NASHP expert panel recommends Medicaid reforms
As President Bush calls for policy changes to save $60 billion in Medicaid spending over 10 years, governors raise red flags and members of Congress seek political cover behind a one-year independent commission study by the National Academy for State Health Policy (NASHP), an expert panel that debated Medicaid reform during much of 2003 and 2004.
The recommendations include changes to eligibility, benefits, and financing.
The report noted that while Medicaid initially was created in 1965 to provide services to people qualifying for cash assistance, it has grown over the last four decades to become the largest single health program in the United States, helping to finance the health care of more than 52 million Americans.
Medicaid is the largest purchaser of health care in the country, larger even than Medicare; and program expenditures are expected to exceed $300 billion in state and federal funds. Medicaid spending now is some 9% of the federal budget, while state spending on the program accounts for about 16% of state general fund budgets, making it equal to or even greater than education in terms of state spending.
According to NASHP, about half of Medicaid’s beneficiaries are low-income and/or disabled children, and the program plays a key role in assuring care for pregnant low-income women. It finances prenatal care as well as more than one-third of all U.S. births. Medicaid also has a critical role in assuring care for adults with disabilities and for those requiring long-term care. Thus, in 2003 when total Medicaid spending was some $280 billion, about 30% ($84 billion) went for long-term care services and support.
The panel noted that Medicaid is unique in its design and structure. While it is established in federal law (Title XIX of the Social Security Act), it is the states that have the key role in defining the programs they administer. Although deemed an option for states, when a state implements a program, as they all have, it must adhere to certain conditions. Medicaid beneficiaries become entitled to benefits adopted by their state, and the states become entitled to federal matching funds for which they qualify. The federal government defines the terms and conditions under which a state can qualify for federal Medicaid matching funds and ensures that federal funds are used appropriately. Federal rules define which populations and benefits are mandatory and which are optional. The feds also define other policies, procedures, and requirements for states to follow to be able to receive federal funds.
According to NASHP, the role of states has been one of the program’s strengths over the years. With every state having adopted a Medicaid program, and every state Medicaid program being different, the often-heard statement is true — "When you’ve seen one state Medicaid program, you’ve seen one state Medicaid program." State programs reflect local traditions, decisions, and characteristics of their individual health systems.
States sometimes become frustrated when they want to make program changes and find that federal requirements complicate or even prohibit such changes. "To improve the program can, quite literally, take an act of Congress," NASHP said.
It has reached the point that Medicaid is fundamental to each state’s health care delivery system, and states often have looked to Medicaid to reform their systems. Federally approved demonstration waivers have allowed states to enact innovations and cover additional populations and services. NASHP said that according to one report, 20% of all Medicaid spending is for individuals receiving coverage under a demonstration waiver. In many states, Medicaid funds an array of health and medical services, including long-term care, prescription drugs, school-based care, and mental health care.
The NASHP panel said that in many ways, Medicaid has been a great success. Its costs are lower than private insurance when similar populations are compared.
Its administrative costs are quite low as a proportion of benefit costs compared with other health plans or insurers, even without taking into account that Medicaid payment rates typically are much lower. Medicaid provides a comprehensive set of benefits for a population that is disproportionately vulnerable due to poverty, health status, and a higher prevalence of chronic and disabling conditions.
It is a laboratory for state innovation in health care delivery and financing. It fills important gaps in Medicare for low-income elderly and disabled, especially for long-term care, and is the financial glue that holds the health care safety net together.
"By these and other measures," the panel’s report said, "Medicaid represents an exceptional value. Nevertheless, the dramatic growth and evolution of the program, coupled with its enormous cost burden on states, suggest that the time has come to review and make improvements to the program in order to ensure its sustainability, value, and effectiveness."
The 25-member panel was created in 2003 after the Bush administration proposed changing Medicaid to give states more flexibility in program design and also changing financing to a capped allotment block grant system.
Those changes were not adopted, but they led people to ask whether other changes could be adopted that would improve the program and that led the National Academy to its Making Medicaid Work for the 21st Century Project.
"Many organizations representing specific constituencies have developed Medicaid reform proposals," NASHP said. "This effort has been unique, however, in that it involved a broad range of key stakeholders with an interest in an effective and sound Medicaid program. . . . Most of the workgroup members have been actively involved in developing programs at the state level, either as state officials, consultants, or advocates. All are experts in Medicaid. The group included eight current state officials, among them public health directors, Medicaid directors, a state budget director, and two governors’ health policy advisors. The group also included representatives from the Centers for Medicare & Medicaid Services, two state legislators, five providers, three advocates, and five academics and researchers."
NASHP stressed that the report draws from the experience and expertise of a diverse workgroup. Recommendations made in the report reflect the consensus or majority view of workgroup members, but do not necessarily represent the views of project funders or individual workgroup members. All workgroup members emphasized that their recommendations are interrelated and must be viewed as a whole. Recommendations often reflected a balance of competing interests, and highlighting one recommendation separate from the context of the others would not honor the deliberative process of the workgroup, they said.
The group united on this statement of a vision and role for Medicaid: "To support the health and well-being of low-income populations by prudently managing programs that ensure access to quality health care and support services through a federal-state financial partnership."
Key recommendations were developed for Medicaid eligibility, benefits, and financing. The workgroup said its most significant recommendation was that Medicaid coverage be available for all Americans in households with incomes at or below the federal poverty level. Such a new national minimum eligibility level would apply in all states and would replace the current system of categorical eligibility that ties Medicaid eligibility to other matters such as age, family structure, and health status. An independent analysis of the recommendation concluded it would extend coverage to 4 million currently uninsured people and improve coverage for another 1.3 million insured at an estimated cost of $16.6 billion in 2005 dollars. Because of the price tag, the workgroup recommended the change be phased in over four years and that enhanced federal matching funds be made available to states to cover a share of the cost.
The workgroup further recommended that all individuals covered up to the new national minimum eligibility level be entitled to the same set of benefits provided under current Medicaid law. For individuals with incomes above the mandatory level, states could offer the current Medicaid package or a lesser but still comprehensive set of benefits as long as they meet certain benchmark standards. For optional groups, states could offer acute and preventive health care coverage without offering long-term care services. States also could choose to offer a different long-term care benefit package to optional eligibles than they do to the mandatory group.
The panel gave special consideration to waiver recommendations for long-term care and home- and community-based services. Given that home and community service waivers now are in every state, the group recommended that states be given the option of converting the waivers to separate community-based care programs that would no longer be subject to the waiver requirements of cost neutrality and periodic renewal, and states could retain certain waiver features, such as the ability to limit the number of participants. To come up with financing recommendations, it evaluated the current financing structure under which the federal government matches qualifying state Medicaid expenditures and rejected any radical restructuring of the approach, specifically rejecting converting Medicaid financing into a block grant for states.
The workgroup did recommend that revisions be made in the formula and process for establishing the federal match percentage so that it can more quickly and accurately reflect changes in the economy and states’ fiscal capacity.
(For the NASHP report, go to www.nashp.org/_docdisp_page.cfm?LID=0D5298D4-E308-40D6-B0CE7C85E0A5C959.)
As President Bush calls for policy changes to save $60 billion in Medicaid spending over 10 years, governors raise red flags, and members of Congress seek political cover behind a one-year independent commission study the National Academy for State Health Policy (NASHP) has released the recommendations from an expert panel that debated Medicaid reform during much of 2003 and 2004.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.