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Medicaid News
States
May Face Showdown With Feds Over Cutting Medicaid Rolls, Many Seniors
Elderly and
disabled account for majority of Medicaid spending
good chunk used for
long term care; Medicare has cost-cutting suggestions
By
Marilyn Werber Serafini
and
Julie Appleby, KHN
Staff Writers
 Jan. 31, 2011
- Financially strapped governors, Congress and the Obama administration
could be headed for a showdown over the Medicaid health care program
that covers 48 million poor, disabled and elderly people nationwide.
Arizona's
governor has already asked for permission to drop people from the joint
federal-state program, which states say is eating up huge portions of
their budgets. But to do so, they need the green light either from
Congress or the Obama administration.
If they don't
get one? States warn they may need to slash payments to doctors and
hospitals and make deep cuts in other programs such as education. They
could even thumb their nose at the law and cut eligibility, which would
force the Obama administration to decide whether to cut all federal
Medicaid funding to those states.
The new
health care law requires states to maintain their Medicaid eligibility
levels for adults until 2014, when much of the law kicks in. In the
meantime, federal funds that helped most states maintain their Medicaid
programs part of the 2009 stimulus package --comes to an end in June,
even as enrollment remains at an all-time high while the nation
struggles to recover from the recession.
Republicans
in the House generally want to allow states more leeway, but their only
hope is to get some members of the Democratic-controlled Senate on
board.
Sen. Max
Baucus, D-Mont., who chairs the Senate Finance Committee, said in an
interview he is aware that states are under pressure to cut eligibility
and that he will "look at" options. Still, he said, any such effort
should "find a way to maintain as much coverage as we can."
He and other
Democrats, including Iowa Sen. Tom Harkin, chairman of the Health,
Education, Labor and Pensions Committee, and House Minority Leader Nancy
Pelosi of California, said they would like to extend the expiring
Medicaid aid until 2014.
The odds are
against making such a move. Republicans have complained bitterly about
the stimulus funding. Now that they control the House, theyre stressing
the need to narrow the ballooning federal budget deficit.
Arizona,
which says its Medicaid spending has gone from 17 percent of its general
fund in 2007 to nearly 30 percent this year, recently asked the
administration for permission to drop coverage for 280,000 Medicaid
recipients. The state argues it's already more generous than most states
it's one of only 7 states that cover childless adults -- and says
Medicaid costs are jeopardizing other priorities.
Other states
also are likely to seek waivers. "The states are reaching a crisis point
fiscally," said Dan Mendelson, CEO of Avalere Health, a consulting firm.
Still, allowing states to drop coverage "runs directly counter to the
goals" of the Obama administration, he said, adding that it would lead
to "an erosion of coverage before the next (presidential) election."
Earlier this
month, the National Governors Association and the Republican Governors
Association urged congressional leaders to let them downsize their
programs. Matt Salo, director of the Health and Human Services Committee
at the NGA, said that some governors staff members are warning
congressional offices that, unless they get help, they might have to
ignore the law and change their eligibility rules anyway.
If that
occurred, the federal government would have to decide whether to stop
sending Medicaid money to those states. Even without the extra stimulus
aid, the federal government, on average pays 57 percent of the cost of
the joint program; in some states it is as much as 75 percent.
The health
law and the stimulus program both require states to maintain
eligibility, just as do other agreements between the states and Congress
where matching federal funds are involved. Without such rules, there
"isnt a mechanism that the states will use funding the way it is
intended by Congress," says Mendelson.
"States have
taken a lot of federal money over the past couple of years with strings
attached and these are the strings."
Under the
law, Medicaid will expand sharply in 2014 when 16 million more people
are expected to become eligible for the program. The federal government
will pick up the full tab for the newcomers for the first three years.
By 2020, the federal share ratchets down to 90 percent.
When asked
whether he would support loosening the eligibility rules for states,
Donald Berwick, the administrator for the federal Centers for Medicare
and Medicaid Services, said that he was sensitive to the states
situation. His solutions, however, were to point states to funding that
he said is already available to them, such as subsidies to establish
insurance exchanges.
Moreover, he
added, his agency plans to make recommendations to states on ways to
lower costs by improving care. One example is reducing hospital
admissions, said Cindy Mann, director of the federal Center for Medicaid
and State Operations.
Democrats in
Congress have additional ideas, but most have little chance of moving
forward because they go against Republican priorities of reducing
federal spending and control.
Harkin, for
example, said he also plans to look into an idea that has surfaced in
the past to turn Medicaid over entirely to the federal government.
"Maybe the federal government should take over the whole thing, and in
exchange states would do other things," he said.
Mendelson
points to another past proposal for the federal government to pick up
the nursing home costs for Medicaid enrollees who are also eligible for
Medicare, the federal health program for the elderly.
The elderly
and disabled account for the majority of Medicaid spending, with a good
chunk of that being used for long term care. Medicaid payments represent
40 percent of all nursing home spending, according to the Kaiser
Commission on Medicaid and the Uninsured. (KHN and the Kaiser Commission
on Medicaid and the Uninsured are both part of the Kaiser Family
Foundation.)
While AARP's
state policy director JoAnn Lamphere says the idea is "intriguing," it
is "a long term policy discussion that not going to save the states
right now."
|
 This
information was reprinted from
kaiserhealthnews.org with permission from the Henry J.
Kaiser Family Foundation. You can view the entire Kaiser
Daily Health Policy Report, search the archives and sign up
for email delivery. © Henry J. Kaiser Family Foundation. All
rights reserved. |
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