Here is what state Medicaid directors would like to see

Like many states, Vermont has been "disappointed" with the support of the current federal administration for its health care reform efforts, says Susan W. Besio, PhD, director of health care reform for the Vermont Agency of Administration. Dr. Besio also is newly appointed as the state's Medicaid director.

"Specifically, given the flexibility promised in our 1115 Global Commitment Medicaid Waiver, we had expected that CMS [Centers for Medicare & Medicaid Services] would support federal participation in our new premium assistance program for adults up to 300% of the federal poverty level [FPL]," she says. However, CMS only agreed to participate up to 200% FPL, leaving the state to provide full support for the remaining premium assistance enrollees. Given the current economic situation, this puts the state-only funded premium assistance program for people between 200% and 300% FPL in jeopardy.

President-elect Obama's health care reform plan is very similar to the health care reform efforts being undertaken by Vermont, according to Dr. Besio. "Depending on the national economic environment, we are hopeful that his policies will enable more support for our reform efforts," she says.

Dr. Besio says she also is hopeful that the Obama administration will look to Vermont for examples of progressive health care reform initiatives, such as its Blueprint for Health program that integrates prevention, chronic care management, and payment reform to better support primary care and achieve better public health outcomes, and its focus on health information technology to improve quality of care and control health care costs.

Tom Dehner, state Medicaid director of Massachusetts, also is hopeful that some elements of the state's health care reform initiatives will serve as a model for federal reform. "We look forward to being helpful in that process however we can," he says.

Mr. Dehner says Massachusetts enjoys a "strong and productive" partnership with the U.S. Department of Health and Human Services and CMS in administering the state's Medicaid and waiver demonstration programs and other initiatives.

In particular, Mr. Dehner and Massachusetts Secretary of Health and Human Services (HHS) JudyAnn Bigby, MD, are in the process of finalizing an agreement in principle with CMS and HHS officials to renew the Massachusetts demonstration waiver for an additional three years. "The agreement will allow our successful health reform programs to continue at current eligibility and benefit levels," he reports.

With a strong waiver agreement in place for the next three years, Mr. Dehner says he doesn't anticipate the change in administration to have a significant, immediate effect on Massachusetts' programs.

A new approach is expected

According to Trish Riley, director of the Governor's Office of Health Policy and Finance in Augusta, ME, while the policy of the Bush administration was not always supportive of what the state wanted to do, she always found the staff at CMS to be of the "highest professional caliber and very good to work with."

However, Ms. Riley says the Bush administration has tended to support state flexibility in ways that seek to reduce benefits, pass more costs on to beneficiaries who are least able to afford them, and support block grants for Medicaid, which is "an abrogation of an important entitlement to health care."

"Through regulations, they have proposed dramatic changes in what Medicaid has historically funded," she says. "The question of what Medicaid should fund-and how-is legitimate, of course. But the relationship has been more top-down and ideologically driven than negotiated with the states, from my vantage point. States that share the administration's ideology may take a different view."

Ms. Riley says she expects a different approach from the Obama administration. She says she hopes to see a national reform agenda. But even if the determination is made to continue state experimentation, she anticipates the Obama administration will "use a clear set of guidelines and allow states to have flexibility against clear expectations and with clear accountability."

"And I would expect those experiments to be across the ideological spectrum, as long as beneficiaries are fully protected," says Ms. Riley. "The challenge of how much can be achieved in the current economic crisis is very real, however."

Particularly in light of the current economic crisis, Ms. Riley says she is looking for the Obama administration to take a system approach to reform and begin to address inefficiencies in the system.

"Medicaid operates within the broader health care environment, and as such, needs to be considered in that context. The U.S. spends twice what other nations spend, yet we don't cover everybody and don't get better health outcomes or quality. We do more, have more, use more, and spend more but get less for the investment," says Ms. Riley.

Better coordination of Medicare and Medicaid, as huge payers, can help drive system reform and streamlining with consistent billing, rates, and quality metrics, she says.

"Specifically, I hope the administration will address a fundamental issue in Medicaid," says Ms. Riley. "As we have de-linked welfare from health care eligibility, many people on Medicaid work and have access to coverage in the workplace but cannot afford it."

It needs to be determined, she says: Who is responsible for their coverage? This may mean requiring employer dollars to be pooled to help fund Medicaid, or redesigning the premium assistance program to assure the resources of employer contributions and federal Medicaid funding are combined.

"All of those issues would help advance Maine's health reform, that is designed to make affordable, quality coverage available to all," says Ms. Riley. "The key issue is affordability of comprehensive coverage in an environment where, absent cost constraint, employers are shifting more costs to employees. That is creating a growing pool of seriously underinsured people. If you have cancer, it doesn't do much good to have $1,500 of coverage for chemotherapy that costs far, far more, unless you have a high-enough income to self-insure that risk."

For cuts, everything's on the table

Carol Steckel , MPH, commissioner of the Alabama Medicaid Agency, says Alabama has a "bare-bones" program, and the only optional eligible group covered is nursing home residents. Those individuals are eligible up to 300% of the FPL; but if this were cut to 100%, they would get a Miller Trust, and Medicaid still would cover them. Since new administrative staff members would have to be added in this case, the state wouldn't see any savings if their eligibility were reduced.

Ms. Steckel says she hasn't come up with any definitive recommendations for the governor yet, but that "there won't be anything off the table" when it comes to balancing the budget. "We have a few benefits for adults we could cut. We're in a position where we are going to have to look at absolutely everything," she says. "The problem is, during the previous downturn, we took all the easy cuts. So now the cuts that have to be made are much more difficult."

Ms. Steckel says if the new administration wants to make something happen that is efficient and focused on quality, it should look at what the states are doing. "If you want to see true health care innovation, it's been going on in the states."

Contact Dr. Besio at (802) 828-1354 or, Ms. Riley at (207) 624-7442 or, and Ms. Steckel at (334) 242-5600 or