Congress sharply divided on Medicaid changes

Less than a week before Health and Human Services Secretary Tommy Thompson announced a proposal for sweeping Medicaid changes that would require congressional approval, two House Energy and Commerce Committee staff members who participated in a Families USA-sponsored panel on "Getting Ready for Medicaid Restructuring" demonstrated how hard it’s going to be to get any changes through a sharply divided Congress.

Republican staff member Patrick Morrisey promised Congress would pay much more attention to Medicaid this year than it has in past years.

"It’s no secret that Congress has spent time on Medicare and paid scant attention to Medicaid, but that will change this year," he said.

He also noted that Medicaid has less ability to manage cost increases than do other payers, and said there is a need to address issues such as prescription drugs, long-term care, and disproportionate share payments.

His comments made clear that Republicans are interested in exploring new approaches and not just providing additional funds. He pointed to demonstrations of family-directed care in four states and said they should be expanded considerably.

However, some in the audience challenged that notion, saying they work with clients who are not able to direct their own way through the health care system and that the money spent on family-directed care could better be spent educating people to be intelligent health care consumers.

Others criticized Mr. Morrisey for the Bush administration tax cuts, although the committee he staffs is not responsible for writing that legislation.

Defense of Medicaid cheered

Democratic House Energy and Commerce Committee staff member Bridgett Taylor drew applause several times from the audience for her impassioned defense of Medicaid and other efforts to help those in need. She also questioned how much more flexibility can be given in Medicaid "short of putting the monkey on the backs of poor people who have to pay for health care out of their pockets. If you increase cost sharing, you’re still not doing anything to stop the need for services."

Panel moderator Diane Rowland of the Kaiser Commission on Medicaid and the Uninsured set the stage for the discussion by noting that Medicaid covers 44 million low-income people at a cost to federal and state governments of more than $250 billion each year.

"It is the major source of coverage for low-income children and their parents and health and long-term care coverage for the low-income very disabled," she said. "It is the program that makes Medicare work for 6 million low-income Medicare beneficiaries who depend on Medicaid for prescription drug coverage and long-term care."

According to Ms. Rowland, although more than half of Medicaid beneficiaries are children, they only account for 15% of Medicaid spending, with most Medicaid money going for the elderly and disabled, "filling in the cracks in Medicare and private coverage."

Judy Waxman, deputy executive director for Families USA, told the group that children and adults together total 75% of Medicare beneficiaries but are responsible for only 25% of the spending, with most of the remainder going for long-term care and the disabled and 9% not going to beneficiaries at all, but instead needed for disproportionate share payments to safety-net hospitals.

Medicaid too successful?

"Medicaid today is a victim of its own success," Ms. Waxman said.

She added that three things needing to be addressed are:

1. unsustainable cost trends (Medicaid’s costs are about the same as those for private insurers, but Medicaid is carrying a lot more burdens);

2. the safety net, because when states cut eligibility, the burden on safety net hospitals increases;

3. flexibility.

"People, especially in Congress, don’t understand what Medicaid covers," Ms. Waxman said.

"They don’t know that it supports long-term care. They don’t know that it is a safety net. They don’t know its impact on state economies. Is the call for even more flexibility for genuine experiments to move the program forward or just new ways to slice and dice? How should we shore up the safety net? How should we divide up long-term care responsibility?" she asks. (See related story in State Health Watch, March 2003, p. 1.)

Ray Scheppach, executive director for the National Governors Association, said that state financial problems are due primarily to structural problems plus the current economic slowdown.

Two big structural issues facing states, he said, are old tax systems that are geared to a manufacturing economy rather than a high-tech and service economy, and the way in which health care is delivered and financed.

Right now, he said, states that must make cuts in Medicaid only have the option to cut coverage for women and children, and he predicted that "hundreds of thousands, if not millions, are going to lose Medicaid eligibility next year."

Can feds pick up some costs?

He called on Congress to look at whether it can start the long-term process of picking up the costs of dual eligibles (those eligible for both Medicaid and Medicare) or the long-term care costs now borne by Medicaid, and also whether it can give states much more flexibility in terms of optional populations, benefits packages, waivers, deductibles, etc.

Mr. Scheppach predicted it’s going to take states three to five years to work through their structural problems.

Not knowing that Secretary Thompson would propose flexibility without waivers, Mr. Scheppach said he supported waivers as the best way to start to get major changes in Medicaid. The Families USA-sponsored panel met Jan. 25 in Washington, DC.

(To access the program transcript, go to: