Medicaid Under Assault

Medicaid, the health insurance program for poor people, is again under assault. Created in 1965 through Title XIX of the Social Security Act, it has been instrumental in providing low-income Americans with needed medical care for more than four decades, serving as a crucial component of the nations safety net and sustaining some of the nations most vulnerable citizens. Unlike Medicare, an entitlement program for people 65 and over which is funded entirely at the federal level, Medicaid is something of a stepchild in the federal budget. Although it too is an entitlement program, its cost is divided between the states and the federal government. The administration is now trying to shift more of the costs to the states, which are already struggling with a deeply weakened economy.

Over the past year, the Medicaid safety net has been fraying because of a series of federal regulations whose purpose is to reduce federal Medicaid spending by $15 billion over the next five years. As a consequence, important services for both adults and children are in jeopardy. Children with special needs would be especially affected. The regulations would, for example, eliminate therapeutic foster care. Through this valuable program, children with severe emotional problems are placed in private homes with specially trained foster parents. Judith Solomon, a senior fellow at the nonprofit and officially nonpartisan Center on Budget and Policy Priorities, has pointed out that therapeutic foster care has proven its worth in keeping youngsters with disorders out of psychiatric hospitalsan option that would involve far greater cost and would also jeopardize a childs chances for later being able to reside in the community. Ms. Solomon noted that the U.S. surgeon general, in a 1999 report, cited this type of now-threatened program as an example of a best practice.


Other regulations would remove Medicaid coverage for day habilitation. This type of program makes it possible for people with developmental disabilities, like retardation, to live in community-based settings rather than institutions. In the former they receive the kind of personalized assistance that maximizes their potential. Cuts in case management funds represent yet another area that the regulations would adversely affectreducing the amount of time case managers can spend assisting people in need of housing and specialized services in preparation for semi-independent living in the community. The current policy allows 180 days for a caseworker to make the necessary arrangements, but under the new rules, the time frame would be reduced to 60 days. By limiting the amount of time caseworkers can work with the individual, Ms. Solomon noted, the outcome may be less successful. A similar rule would deny federal reimbursement for case management carried out by child welfare workers acting on behalf of children in foster care.

Further shortsightedness can be seen in the elimination of federal matching funds for programs aimed at parents who may be unaware of benefits for which their children could be eligible. The regulations would mandate that funds for these purposes be restricted if the assistance would be provided by school personnel. And yet the U.S. Department of Health and Human Services has itself pointed out that school settings offer the best link for enrolling low-income youngsters in coverage for which they are eligible.

Another area affected would be Medicaid funds to cover some of the costs of graduate medical education for physicians, interns and residents in public hospitals. The administration claims that such uses lie outside the scope of Medicaids purpose. In fact, payments for medical education have been authorized since the very inception of Medicaid, with both Democratic and Republican administrations supportive of this use of funds.

Not only health care advocates, but also the nations governors of both parties deplored the proposed regulations at their February meeting in Washington, D.C. They predicted that shifting billions in costs to the states could force many states to cut back services to some of their poorest residents, thereby leaving still more low-income women, men and children without needed medical insurance at a time when a recession seems all but inevitable. Congress has at least imposed a moratorium on the implementation of some of the regulations until late spring. Instead of moratoriums, the better action would be to eliminate these regulations entirely. Ironically, they come at a time when the president is trying to make permanent his tax cuts for the richest Americansa sad contrast between what the poor and the rich can expect from the present administration, expecially as an ill-advised war continues to cost the nation an estimated $10 billion a month. Congress should act while there is still time.
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11 years ago
State Medicaid programs across the country are in perennial financial crisis. Members of Congress and state legislators have come to realize that runaway Medicaid spending is unsustainable and presents a very real threat to other budget priorities such as education, highways and law enforcement. But these same leaders have too little appreciation of what is wrong with Medicaid and how to fix it. The root cause of Medicaid's problems is that the program is replete with perverse incentives from top to bottom. Every entity and individual from the federal government, through state capitals, providers, all the way down to the patient not only has no interest in providing and consuming care efficiently, most are actually rewarded financially for doing so inefficiently. Until federal and state legislators grasp this, Medicaid costs will continue to spiral out of control. Ironically, despite these massive and ever higher outlays, access to care for Medicaid patients continues to decline. Medicaid pays for health care for the poor in America -- currently for as many as 59 million people to the tune of $330 billion -- and is funded jointly by the federal and state governments. The Medicaid program primarily serves three groups of beneficiaries. Women and children comprise about 73 percent of enrollees but utilize just 27 percent of the Medicaid funding. The elderly and people with disabilities are the other two major groups that comprise just 27 percent of the Medicaid population, though the cost of their care consumes about 70 percent of Medicaid spending. In fact, almost 70 percent of nursing home beds are now Medicaid-financed, and State and Federal governments pay roughly 60 percent of all long-term care costs nationally. Why don't people worry about Long-term Care until they're in crisis? The answer to that question is simple: "Medicaid and Medicare have paid for most expensive LTC in the U.S.A. since 1965 so the vast majority of people don't think about LTC until they need it." The country is slipping toward recession. State and federal budgets are stressed. Medicaid, especially its LTC component, threatens to sink the foundering fiscal ship. More public spending on long-term care is less likely than ever. Cutbacks in Medicaid eligibility and benefits are far more likely. Medicaid estate recovery efforts will increase. Access to and quality of Medicaid-financed LTC, whether in nursing homes or home and community-based settings, will surely decline. More citizens who failed to plan for LTC will be caught in the Medicaid trap. Their adult children and heirs, previously indemnified against LTC costs by easy Medicaid eligibility rules and opportunistic Medicaid planners, will lose inheritances. Someday, folks will recognize their LTC will someday have to be paid for out of pocket. So, at long last they'll turn to private financial planning tools like insurance and reverse mortgages. Those markets will thrive, and in time, thanks to market competition and extra private financing, LTC service delivery will improve. Thus will come the calm after the storm.


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