room treatment, which continue to squeeze them and drive up costs for the private marketplace. The Wall Street Journal reports:

Washington’s legislature last spring ordered the Medicaid agency to cut spending on unnecessary ER visits, spurred by a budget shortfall then projected at $2 billion. Officials say too much routine care is given in ERs, often the most expensive setting, and that this plan would save the state $17 million a year.

Doctors and hospitals, which got an earlier version of the plan blocked on procedural grounds after suing the state, say the new effort goes too far. They say the cuts would put them in a bind because federal law requires them to screen and stabilize all patients, which may involve imaging and lab tests.

Moreover, because of ethical and liability concerns, hospitals often will have to treat some conditions the state considers nonurgent, such as urinary-tract infections, they say. The upshot, they say, is they will be forced to do unpaid work, and the costs ultimately could be shifted to private health-care payers.

“If you fall down the stairs, and your ankle is twice its normal size, and I X-ray it and it’s broken, they’ll pay me, and if I X-ray it and it’s not broken, they won’t,” said Stephen Anderson, president of the Washington chapter of the American College of Emergency Physicians.

Read the rest at the WSJ.

Maine’s Medicaid challenge is looking significant:

“If we are to bring our welfare system to a manageable level that Maine can afford,” LePage insists, “we must make the necessary structural changes. … The state can no longer use gimmicks to fill the hole.”

The size of Maine’s Medicaid shortfall is substantial, but it pales in comparison to gaps in many other states. In fact, health experts in Maine say the program has survived far bigger shortfalls in recent years without cutting the rolls. Still, LePage argues that the program can no longer provide a “free lunch” to poor 19- and 20-year olds, or to healthy adults responsible for the care of others.

Some of LePage’s proposed Medicaid cuts, such as eliminating dental care, physical therapy and chiropractic services, are not too different from ones that governors in both parties are recommending in states across the country. Neither are his proposed reductions in payments to hospitals and doctors or limits on prescription drug coverage.

But LePage also wants to get at enrollment, and this is what makes him, at the moment, the most draconian of the governors when it comes to health policy. In his January 24 state of the state speech, LePage argued that “we have encouraged people to rely on the taxpayers, rather than rely on themselves.” The cuts to enrollment, he argues, are necessary to shore up the state’s safety net so it can continue to care for its most vulnerable residents – children, elders and the disabled.

But for many of Maine’s citizens, the enrollment cuts would be life-changing.

The latest on Gov. Rick Scott’s approach to reforming Medicaid:

Based on evidence Florida’s attempt to reform Medicaid is bearing fruit for the Sunshine State, Republican Gov. Rick Scott is seeking to expand it beyond its initial test counties.

Florida passed its Medicaid Reform Pilot for five counties with bipartisan support in 2006. The program shifted health care from the government-controlled status quo toward patient-centered care, with the goals of greater choice, expanded services, ability to opt-out for private coverage, and increased patient satisfaction.

The pilot achieved greater choice and control for patients by expanding the number and types of plans offered. “Patients deserve the power to choose,” says Tarren Bragdon, president and chief executive officer of the Foundation for Government Accountability.

“With the Reform Pilot, patients can choose among [either] 2 [or] 11 plans, depending on the county. This allows them to choose the plan that best meets patients’ unique health needs,” Bragdon said.

Read this important report from Bragdon on the successes in Florida, released in November.

There’s disturbing news from a recent study of Medicaid recipients and cancer based on data from Ohio, which found several disturbing datapoints. Sarah Kliff summarizes:

“Medicaid patients had worse survival rates than the rest of the study sample, which included both those with private insurance and with no coverage at all. The disparities persisted even after the researchers controlled for where patients live, how much education they had received and the income level of their neighborhoods… What this study doesn’t delve into is why Medicaid enrollees have worse outcomes than the general population, whether it has to do with access to certain physicians, with wait times to see a specialist, or some issue completely removed from the doctor’s office.”

It’s impossible to measure exactly how much of the problems with Medicaid are due to its false promise of access to care, which delays diagnosis and treatment; but I categorically reject the assumption, implicit in much of the research, that Medicaid’s population is simply to blame for its own inability to navigate the system or seek care in a timely fashion. Reforming Medicaid starts with returning to a true safety net model, while giving people more control within a system with more transparent choices and reliable access to care.

As the gradual implementation of Obamacare continues and debate over the intelligence of socialized medicine mounts, the budgetary malaise of the current Medicaid system should be a red flag to supporters of the President’s health care plan. The current degree of governmental control over healthcare is proving calamitous for states with financial troubles, and the expanded bureaucracy that is Obamacare will only make matters worse.

The contradictions and logistical maladies manifest in government-controlled healthcare have never been more evident than in the recent series of cuts in the Pennsylvania Medicaid apparatus. Over the next nine years, $1.2 trillion in reductions will mean the elimination of care for 150,000 people (43,000 of which are children) and more than 80,000 in job losses.

The uncertain economy has meant a surge in those receiving Medicaid across the nation, but since the summer of 2011, Pennsylvania has seen a steady decline because of the Department of Public Welfare’s (DPW) efforts to cut those no longer living in state and those who are dead or otherwise ineligible for aid. Patient advocates are saying otherwise, calling the cuts “disastrous.”

The bureaucratic nightmare that the cuts have unleashed on eligible patient care could be called Orwellian, as Pennsylvania’s push to close the backlog of cases has resulted in an overload for an already understaffed DPW. Hundreds of thousands of pending cases were “reviewed” in a matter of weeks, and technical omissions that would regularly necessitate simple clarification from the patient, such as lack of information, resulted in the cancellation of thousands of cases.

But the bureaucratic incompetence doesn’t end there.

Computer programs cancel patient benefits based on little-known deadlines, and hard copies (often the only copies) of patient files are regularly lost. Additionally, Gov. Tom Corbett has reduced the number of welfare caseworkers from the previous Rendell administration by 20 percent, while between administrations the number of those receiving Medicaid has skyrocketed more than 50 percent, according to the Philadelphia Inquirer.

Eighteen percent of Pennsylvanians receive some degree of Medicaid assistance. And in 2010, approximately 27 percent of Scranton’s Community Medical Center’s $157.6 million in patient revenue came from Medicare, according to a report by the Pennsylvania Health Care Cost Containment Council, cited in the Scranton Times-Tribune. As increasing cutbacks loom, such dependence will no doubt be put to the test.

In short, these cuts aren’t merely superficial “budgetary readjustments.” Such reductions severely curtail the quality of care that many receive, as well as Pennsylvania’s fledging economy. According to a study done by Families USA in June 2011, a 5 percent cut in Pennsylvania’s Medicaid system means 12,230 jobs at risk and $1.5 billion of business activity at risk. These numbers only increase as cuts become more and more severe. A 33 percent reduction results in 80,750 jobs at risk and $9.9 billion of endangered business activity.

The man in charge of implementing many of the cuts, DPW Secretary Gary Alexander, has been praised by Gov. Corbett as having “just the kind of experience we need right now in Pennsylvania.” If the “experience” that Corbett refers to is the global waiver program that Alexander pushed through in Rhode Island, proponents of Alexander’s budgetary management should think again. Alexander’s track record reveals an unsustainable and highly political program that is anything but applicable to Pennsylvania, or indeed any other state.

According to the Center on Budget and Policy Priorities:

The Rhode Island waiver was a “sweetheart deal” [with] the Bush Administration…in which the federal government effectively unloaded additional federal money on the state and gave Rhode Island federal funds beyond what it would receive under the regular Medicaid program, in return for the state accepting a cap on its Medicaid expenditures at an inflated level that it never expected to reach anyway. Such a deal would be impossible to replicate under proposals to convert the Medicaid program to a block grant; such proposals are designed to cut federal Medicaid funding by tens or hundreds of billions of dollars, the opposite of what happened in Rhode Island.

But Alexander’ commitment to reducing waste, fraud and abuse is indeed a sorely needed sentiment in the world of healthcare policy. He’s currently seeking to limit the number of firms providing Financial Management Services (FMS) to Medicaid patients receiving home-based and community-based care from 37 firms to 3 or less like most states, according to the Beaver County Times. Such a move will help lower the overall price of services, contribute to cost savings for the state programs and make it easier to guarantee compliance with state and federal laws, according to Alexander.

And, as he and other reformers have constantly pointed out, those abusing the system are constantly being exposed and brought to justice. But a large part of the problem is the ease in which the system is taken advantage of, as well as the devastating results such cuts can have on the eligible patients trying to get the care they deserve.

Indeed, these cuts are not unique to Pennsylvania. Obamacare means more nationwide cuts, less accountability, and fewer affordable options.

Despite the cuts and the exaltation of universal healthcare, the roots of the problem, corruption, inefficiency and vulnerability, persist. The distended bureaucracy that has come to characterize too much of our government will not be sated by arbitrarily slashing budgets.

As James Capretta, a fellow in the Ethics and Economics Program at the Ethics and Public Policy Center in Washington, DC explains,

The fundamental problem in Medicaid is that the program provides strong incentives for states to push costs onto the federal budget. The [federal government] pays 57 percent [of Medicaid costs], on average, [which] seriously weakens incentives for states to police this well.

The weakness of the system is glaringly evident today, and as Obamacare takes effect, the system’s inadequacies will become more pronounced, and more of a liability. Markets, not bureaucrats and government initiatives should drive healthcare policy.

Options that create private sector competition with Medicare while maintaining a baseline of guaranteed aid, like the Wyden-Ryan Plan, promise more results than just cutting budgets.

Cutting waste, fraud and abuse should be a top priority for both state and federal budgetary review committees, but such cuts must be made with great care, keeping the patient first and foremost. While one must recognize the extraordinary difficulty in trying to work with the budget of an inherently flawed structure, Secretary Alexander’s work in Pennsylvania is decidedly shortsighted.

The cuts are a symptom of the larger syndrome of economic distress coupled with the unsustainability of the current Medicaid system. Reductions and streamlining measures like the FMS consolidation may serve to quell budgetary issues in the short term, but the only cogent long term solution lies in a complete overhaul of Medicaid itself.

Marc Kilmer reports on the latest from Oregon:

In June 2011 the Oregon legislature passed legislation that was signed into law by Democrat Gov. John Kitzhaber to create a statewide system of coordinated care organizations (CCOs) for the state’s Medicaid system. According to the Oregon Health Policy Board, “the goal of the legislation is to create a new model of health care that will improve health. The vision is also aimed at beginning to lower the high cost of care by emphasizing prevention, reducing waste, improving efficiencies and eliminating avoidable differences in quality and outcomes.”

A final plan on how these CCOs will work must be approved by the legislature in February 2012. If approved, it will go into effect in July 2012. Oregon officials estimate the change will save the state $249 million in Fiscal Year 2013.

Although details have yet to be finalized, Oregon health care officials envision coordination of care that would help manage recipients’ health through “collaborative relationships” involving preventive care, chronic disease management, and other more flexible and less fragmented approaches than the current Medicaid system.

Read the rest at The Heartlander.

Kenneth Artz reports on the latest news from Oregon, focused on the governor’s Medicaid expansion attempts:

Expanding Medicaid coverage to low-income individuals results in better reported health and greater financial well-being, but also higher costs and greater utilization of care, according to a new study by researchers from the National Bureau of Economic Research and the Oregon Health Study Group.

In early 2008 Oregon added 10,000 spots to its state Medicaid program providing health insurance for low-income adults who lack private insurance and do not qualify for Medicaid or Medicare. Program officials decided a lottery would be used to determine who would fill the new spots. Some 90,000 people signed up to participate out of roughly 600,000 Oregonians who do not have health insurance. The Oregon lottery became the first random assignment of health insurance ever done in the United States.

Proponents of President Obama’s health care law have used this study to push for universal health care coverage. But opponents say it merely illustrates that if you give people something for free, they will use more of it.

Read the rest at The Heartlander.