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It’s an old request. State policy-makers want flexibility from the federal government for delivering health care. Time and again states have asked and time and again they have been told, "Not now. Maybe later." But the political planets are now in the proper alignment to not only ask the bureaucratic behemoth in Washington, DC, once again for change but perhaps even to expect a response that is not entirely discouraging.
The federal government is starting to look pliant when it comes to Medicare and Medicaid. Newly installed President Bush strides through the Federalist camp strongly urging Congress to not only revamp Medicare but to make more than just cosmetic changes. While you’re at it, Bush adds, take a long look at Medicare’s basic structure and look more broadly than just adding a prescription drug benefit.
Tommy Thompson, Health and Human Services (HHS) secretary, is also a popular figure among many of the state governors. He was, after all, one of them for 14 years. He was also one of the more successful ones as he wrestled with Washington in designing and delivering Medicaid through BadgerCare in Wisconsin.
The National Governors Association, at its February meeting in Washington, DC, has stepped up to its own pulpit and announced that it plans to take advantage of this welcome change in attitude and timing. The association has asked the feds to widen access to Medicaid so that, according to Gov. Parris Glendening of Maryland, more people can receive basic health care, not just a relative few.
The request encourages more state and local design of education programs, such as creating more flexibility to work with established managed care networks. At issue, the governors contend, are federal rules that increase health care costs at a time when tax revenues in states are falling. The most recent batch of rules was imposed by the Clinton administration in the last weeks of its existence. Sweep those new regulations away, the governors have asked Bush, and help create a benefits package that gives states the power to widen the Medicaid net by offering help to more people with higher incomes.
Any state’s attempt to do anything outside of federally established Medicaid requirements means a Sargasso Sea of paperwork and bureaucratic maneuverings. New prescription drug discount programs created, after much strain and sweat, by Maine and Vermont are an example.
How much of a chance does the governors’ plan have of getting the support of Congress and the president?
"It’ll get a decent ear. It puts a concept on the table that hasn’t been talked about much," Debbie Chang, Maryland’s Medicaid director, tells State Health Watch. Ms. Chang, who has seen the federal-state tug of war from both vantage points, administered the Children’s Health Insurance Program (CHIP) for the Clinton administration. She recognizes that both sides have an agenda and that striking a balance on the issue is the key to success.
"No one side is better. On the Hill side, you are looking for broad principles. With Clinton, I was the lead in CHIP. I tried to implement a lot of flexibility to the states," Ms. Chang says. "We recognized that states have a different way of doing things. Where the line was crossed perhaps on the other side was with managed care regulations, where very specific guidelines or requirements really delve into the operations of programs. . . . Even for expanding coverage, this balancing act is the key and it’s something that the governors appreciate."
Matt Salo, director of health legislation for the National Governors’ Association, emphasizes his belief that the timing of the governors’ proposal does not have much to do with having a new Congress, a new president, or a new HHS secretary.
"Really, it comes out of other factors unrelated to politics, one of which is a severe budget crunch regarding Medicaid. Our informal surveys show 25 states with some form of shortfall in the budget for the Medicaid program. That’s out in the last couple of months," Mr. Salo tells State Health Watch. "About 25 states are proposing some expansion of coverage. Some programs are over the top, where Medicaid budgets are proposing expansions and running budget shortfalls. This would give states the tools to shore themselves up."
Medicaid spending is growing faster than is sustainable, Mr. Salo says. Medicaid spending is about 20% of any given state’s budget, he says, and it had been growing in the mid- to late 1990s from 3% to 5% a year. But now many states are growing their health budget from 9% to 11% a year. "Even in a good economy, that’s unsustainable," he adds. "The pharmaceutical component of the budget is growing at 20% a year. They say we can maintain this, but when the economy goes down, it’s going to be bad news."
The goal of the governor’s proposal, Mr. Salo says, is to streamline an unwieldy system, thereby cutting unnecessary costs. "We would like to make it easier to get waivers. We have had a number of states that have petitioned HCFA [the Health Care Financing Administration] for major Medicaid waivers for years and were told no. It’s stifling real innovative changes."
Mr. Salo contends that Mr. Thompson will give the governors’ proposal appropriate consideration. He says the new secretary understands the system well, that he has heard plenty of stories of frustrations of dealing with the HCFA bureaucracy. It was the last term of the Clinton administration that highlighted some current problems with Medicaid, he suggests.
"We saw 1,115 waivers approved, such as the Hawaii plan, and in Vermont, an explosion of progressive state reforms that have tapered off," Mr. Salo says. "I don’t know why that was. There was no political motivation."
The governors’ association proposal had its genesis at a recent executive committee meeting in Utah. Howard Dean, governor of Vermont, told the committee that in his state Medicaid covered children up to 300% of poverty level with a great benefits package but that there were adults at 150% of the poverty level who got absolutely nothing. They may simply need eyeglasses to remain a functioning member of the work community, but they are not eligible for the program.
Elaine Ryan, acting executive director of the American Public Human Services Association in Washington, DC, agrees that the role of adults in Medicaid is an agent for the governors’ proposed changes.
"Frankly, it was a sense that there was an increase in Medicaid costs at the state level certainly with prescription drugs that was creating pressure on state budgets," Ms. Ryan tells State Health Watch. "It also made state policy-makers stop to ponder what was causing that increase. It was not necessarily mothers and children, but it had to do with the breadth of people in the Medicaid program. When you look at why Medicaid costs are rising, the costs are in the elderly and disableds’ prescription drugs."
There is also the belief that the current rules linking state and federal governments regarding Medicaid are more of a bowl of spaghetti, tangled and often limp. Ms. Ryan would like to see simplification of the regulations which, she says, would benefit everyone. "We think people have been struggling to understand the rules. There are layers of complications. The governors say we need to simplify and point out that even in CHIP, it’s possible to cover more low-income families and adults without creating a service package that’s not all that different than Medicaid."
The fundamentals in the new proposal open possibilities to broader Medicare reform discussions, Ms. Ryan adds. "We know that in the next several months, after the tax bill, Medicare reform will be a prime piece of legislation. You have two former governors who understand this issue. But with Thompson, he not only understands this issue, but he was a leader among governors trying to seek additional waiver authorization from the federal government in order to cover people more comprehensively. . . . It’s courageous that the president is willing to take this on."