State's Medicaid Deal Could Put Psychiatric Services at Risk

An ever-increasing Medicaid burden coupled with a decreasing ability to meet that demand has led Vermont to conclude a first-of-its-kind deal to revamp the funding relationship between the state and the federal government.

Gov. James Douglas (R) led the development of the Global Commitment to Health program, under which Vermont accepted a five-year cap on federal Medicaid funding and gained unprecedented flexibility to manage the program and control its escalating costs. The cap approach presets spending on a state Medicaid plan for the first time and allows the state to retain the funds it does not spend, according to Judith Solomon, a senior fellow at the Center on Budget and Policy Priorities. The center is a nonprofit organization that analyzes federal budget priorities, with emphasis on their impact on low-income Americans.

The deal specifies that the state may make eligibility requirements more stringent or reduce benefits; the only exclusion affects beneficiaries for whom the federal government mandates coverage, such as children from low-income families.

The new program went into effect in early October, at the start of the federal fiscal year. Initially, no changes were made to eligibility criteria or benefits. The earliest that changes can be considered is January 2006, when the governor begins work on a new budget; any proposed changes would have to be approved by the legislature, which is controlled by Democrats.

“We are clearly concerned about the implications of Vermont's new Medicaid plan,” said David Fassler, M.D., the legislative representative of the Vermont Psychiatric Association (VPA) and an APA trustee-at-large.“ While we appreciate the very real financial pressures and considerations, we worry about losing the safety net for children and adults with psychiatric illnesses.

“Although the proposal has received preliminary legislative approval, many of the actual details of critical importance to physicians and patients have yet to be developed or publicly discussed. The VPA will monitor the process closely and work with the state medical society and the mental health advocacy community to ensure ongoing access to appropriate psychiatric treatment.”

The new program will cap federal and state Medicaid spending in Vermont at $4.7 billion over the next five years, of which the federal government will pay 60 percent.

Douglas estimated that the five-year spending will be near $4.2 billion, but Vermont will have to pay the difference if it exceeds $4.7 billion. Previous estimates projected that an unchanged Medicaid program would cost the state and federal government $6 billion over the next five years.

The state estimates that it will save between $135 million and $165 million over the five years, but that is not enough to make up for Vermont's projected shortfall in covering its Medicaid costs, estimated to remain at $300 million within that time.

Vermont's program currently covers about 25 percent of all state residents.

States across the country, along with the Bush administration and the president's Medicaid Commission, are expected to monitor closely the results of the Vermont program to see whether it can serve as a model for programs in other states. Other states considering a major overhaul of their Medicaid programs include Montana, California, Missouri, and Ohio.

Vermont was one of the first states to expand access to Medicaid beyond the poor to include middle-class families that met certain criteria. Part of the intent behind the expansion was to give more children access to health care.

Illinois Proposes Subsidy for Children

In Illinois, Gov. Rod Blagojevich (D) proposed a plan to provide subsidized health insurance for 253,000 uninsured children in the state, including many in families with incomes too high to qualify for government assistance but too low to afford private health coverage. The Illinois legislature is expected to consider the governor's proposal during its fall veto session.

The All Kids plan would have parents pay monthly income-based premiums that in most cases would cost less than private insurance. Copayments would apply for doctor visits, hospital stays, and prescription drugs. No copayments would be charged for preventive care, such as immunizations and regular checkups. The plan would have no deductible. For a family of four with an income between $40,000 and $59,999, expenses would be capped at $500 annually. That same family would pay a $40 monthly premium per child, capped at $80. Doctor visits would cost $10; emergency room visits, $30; prescription drugs, 5 percent of retail cost; inpatient hospital stays, $100; and outpatient hospital services, 5 percent of cost. Eligibility would be limited to children who have been uninsured for six months prior to the initial enrollment period.

State officials say All Kids will extend health benefits to 125,000 children who are ineligible for KidCare, the state's SCHIP program. An additional 125,000 children are eligible for KidCare but are not registered in the program, and officials hope the publicity about the All Kids benefit will help them identify eligible families.

Tennessee Helps Underserved Areas

Tennessee awarded $5.7 million in grants to 60 health centers in medically underserved areas, Gov. Phil Bredesen (D) announced last month. The centers are part of a $104 million network of programs to provide services to uninsured state residents and ease the transition for about 190,000 people who will lose coverage under an ongoing reduction in the size of TennCare, the state's Medicaid program. The centers are required to provide care on a sliding-fee scale for adults aged 19 and older.

New Jersey Reaches Out to Latinos

Latinos seeking mental health care in New Jersey face a range of obstacles, according to the report of the Hispanic Directors Association of New Jersey. The report, prepared by a panel of 15 New Jersey mental health experts and released last month, said that stigma, language barriers, cultural insensitivity, and other issues make it difficult for Latinos to obtain care.

Among the panel's recommendations to improve the mental health system are creation of a task force to report on whether changes to the system would help it to better serve Latinos and foster the appointment of qualified Latinos at all levels of New Jersey's mental health system. The panel also requested increased funding for educating Latinos on mental health issues and for the delivery of outpatient services in Spanish.

Panel members urged that New Jersey mental health screening centers have at least one bilingual mental health screener on call, increase the detail of data collected on services targeted at racial and ethnic minorities, and support mental health training programs on cultural diversity for law-enforcement officials and judges. ▪