Medicaid Needs More Than A Short-term Fix

Health reform may be stalled in Congress, but you need only look to the overburdened Medicaid program to find evidence of the continued toll the current economic crisis is taking on Americans’ ability to afford and access medical care.

At the same time that states are experiencing huge budget deficits, more and more of their residents are unemployed; more and more are joining the ranks of the uninsured and clamoring for Medicaid benefits. The result: Even with emergency federal infusions of funding, state safety nets are being stretched dangerously thin.

On December 1, for example, Tennessee closed enrollment in CoverKids, the state program that provides health coverage to uninsured lower-income children. Despite Governor’s Phil Bredesen’s promise in 2006 to provide health benefits for “every kid in Tennessee,” this year coverage is frozen at 49,000 children; leaving Tennessee's other 150,000 uninsured kids without benefits.

According to Michele Johnson, an attorney with the Tennessee Justice Center, “Tennessee is the last state in the nation that can afford to neglect the health of its children. Infant mortality in Tennessee is worse than in many developing countries, and the rate of infant deaths in Memphis is the worst of any city in America…A state this unhealthy for kids should be striving hard to improve children's health coverage. Instead, Tennessee has just become an island of neglect, in terms of the health of its children.”

Tennessee is not alone in limiting health coverage for some of its most vulnerable citizens. In Arizona, Governor Jan Brewer, struggling with a $1.4 billion deficit this fiscal year (and a projected shortfall of $3.2 billion in fiscal 2011), ordered the state to stop enrolling children in KidsCare, that state’s CHIP program that provides coverage for 47,000 children. Brewer has also introduced a ballot measure that would roll back a 10-year-old expansion of Arizona’s Medicaid program, resulting in 310,500—more than 4 percent of all Arizonans—losing their coverage.

Meanwhile, Medicaid in Arizona has seen enrollment increase 18 percent from a year ago, while facing the prospect of more than $200 million in cuts for the next fiscal year.

A report conducted by Families USA found that under the current economic climate, more than 1 million people are at risk of completely losing health coverage in Medicaid and CHIP because of cuts that have been enacted or are under consideration in just eight states—including Arizona, California and Florida. Some 39 states are planning to cut or freeze provider reimbursement rates in 2010 and 15 states have announced benefit cuts and increased cost-sharing; actions that ultimately reduce access to care. According to Kathleen Sebelius, Health and Human Services Secretary, “Every state in the country is looking at a huge gap."

According to the National Association of State Medicaid Directors, states will face a $140 billion budget shortfall in FY 2011. Meanwhile, the group also found that total Medicaid spending increased by an average of 7.9% in 2009 as more people became eligible for coverage.

This year, an infusion of $87 billion from the federal government’s American Recovery and Reinvestment Act prevented some of the most draconian cuts in state Medicaid programs. This funding is scheduled to expire at various points this year and early in 2011, but the White House announced today that President Obama’s budget will include a $25 billion extension of the Medicaid funding program—giving the states another six months to help keep their programs solvent.

That’s good news for the short term. This emergency life-line for Medicaid faces little opposition, even from states like Arkansas, North Carolina and Utah whose legislators fought hard against the program’s expansion under health care reform. (Ironically, those same states—with highest numbers of uninsured and lowest projected cost of Medicaid expansion—stand to gain the most from reform.)

According to the Wall Street Journal , “Some states were so confident Congress would pass a health bill that they included the extra Medicaid funds in their state budgets.” Without this stop-gap measure, they’d be scrambling to find ways to make up for the shortfall.

 “California Gov. Arnold Schwarzenegger called the health bill a ‘trough of bribes, deals and loopholes’ in his Jan. 6 State of the State address. Two days later, he included a $1.2 billion increase in federal funding for the state's version of Medicaid, called Medi-Cal, in his budget proposal for the 2010-11 fiscal year. That figure was based on funding in the House bill.”

Faced with a glum economic outlook, states of both the red and blue variety increasingly see bolstering Medicaid as an important issue. With the nation’s unemployment rate at 10%, more Americans have lost their employer-provided insurance coverage. As insurance premiums continue to increase, more small businesses will drop coverage for their employees. These newly jobless, along with people who have pre-existing medical conditions, the chronically ill, and of course, old people who have maxed out their savings paying for long-term care, will desperately need coverage. In the absence of health reform, their only option is to apply for existing Medicaid benefits.

Of course, the House and Senate versions of health care reform would do far more to help permanently shore up Medicaid finances, as well as expand coverage to 15 million of the nation’s uninsured—including childless adults who aren’t eligible for benefits in most states. Under the House bill, individuals with incomes up to 150 percent of the federal poverty level, or $16,245, would be eligible for Medicaid. Under the Senate bill, eligibility would reach 133 percent of poverty, or $14,404 for individuals.

Medicaid expansion is an important feature of health care reform—despite the need to rejigger some financing mechanisms to be fairer to states like New York that already provide generous benefits to residents. (And we need to get rid of the Nebraska pay-off that secured Senator Ben Nelson’s vote on the Senate bill.)

Depending on short-term financial fixes is only a stop-gap measure. Without reform, Medicaid will remain a deeply inequitable and financially unstable program. In past years, for example, individual states have responded to budget concerns by increasing cost-sharing fees, instituting more frequent re-enrollment procedures or requiring new identification documents—all with the ultimate goal of reducing their Medicaid rolls. States vary significantly in how much their Medicaid programs pay providers and in optional benefits like dental care, mental health services and smoking cessation programs.

These inequities are harshest in coverage of low-income parents. Some 34 states limit Medicaid eligibility to less than 100% of poverty; and 17 of these states limit eligibility to less than 50% of poverty. More than half of all states do not provide coverage for childless adults, no matter their income levels. Of the states that do, most provide coverage that is far more limited than standard Medicaid benefits.

For working parents, the inequities are equally stark, according to the New York Times:

“Existing Medicaid coverage varies widely. Arkansas, for example, extends Medicaid to working parents who earn up to 17 percent of the federal poverty level, and Alabama offers coverage for those making up to 24 percent of that level. Minnesota covers working parents making up to 215 percent of the federal poverty level, and New York, up to 150 percent. New York also covers childless adults up to 65 making up to 100 percent of the federa
l poverty level.”

In the end, the $25 billion that the administration wants to provide for Medicaid will help staunch the bleeding in state programs for a short while. But as Jocelyn Guyer, co-director of Georgetown University’s Center for Children and Families writes on her center’s blog,  “If reform fails, we not only lose a valuable chance to stabilize and strengthen these programs, but face the prospect of states cutting back on Medicaid when fiscal relief runs out at the end of this year. We could see more states try to solve their state fiscal problems, in part, by putting uninsured children on waiting lists for coverage, as already has occurred in Tennessee and Arizona.”

This short-term fix, although welcome, does not make for intelligent health policy. It might prevent some vulnerable Americans from losing their benefits today. But it won’t make a dent in covering the 46 million Americans who continue to remain uninsured. And it is certainly no substitute for comprehensive health reform.


13 thoughts on “Medicaid Needs More Than A Short-term Fix

  1. If health care reform was what Ezekiel Emanuel described in his book Healthcare Guaranteed, Medicaid and its financial problems would go away. Every citizen would get a health care voucher regardless of income, so no filling out forms to ensure qualification and no more financial burden on the states. Emanuel’s plan is still the best reform plan I have seen.

  2. Hi Maggie:
    It is apparent the state and federal pols see no problem in balancing the budget on the backs of the poor, the elderly, and the young. At the same time the cost of healthcare administered in the emergency room is far more expensive than at a doctor’s office. Time to change the parqadigm, dontcha think???

  3. With the Medicaid related comments and financial related comments, I must interject that Medicaid has been an awful program in many respects for a long time. If all the program does is pay for care at rates that the private sector rejects, then access to some care becomes problematic. Only about 20-30 % of kids on Medicaid have been able to find dentists willing to treat them, and this situation has been going on socially unchallenged for the most part for the 45 year history of the program!
    Indeed, healthcare reform that has no power over the number and types of providers or who they must see and what they must do will likely not result in anything better over time!

  4. This is a great post about a sticky subject. Personally I find it to be disheartening to hear about the lack of funding for healthcare for our most vulnerable citizens. They are the people that tax the system the most when things go really, really wrong. It’s preventative medicine that will save us from the emergency room, and we have to have access to affordable healthcare to get it.

  5. One measure I’d like to see, that would not be too terribly expensive or controversial, would be a vigorous expansion of Federally Qualified Health Centers (FQHCs).
    I’ve often said our present health care system combines the worst of public and private models. FQHCs, by contrast, have often proved to be the best of both worlds.
    An FQHC is a private not for profit entity (although often affiliated with a for profit health system). By meeting certain targets for quality and access to care, FQHCs can qualify for grants and preferential Medicare/aid reimbursement. FQHCs are often located in communities where health care would otherwise be unavailable or unaffordable.
    Everywhere the FQHC model has been tried, they expand access to affordable care and save Medicaid programs substantial money. They really are a case of getting a lot of bang for the taxpayer buck.

  6. I do agree with Alath that FQHCs can help. I sit on the Board of one in my county, and it truly helps Medicaid access and helps the uninsured with sliding scales. These FQHC are reimbursed by Medicaid (not Medicare) at a higher cost based reimbursement level than private sector practices, although why that happens is hard to figure out. Not the higher level for FQHC, but the lack of higher levels for the private practices in the program.
    The one likely problem with this FQHC approach (or any non-system integrated approach) rests with referral care to specialists in some areas who may not take Medicaid. Then what??

  7. FQHC are critically important to providing care to our uninsured and publicly insured patients. However, we won’t be able to keep the doors open with fewer and fewer physicians entering primary care.

  8. Grant, I totally agree. Even though Obama hired Zeke Emanuel as advisor to OMB, he immediately rejected his plan in favor of incremental change. Understandable, politically. People with employer provided insurance would surely balk at anything that looked like a preventable change in their personal coverage.

  9. The people you are describing unfortunately tend to have lower rates of registered voters, among the % pct of voter participation including almost no presence in many important party primary elections, and weak/poorly organized constituencies.

  10. I live in TN and was appalled when I heard this in Gov. Bredesons’s State of the State address. TN has had a long history of problems providing these kind of benefits. Further cuts/freezes in CoverKids equals a tougher future for TN children and more challenges for TN students.

  11. Much more than a short-term fix is needed, especially as we look down the road not just to the Baby Bommers turning 65 but to them aging into their 80s and 90s.
    We should be encouraging long-term thinking and creativity, not just looking for ways to cut or to continue to fund more of the same. Illinois recognized a number of years ago that it was paying for a lot of people on Medicaid to be in nursing homes who really didn’t need nursing home care. So the state established an innovative program called Supportive Living. It provides a lower cost alternative to living into a nursing home for older adults who lack the financial resources to afford assisted living but need some help to maintain their independence. Last year, some 6,000 individuals on Medicaid from the program. The State saved money as its costs the state at least 40% less for a person to be in Supportive Living than in a nursing home. The older adult benefits from being able to live in a highly residential environment where they can get the personal assistance and help with medications they need plus benefit from plenty of opportunities for socialization.