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States face "tsunami" of Medicaid applications
States are facing a huge increase in Medicaid applications under the Patient Protection and Affordable Care Act, with the total number of recipients projected to grow more than 40%, according to the Congressional Budget Office. "If states continue the traditional welfare office strategies for taking and processing applications, I don't know how they will be able to cope with the tsunami of applications that is headed their way," says Stan Dorn, a senior fellow at the Urban Institute in Washington, DC.
Computerizing eligibility determination would allow states to do more with fewer administrative resources. "Massachusetts dramatically changed the way they handle eligibility. It was a major sea change in how they did business," says Mr. Dorn. "They moved out of local offices to a statewide office. They shifted away from a system based on caseworker discretion to one driven by computerized logic routines."
This allowed a doubling of caseload with less than a 10% increase in staff. "The question is whether 50 states and the District of Columbia are going to be able to make a similar change between now and 2014," says Mr. Dorn.
Complicating that question is the issue of what federal resources will be available for information technology investments related to eligibility. Traditionally, enhanced federal match for computers has been limited to claims processing, while computer upgrades related to eligibility benefit only from a Medicaid 50% match.
"My hope is that federal policymakers will find a way to get states the money they need to dramatically upgrade their eligibility systems," says Mr. Dorn. "Otherwise, it might be tough for states to cope with this new flood of applications."
How much money the federal government and states will each provide is an important question to resolve, says Mr. Dorn. However, he notes that Massachusetts reported large operational savings after an up-front investment in computerized systems, since it became much cheaper to process applications.
"My impression is that states are looking at these issues of modernizing public benefit programs, including health coverage, but also other programs too," says Mr. Dorn. "There is a lot of pressure on states to do more with less. Local social services offices have been overwhelmed during this economic downturn; lots of states have been looking at new ways of doing business."
This includes streamlining eligibility determination for a range of public benefits programs. "I think many states are much farther along on this than was the case a few years ago," says Mr. Dorn.
He notes that Massachusetts' new eligibility system was in effect for several years before the 2006 reform. "It takes time to work the kinks out," says Mr. Dorn. "Ideally, states will start looking at these issues within the next year or two. But that will depend on great support from the federal government, both financially and in terms of guidance."
Mr. Dorn adds that generally speaking, he is impressed with how the U.S. Department of Health and Human Services is handling the situation. "I've been impressed at how quickly they've been moving to implement this enormous law," he says.
He points to three different regulatory packages that have come out in just a few weeks' time frame on dependent coverage, small business tax credits, and Medicaid reduced benefits packages applicable to adults. "That said, there are some important remaining questions. When they get answered, I think that states will be on firmer ground in moving forward," says Mr. Dorn.