Small Steps Could Be Key To Reforming Medicaid

Governors are advocating the power of “common-sense principles” to maintain the viability of the Medicaid program.

Matt Salo, director of the Health and Human Services Committee of the National Governors Association, told attendees at a meeting on prospects for Medicaid reform, “I want to reassure people that.. .we do not have a Medicaid reform agenda, or proposal, or clandestine work group trying to figure out how best to deal with Medicaid.”

He pointed out that for about 10 years, “every year, every other year, states [were] looking at some kind of grandiose design for Medicaid reform....”

America's Health Insurance Plans, a national trade association for insurance companies, sponsored the October 21 meeting.

Salo went on to describe key issues and emerging problems for the program. A primary problem for state budgets is “dual eligibles,” people who are eligible for both Medicare and Medicaid benefits. Although the group is only about “6 to 7 million people out of the universe of 50 million in Medicaid,” about 42 percent of the Medicaid budget is directed to them. The population is composed of “low-income, frail seniors and some adults with disabilities.”

The biggest issue, according to Salo, is a “very hidden one.” Medicaid has become the de facto payment system for long-term care. About 70 percent of people in nursing homes receive care financed by Medicaid at some point. The problem will get “worse and worse and worse,” as the baby boomers age, he said.

Salo spoke in favor of state-based health care demonstrations because of the difficulties of large-scale reform at the federal level.

He listed items including improving patient safety in hospitals and increasing use of technology such as electronic prescribing and medical records.

Amy Hall, minority staff member of the House of Representatives' Committee on Energy and Commerce, argued in favor of legislation that would increase the federal contribution to Medicaid during economic downturns. Currently, when states' budgets are tight, they are also faced with an increase in the number of people eligible for Medicaid.

Hall pointed out that President George W. Bush twice had proposed turning Medicaid into a block-grant program and likely would return to the idea (Psychiatric News, September 5, 2003).

She also said there will be increased emphasis on cutting “fraud and abuse” from the program, but that there are unrealistic assumptions about how much money can be saved.

Hall and Salo both mentioned that the federal government is challenging various financing mechanisms used by states to reach their match for funds.

Salo charged, “What they are doing right now is going into states and just denying completely unrelated waivers,... state plans, state plan amendments, state plan renewals, until they can find a way to change the way they're financing the program.”

Rep. Heather Wilson (R-N.M.) chairs the House Committee on Energy and Commerce's Task Force on Medicaid Reform. She described her perception of problems with the Medicaid program to American Medical News reporter Joel B. Finkelstein and was quoted in the July 19 issue.

Wilson said the financing mechanism is a “joint state-federal operation that results in these Rube Goldberg schemes for states to shuffle money around and draw down more federal dollars.”

She also said that the program was “not set up to improve anyone's health,” but is instead an insurance-claims payment system.

Wilson expressed concern about the program's lack of flexibility and acknowledged that reimbursement rates have limited access to physicians.

She said, “We're going to try to move toward a comprehensive Medicaid reform bill.... The big problems with Medicaid are just that—big problems—and so we have to come up with comprehensive solutions and at least get them on the table.”

Changes to Medicaid could have serious consequences for mental health, according to Michael Hogan, Ph.D., director of the Ohio Department of Mental Health and chair of President Bush's New Freedom Commission on Mental Health.

He told Psychiatric News, “Medicaid has become the leading single payer of treatment for adults and children with serious mental illness.”

Hogan cautioned, “Mental health considerations must be explicitly and carefully considered in Medicaid reform or there will be problems. There is a very uneven history at best of weighing mental health needs in the Medicaid program at the national and state levels.”

“Prospects for Medicaid Reform” is posted at<www.kaisernetwork.org/health_cast/uploaded_files/102104_ahip_prospects_transcript.pdf>.▪