Posts Tagged ‘Medicaid’

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Obama’s Speech Today: A Listeners Guide for Health Care Advocates

Wednesday, April 13th, 2011

Later today when the President speaks about the national debt, what should health care advocates be expecting and hoping to hear? Given that long-term projections of rising public debt rest almost entirely on growth in health spending, we should expect at least some substantial attention will be paid to health care cost containment. However, don’t expect a detailed prescription. 

Since the President is addressing the public at large, he is unlikely to get too deep in the policy weeds, but there are a few key things health care advocates should be listening for (even if only “between the lines”):

Does the President address block grants and vouchers?
We should expect the administration to reject explicitly or implicitly both a Medicare voucher and a Medicaid block grant. It’s notable that two of the President’s top health policy advisors were leading public opponents of Medicaid block grants during previous efforts to transform the program, and it is very unlikely that the President will move off of this position.  This is where we should expect the most clarity as the President works to distinguish his approach from the one laid out by Congressman Ryan in the context of the FY2012 federal budget.

Does the President endorse a global federal health spending cap a la Bowles-Simpson?
While the Bowles-Simpson debt reduction plan does not call for either a Medicaid block grant or a Medicare voucher, it does call for limiting the growth of federal health spending to the rate of GDP plus one percent. Such an inflexible spending target would fail to allow for growth in the number of elderly or Americans with disabilities, an economic downturn, an epidemic, or changes in health care delivery that bring substantial benefits but also new costs. While we can expect the President to be somewhat clear in rejecting a block grant or voucher, his position on a global spending cap is truly unknown. Since the spending cap approach has garnered some favorable attention from a bipartisan group of Senators working on a debt reduction plan, a signal of Presidential approval or disapproval of this position could be very important. Silence on this point would also be important and would likely be interpreted on Capitol Hill as a green light to continue to negotiate a global spending cap.

Does the President offer a rational framework for reducing health care spending, consistent with the Affordable Care Act?
One of the big lies about the ACA is that it doesn’t tackle health care cost containment.  In fact, the ACA approaches cost containment in a very rational way.  If you look at the sources of excess health care spending in the U.S. relative to the rest of the world, you see that high prices and high administrative costs, particularly in the private sector, are among the main causes. Within public programs, high administrative costs and high prices are much less of an issue (with prescription drug prices for Medicare beneficiaries being a notable exception). Instead, the sources of low-value public health care spending primarily include preventable hospital and nursing home admissions, preventable complications (such as infections and other medical errors) and improper payments. Finally, any long-term cost containment approach must include improvements in the underlying health of the population.

The ACA already tackles all of these issues with: Exchanges, Minimum Medical Loss Ratios, beefed up rate review, enhanced payment oversight for Medicare and Medicaid, new Medicare and Medicaid payment and delivery models, investments in community care and improving transitions between hospital and community, major investments in public health and more. 

Of course more could be done, but generally that would require reopening some of the deals that were negotiated in the context of the ACA debate.  It will be instructive to listen for clues as to whether President Obama stands behind the cost containment path chartered by the ACA and whether he indicates a desire to go further down that road, or if he signals a change in direction—one that would involve placing more of a burden on elders, people with disabilities, and low-income children and families. 

Stay tuned for follow up analysis tomorrow.

- Michael Miller, Policy Director

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Posted in Affordable Care Act implementation, Medicaid, Uncategorized | 1 Comment »

Ryan’s Plan CHIP-ing Away at Children’s Coverage

Monday, April 11th, 2011

House Budget Committee Chairman Paul Ryan’s Federal Fiscal Year 2012 budget blueprint, dubiously titled The Path to Prosperity, has damaging implications for children’s health. The Republican budget plan would dramatically cut funding for Medicaid and the Children’s Health Insurance Program (CHIP), health insurance programs that cover about 30 million children—almost a third of all children living in our country today.

Chairman Ryan would cut Medicaid and CHIP by a staggering $2 trillion over the next 10 years by doing the following:

  1. Slashing the Medicaid Budget: Ryan’s proposal would cut $771 billion in federal spending from the Medicaid program. According to the Congressional Budget Office, “federal spending for Medicaid would be 35 percent lower in 2022 and 49 percent lower in 2030 than currently projected.”
  2. Transforming Medicaid into a Block Grant: Under a block grant, states that use up their federal Medicaid allotment will no longer be able to receive additional federal funds when costs go up or enrollment increases. Cash-strapped states will be left high and dry, and will have to make up the difference by raising taxes, cutting other spending, or shrinking their Medicaid programs.
  3. Repealing the Affordable Care Act: Ryan’s blueprint repeals most of the new health law’s major provisions, including its language extending CHIP through 2019 and fully funding the program through 2015. This means that CHIP would not receive any federal funding past 2013, its reauthorization date prior to the Affordable Care Act’s (ACA) two-year funding extension. Repealing the ACA would also cut an additional $627 billion from Medicaid—bringing total Medicaid cuts to $1.4 trillion—and would have a host of other detrimental effects on children’s access to quality health care.

States will have to fill in these funding gaps somehow, which could mean cutting reimbursement rates to providers and hospitals, limiting benefits, or reducing eligibility levels. No matter how states work to fill in these gaps, children are likely to lose out. Children represent half of all Medicaid enrollees, but account for only 20 percent of Medicaid spending—meaning that huge numbers of children could be adversely affected by program cuts yet save the federal government comparatively little money.

The impact of limiting benefits is particularly concerning for children. As Jocelyn Guyer from the Georgetown Center for Children and Families points out in a recent Say Ahhh! blog post, families rely on these programs “for hearing tests and glasses so their children can grow and learn, as well as for physicals so they can play sports. In many families, Medicaid provides children with the medical care that they need so they can thrive in the face of common medical conditions such as asthma and ADHD.”

While Ryan’s budget proposal may be a path to prosperity if you’re a wealthy individual or corporation in line to receive some $1.8 trillion in tax cuts, it certainly isn’t a path to prosperity if you’re a family who depends on Medicaid or CHIP for your child’s asthma medications, eye tests, or flu shots. Our nation cannot afford to ignore the needs of its children. We can and should do better.

—Maia Fedyszyn, Program Associate, New England Alliance for Children’s Health

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The Insider: The Politics of State Flexibility

Monday, March 7th, 2011

What’s behind the President’s embrace of state flexibility?
President Obama surprised a lot of people, including, apparently, Congressional Democrats, when he came out in favor of moving up the date when states could seek “global waivers” under the Affordable Care Act to craft their own health policy solutions. The waiver provision in the ACA, which would let states opt out of the Individual Responsibility Requirement (IRR), the Exchange and other provisions of the law as long as they can provide coverage that is equally comprehensive, equally affordable and doesn’t add to the federal deficit, goes into effect in 2017. The President announced his support for moving that date up to 2014. Republicans lost no time in trashing the President’s announcement. At the same time, there was conspicuous silence from Congressional Democrats, suggesting there is little chance a waiver date change could move through Congress.

There are also some technical challenges to implementing a waiver in advance of establishing any baseline for coverage or spending, but the President’s support for changing the date should be viewed through a political rather than policy lens. It was more designed to change the conversation about health care reform than to change policy.

Republicans have generally concentrated their fire against the means in the ACA rather than the ends. By declaring his support for greater flexibility over the means, President Obama is challenging Republicans to come up with an alternative that will work as well as the ACA or, failing that, forcing them to admit that they do not support comprehensive affordable coverage for all Americans.

Support for greater state flexibility also creates some daylight between the President and the IRR, which is probably the least popular provision in the ACA. At the same time, it creates some tension between Congressional Republicans and Republican governors. While the governors have been largely on board with the Congressional repeal strategy, if push comes to shove and they really do have to implement the ACA, they’d rather have more flexibility. For Congressional Republicans, however, any move to “fix” the ACA would blunt their attack messages and so must be rejected out of hand.

Since there is no sign that Democrats in either branch are interested in pursuing the idea, “state flexibility” could be a one-day blip in the 24/7 news cycle, but don’t be surprised to see it return as a talking point as the Presidential election gets closer.

That Settles That (for the moment)
For all those wondering whether Judge Vinson’s ruling that the entire ACA must be struck down because the IRR is unconstitutional halts implementation of the law pending appeal, the answer came down last week—it doesn’t. However, in an effort to speed final resolution, the Judge demanded that the Justice Department speed its appeal to either the 11th circuit or directly to the Supreme Court. The main effect of the judge’s ruling is that is should tamp down state resistance to implementation. For a scary look at the legal reasoning that underpins the challenges to the ACA and the consequences if that reasoning was widely applied, check out this issue brief by Simon Lazarus at the American Constitutional Society for Law and Policy.

Good news for beneficiaries/ bad news for millionaires
New poll results show the American people do not want to see cuts to Medicare and Medicaid and generally do not believe that such cuts are necessary. In fact, cutting Medicare and Medicaid are among the least popular options for dealing with the budget deficit. Most popular approaches are raising taxes on the wealthy, eliminating unnecessary weapons systems and reducing tax subsidies for the oil industry.

– Michael Miller, Policy Director

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Less pain, more gain: defining an alternative to harmful Medicaid cuts

Monday, February 28th, 2011

(please note most links below are pdfs)

On Friday, Community Catalyst sent a letter to Secretary Sebelius, outlining eight policies states could implement to cut Medicaid costs. We were inspired to weigh in by a series of letters between the Secretary and Republican Governors that contrasted two very different approaches to reducing Medicaid expenditures.

Cutting Coverage vs. Cutting Waste
Republican Governors wrote a letter to Congress and the Administration in January, asking them to lift the Maintenance of Effort (MOE) requirement – the provision in the Affordable Care Act (ACA) that prevents most states from reducing Medicaid eligibility between now and 2014. The basic premise of their letter was that states need to cut low-income children, parents, seniors, and/or people with disabilities off coverage in order to “responsibly manage [their] state budgets.” We anticipate Republican Governors will reiterate this argument at the Energy and Commerce hearing Tuesday about the impact of the ACA on Medicaid.

Secretary Sebelius responded with a letter explaining why that basic premise simply isn’t true (see our blog and summary of her letter.) She outlined dozens of ways states can trim costs in their Medicaid programs without eliminating coverage for vulnerable families. By tackling the inefficiencies in our fragmented health care delivery system, many of the policies she suggested not only cut costs but they also have the potential to improve care for beneficiaries in the process. Sebelius also made it clear that her department remains open to suggestions of additional policies states can pursue to accomplish those dual goals.

When Secretary Sebelius Calls, We Answer
We took the Secretary up on that challenge. Our letter to the Secretary highlights eight additional policies states can pursue to lower Medicaid costs and maintain or improve care. More details about these options can be found in the text of our letter, but here are the highlights:

  • Recalibrate provider payment rates, shifting dollars from inpatient care to outpatient care, to give providers an incentive to treat patients in the lowest-cost settings.
  • Rebalance long-term care dollars away from institutions and towards home- and community-based settings by taking advantage of more funding opportunities created by the ACA to help states front the cost of this readjustment.
  • Better integrate care for those who are eligible for both Medicaid and Medicare by expanding existing programs such as the Program for All-Inclusive Care for the Elderly (PACE) and fully-integrated Special Needs Plans (SNPs) that provide a comprehensive and patient-centered model of care.
  • Reduce preventable hospital readmissions and complications by tying hospitals’ payment levels to their preventable complication and readmission rates.
  • Increase the use of generic drugs by making it easier for pharmacists to substitute equivalent generics when the patient was prescribed a brand name drug.
  • Improve evidence-based drug selection and purchasing by expanding utilization management and the use of state Preferred Drug Lists (PDLs) created by an evidence-based evaluation of available therapies. It’s important to include measures to protect access and quality, especially when applied to classes of drugs or medical conditions that have traditionally been excluded from PDLs (such as mental health, HIV/AIDS and cancer).
  • Improve prescriber education by creating an “academic detailing” program that provides prescribers with up-to-date information about the effectiveness of different medications and alternative treatments, serving as an unbiased alternative to pharmaceutical industry promotion.
  • Combat off-label drug promotion and inappropriate prescribing by requiring that physicians inform their Medicaid beneficiary patients whenever the physician prescribes a drug for an unapproved use, and that the patient consents to the treatment.

A Better Path to Savings
These policies — coupled with the consumer-friendly options offered in Sebelius’ letter — offer a clear alternative to cutting low-income children, parents, seniors and people with disabilities off Medicaid; they illustrate why Congress does not need to lift the Maintenance of Effort requirement for states to make their Medicaid programs more efficient.

They also offer clear alternatives to some of the more harmful cost-cutting tools that states already have at their disposal: imposing higher cost-sharing and eliminating or restricting “optional” benefits such as prescription drugs. Those tools just shift costs onto vulnerable beneficiaries, and risk harming their health. And research suggests they result in fewer savings than states might assume: when patients delay or forgo certain services because of cost-sharing or benefit restrictions, their illnesses can worsen and eventually require more expensive care, canceling out some of the state’s savings.

Our letter lays out a better path — one that not only saves money but also can improve the lives of vulnerable Americans. If Governors are serious about fiscal responsibility, they should jump at these opportunities to cut waste and improve the sustainability of the Medicaid program.

-Katherine Howitt, Policy Analyst

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Medicaid Gymnastics: You want state flexibility? I’ll show you state flexibility!

Friday, February 11th, 2011

Secretary Sebelius sent a letter last week to state Governors outlining dozens of ways that states can trim costs in their Medicaid programs (see our summary here).

Most of these policies were right on target. They take aim at our fragmented health care delivery system, reduce costly inefficiencies, and would even improve the quality of care for high-risk Medicaid beneficiaries.

But a few of the approaches Sebelius drew attention to were, well, off-target. For example, the Secretary highlighted how states can impose higher cost-sharing on low-income beneficiaries and restrict or eliminate “optional” benefits like prescription drugs and home- and community-based long term care services. These approaches only shift costs from the state onto struggling families, and would harm the health of chronically-ill Medicaid enrollees.

Why is HHS drawing attention to states’ discretion to cut benefits and raise copayments?
Good question. And there’s a good answer. While we don’t love having these poor policy choices showcased, this letter is part of an effort to avert an even worse outcome.

Last month, Republican Governors wrote a letter to Congress and the Administration demanding they lift the Maintenance of Effort (MOE) requirement – the provision in the Affordable Care Act (ACA) that prevents most states from reducing Medicaid eligibility between now and 2014. The Governors claim that by prohibiting them from cutting people off Medicaid, the MOE hinders their ability to balance their budgets. Their letter has generated momentum on the Hill for eliminating this critical consumer protection.

But repealing the MOE is the wrong solution to state budget crises. It’s dangerous for two key reasons:

  1. It would increase the ranks of the uninsured, cutting vulnerable children, families, seniors and people with disabilities off health care coverage in the midst of an economic crisis. The human costs would be extraordinary.
  2. It would create a major barrier to implementing the ACA’s Medicaid expansion in 2014. States that reduce Medicaid eligibility in the next few years would have to reinstate it at their regular matching rate in 2014. If states are complaining now about the burden of having to just keep the people they’re already covering on Medicaid, just imagine the drama when they have to expand eligibility – and at their regular matching rate.

The HHS letter helps make the case that repealing the MOE isn’t just wrong, it’s unnecessary. By highlighting all the ways – good and bad – that states can save money in their Medicaid programs, it undercuts the Republican Governors’ assertion they have to cut eligibility in order to balance their budgets.

The HHS letter can be a tool for strengthening Medicaid
In their appeal for the elimination of the MOE, Republican Governors pleaded for the federal government to “restore states’ flexibility to craft Medicaid programs tailored to their specific needs.” As the HHS letter underscores, states already have very significant flexibility in designing their programs, and no state has taken advantage of every opportunity for savings.

It’s up to consumer advocates to hold states accountable. When policymakers propose eligibility cuts, cost-sharing increases or benefit restrictions, we should draw attention to the all the options in HHS’ letter to improve care for beneficiaries while lowering the cost for taxpayers (see our summary of the letter for a list of these positive approaches). No state should resort to jeopardizing the health of our most vulnerable families until they have exhausted the lengthy list of opportunities for reducing costs by strengthening Medicaid.

Going beyond the HHS letter
The HHS letter creates a good starting point. But there are other strategies that states could pursue to sustain their Medicaid programs without harming beneficiaries. Stay tuned – Community Catalyst will be highlighting more consumer-friendly ideas to sustain Medicaid in upcoming blogs.

– Katherine Howitt, Policy Analyst

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The Insider: Putting Things in Perspective

Tuesday, February 1st, 2011

Putting the Florida Legal Ruling in Perspective
The media is full of stories this morning about the ruling yesterday of Judge Vinson, not only that the Individual Responsibility Requirement (IRR) of the ACA is unconstitutional, but also that the entire law must fall as a result. While this sounds dramatic, there is rather less than meets the eye.

Essentially the ruling has no immediate practical significance other than providing fresh ammunition for the attack dogs who were quick to seize on it. It doesn’t really change the calculus with regard to implementation. Federal regulators will certainly move ahead and the situation is not much different in the states. Since all or most of the ACA that pertains to states is likely to survive the legal challenges, the consequences of inaction are too significant for state government to sit back and do nothing while the court cases play out. For example, state administrations politically opposed to the ACA who want to use this ruling as an excuse for inaction risk turning over the operation of the Exchange (and the keys to Medicaid eligibility) in their state to the federal government.

The main concern about the ruling is that it opens up new ground on the far right, moving the Virginia ruling — which struck the IRR while upholding the rest of the law — into the center. This could create cover for the Supreme Court to follow suit in dumping the IRR while upholding the rest of the law.

If it comes, a Supreme Court ruling along the lines of the Virginia decision would create a major challenge for ACA backers. If the law, minus the IRR, remains intact, there could be significant adverse selection in private insurance pools. Technically, there are a number of alternatives that could be put in place to allow ACA implementation to move forward without major disruption.

The challenge is political. Bipartisan cooperation would be needed to enact an alternative. Republican opponents of the ACA could demand other major changes in return for an agreement to enact an alternative mechanism to prevent adverse selection.

During the debate on expiring tax cuts, Congressional Republicans showed themselves willing and able to avail themselves of this type of “hostage taking” opportunity to preserve tax breaks for the wealthy. They seem likely to attempt a similar strategy both with regard to completing the work on the FY’11 budget and the upcoming vote to raise the federal debt ceiling (see below). During the tax debate, neither the Obama administration nor Democrats in Congress were willing to play hardball. It remains to be seen whether the same dynamic plays out with respect to health care.

Stay tuned for more detail on the Vinson ruling.

The Next Dragon in the Road
The much-hyped House vote on ACA repeal is already fading into the rearview mirror. While Senators Reid and McConnell jockey over scheduling a similarly symbolic Senate vote, far more significant threats loom ahead that advocates must be prepared to meet. One critical fight that is rapidly approaching is a likely vote on whether to amend or repeal the Medicaid Maintenance of Effort (MoE) requirement contained in the ACA.

The ACA prohibits states from reducing Medicaid eligibility or putting in place new administrative enrollment barriers for most adults prior to 2014 and for kids until 2019. Recently, Republican Governors sent a letter to President Obama and Congressional leaders calling for repeal of the MoE. Even more recently, the National Governors Association (which includes all of the nation’s governors — Democrats as well as Republicans) sent another letter that, while less explicit in calling for repeal, also took a stance in opposition to the MoE requirement.

Medicaid is the foundation on which the ACA rests. The repeal attempt on the MoE is the opening move in what will be a sustained effort to undermine both the ACA coverage expansion and the entitlement nature of Medicaid itself, which is why we can be sure that Congressional opponents of the ACA will push it.

MoE repeal would not only lead to an increase in the number of uninsured, it would also create new barriers to full expansion in 2014. States that rolled back coverage would have to reinstate that coverage at their regular Medicaid match rate, making the 2014 expansion more difficult. Politically, moderate Senate Democrats, especially those up for reelection in 2012, may be reluctant to hold the line on eligibility given the poor fiscal condition of states and the looming expiration of enhanced federal Medicaid matching dollars. MoE is an especially hard vote for ACA supporters because, unlike total repeal, MoE repeal, will be scored by CBO as a budget saver, making it attractive to Senators eager to burnish their credentials as deficit cutters or for use as a “pay for” for another priority that has a price tag attached.

They just can’t help themselves
Although posing as defenders of Medicare helped Republican candidates rack up positive vote margins with older voters, some members of the House GOP caucus seem eager to cough up those gains. Republican House leaders are considering a measure to convert the Medicare program into a voucher system as part of the House budget proposal, which could take shape within a month. The proposal being considered would convert Medicare into a voucher by 2021 and would also raise the eligibility age for Medicare to 69 (a change that would add substantially to employer health costs). The same idea is likely to be advanced during the debate over an increase in the debt ceiling expected to occur this spring.

Eyes of the Beholder
Did CMS Actuary Richard Foster validate the supporters or opponents of the ACA (or some of both)? Both Democrats and Republicans claim that Foster’s testimony before the House Budget Committee bolstered their views of the ACA. Democrats say that Foster agreed that the ACA would reduce the budget deficit. Republicans point to his statements relating to overall health costs and whether people could stay on their current plans as support for their criticism of the ACA. Let’s take a closer look at these two latter statements.

First, Foster said the claim “if you like what you have, you can keep it” is not true in all cases. Given the way he qualified his statement, on this point, he seems obviously correct. Although Foster may have had changes to Medicare Advantage in mind, conceding that the ACA will force junk insurance off the market isn’t anything that ACA supporters should apologize for. Sooner or later (and generally speaking the sooner, the better) plans that take subscribers money without offering them either reasonable value or adequate financial protection in the event of a serious illness will be forced off the market. People who have them now and like them only like them because they are cheap, and will only like them as long as they don’t get really sick. Just because it’s cheaper to have cars without working brakes or airbags does not mean they should be allowed on the streets.

The more serious contention is that the ACA will not contain health care costs. The statement rests on the Office of the Actuary’s (OACT) projection of total health spending under the ACA and whether the Medicare cost containment provisions will actually be implemented.

The OACT is quite pessimistic about the cost containment potential of the ACA relative to other analysts like the CBO or Council of Economic Advisors. This is a general tendency of the office, not unique to the ACA. For example, the OACT overestimated the cost of Medicare Part D by 25 percent. Nonetheless, their analysis concludes that the ACA will expand coverage to over 30 million uninsured people with virtually no net increase in health spending. Since uninsured people get only about half the care of the insured, this large coverage expansion with a negligible increase in cost is actually an endorsement, rather than a rejection of the ACA’s cost containment effect.

Most importantly, Foster is making a political rather than analytic judgment that the Medicare cost containment provisions won’t be sustained. The endless replay of the drama around how to prevent the cuts in physician fees mandated by the Medicare Sustainable Growth Rate would seem to bolster his view, but, as Paul Van de Water of CBPP points out, the SGR is the exception rather than the rule when it comes to Medicare cost containment efforts. Notwithstanding the routine fee increases approved by Congress, savings from reductions in Medicare physician fees still exceed the levels projected at the time of SGR passage.

Don’t hold your breath
While the repeal and harass parts of the repeal, replace and harass strategy seem well underway, replace seems to be lagging and the likelihood of a coherent replace strategy emerging is much lower. The problem is that most of the ideas previously advanced by House Republicans don’t actually work—having at most a modest effect on health spending and even less on coverage, while failing to adequately protect those with preexisting condition exclusions. Even McCain advisor Douglas Holtz-Eakin, a vociferous critic of the ACA says, “If it’s all they do, it’s not a serious effort.”

Nonetheless the old Boehner bill constitutes too much government intervention for some in the incoming class of freshman Republicans. As a result, coming up with an alternative to the ACA is likely to prove much harder than trying to unravel it by picking at the less popular provisions. In addition, an alternative acceptable to the House majority may not be very popular with the American people who like most of the provisions of the ACA.

In their own little corner
The health care debate in the rest of the country may be focused on repeal, replace, defund and harass or on the fiscal challenges facing state budgets, but a different story is unfolding in Vermont. Newly elected Governor Shumlin campaigned on single payer, and he is taking the issue seriously. Shumlin contracted with William Hsiao, who, among other things, helped design the national health system in Taiwan, and Jonathan Gruber, who modeled coverage expansion costs in Massachusetts and for Congress during the ACA debate, to help design a single payer plan for Vermont. Their report, released a week ago, showed that a single payer system would significantly lower health care costs and create jobs while covering more people with coverage at least as good as offered by the ACA. (They also modeled the ACA and found that it too would create jobs and lower health care costs relative to the status quo, but not as much.)

Even with a supportive governor and a Democratic legislature, there are still many legal, operational and political challenges ahead. How the plan is received by the provider community, whether there would be a role for the state’s Blue Cross plan (which now has a 75 percent market share), and the distribution and reaction of winners and losers among employers in the proposed shift from premiums to payroll taxes, are all likely to play a large role in the ultimate fate of the effort. To date, the national news media have paid relatively little attention to the Vermont effort, but if the state succeeds in establishing a single payer plan, VT could become the mouse that roared in health policy terms.

– Michael Miller, Policy Director

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The Insider: House Republicans Win Pyrrhic Victory on repeal Vote

Monday, January 24th, 2011

A Pyrrhic Victory
The outcome of last week’s vote on repeal was a foregone conclusion from the outset, but the victory was a hollow one. Almost no Democrats broke from their party to vote for repeal. While a few more signed on to the “replace” resolution, that was a very soft vote, putting them on record as willing to explore amendments without committing them to any specific alternative policy. At the same time, ACA supporters finally got a break on public opinion, if not exactly of the sort they were hoping for when the law passed. Although the public has yet to embrace the law overall, over the course of the debate, public opinion more or less solidified against a complete repeal, with multiple polls showing only a small percentage of the electorate supporting total repeal (roughly the same percentage believe Barack Obama is a Muslim).

The question is, what comes next? One likely candidate is an attempt to roll back the regulation requiring insurers to spend at least 80 percent of premium dollars on medical care (known as the Medical Loss Ratio or MLR). ACA opponents believe that they can make the case that the MLR regulation represents over intrusion of government into the business of insurance and that they will actually inhibit insurers ability to contain costs. However, most people are likely somewhat skeptical of both the ability and intentions of insurers as agents of cost containment and like the requirement that premium dollars get spent on medical care and the requirement that insurers pay rebates if their non-medical expenses are too high. Like total repeal, this should be an issue that plays to the advantage of supporters. Other issues in the pipeline relating to the Personal Responsibility Requirement and to Medicaid could prove to be more difficult challenges. (More on the threats to ACA implementation in a coming post.)

– Michael Miller, Policy Director

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New Medicaid/CHIP Report Finds Program Eligibility Maintained Despite Economic Downturn

Tuesday, January 11th, 2011

Despite difficult economic times, forty-nine states maintained or invested in expansions or improvements in their eligibility and enrollment policies for their Medicaid and Children’s Health Insurance Programs (CHIP) in 2010. That’s the headline coming out of the tenth annual Kaiser Commission on Medicaid and Uninsured state survey of Medicaid and CHIP eligibility rules, conducted this year with the Georgetown University Center for Children and Families. Without Medicaid and CHIP’s stability, many more children and families would have likely become uninsured, adding to the more than fifty million Americans currently without health insurance coverage.

Why were Medicaid and CHIP eligibility policies so stable? Well, primarily because provisions in the American Recovery and Reinvestment Act of 2009 required states to maintain their Medicaid eligibility rules and enrollment procedures as a condition of receiving a boost in funding from a temporary increase in the federal Medicaid matching rate. It’s also worth noting here that the Affordable Care Act (ACA) includes a similar requirement to maintain both Medicaid and CHIP eligibility rules and procedures for children until 2019 (and for adults until 2014 when the ACA makes subsidies to purchase coverage available).

Additional key findings from the report include:

  • – Thirteen states implemented targeted Medicaid and CHIP eligibility expansions for children, pregnant women, and adults in 2010. Most of these expansions were aimed at providing coverage to uninsured children and some produced state savings because states were able to draw down federal matching funds to help pay for coverage that was previously paid for solely with state dollars.
  • – Three states (Colorado, Kansas, and Oregon) increased Medicaid and CHIP income eligibility levels for children. Twenty-five states now cover children in families with income at least up to 250 percent of the federal poverty level (FPL), or $45,775 for a family of three in 2010.
  • – Six states (Delaware, Minnesota, Montana, Nebraska, North Carolina, and Wisconsin) took advantage of the option to cover lawfully residing immigrant children and pregnant women during their first five years residing in the country. As of the end of 2010, this means that twenty-one states have eliminated this barrier for children.
  • – While meaningful progress continues to be made in expanding coverage for children, parent eligibility for Medicaid and CHIP continues to lag far behind. Only Colorado expanded eligibility for parents in 2010. Thirty-three states do not cover parents up to 100 percent of the FPL. This was $18,310 in 2010 for a family of three.
  • – Low-income adults without dependent children remain ineligible for Medicaid in the vast majority of states. Just seven states (Arizona, Connecticut, Delaware, the District of Columbia, Hawaii, New York, and Vermont) provide Medicaid or (Medicaid-like) benefits to adults without dependent children.
  • – States have moved forward with making improvements to their Medicaid and CHIP enrollment and renewal procedures in 2010. For example, twenty-nine states took advantage of the Children’s Health Insurance Program Reauthorization Act of 2009 option to verify citizenship by using an electronic data match with the Social Security Administration.
  • – States continued to focus on making technological improvements to their Medicaid and CHIP systems in 2010. For instance, every state posts its Medicaid application online. However, only thirty-two states accept the electronic submission of the application.

Looking back at 2010, this report reminds us of the importance of keeping Medicaid and CHIP strong in order to ensure that coverage remains available during the most difficult times. Going forward, the report paints a clear picture of the work that still lies ahead to continue to make the promise of the ACA a reality for our children and families.

—Patrick M. Tigue, Children’s Health Care Coordinator
New England Alliance for Children’s Health

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Let’s Have an “Adult Conversation” about Opting Out of Medicaid

Monday, January 3rd, 2011

This blog was originally posted here on the Center for Children and Families Say Ahhh! blog

Just last August, Texas advocates chuckled and sighed along with our Arizona colleagues when the Onion ran the headline, “Texas Vows to Reclaim Title of Most Regressive State from Arizona.” That satire piece included references to our Governor Rick Perry’s very real 2009 statements about the possibility of Texas’ secession option. Perry distanced himself from his secession comments then, but recently kicked up a whole new flurry of media attention when he suggested on national television (CNN 11/7 /2010; Daily Show 11/8) that Texas might consider shutting down its Medicaid program entirely, and claimed a potential state savings of $60 billion dollars over several years. The interviews were part of the book promotion tour Perry launched immediately following the November election, and were in keeping with the states’ rights theme of that book, entitled “Fed Up”.

The Governor based his projections on a December 2009 memo from the Heritage Foundation, prior to the March 2010 passage of the Affordable Care Act. That memo speculated that the bill eventually passed might allow states to shut down their Medicaid programs in 2014, and send their former Medicaid enrollees to the new health insurance Exchange where their costs would be entirely borne by the federal budget. (Perry also complained about CMS not having approved a Texas 1115 waiver submitted in 2008. CMS authorities told Texas in August 2008 that Texas’ proposal covered too few adults, too slowly, and with too limited benefits — waiver request examples included a benefit package capped at $25,000 a year — to justify the significant departures from federal minimum standards Texas had requested.)

Of course, rhetoric like this is enough to make a policy analyst/health access advocate want to tear her hair out, but a funny thing has happened over the last six weeks since that first story: a whole lot of Texans have learned a whole lot about Medicaid and the critical role it plays in our state’s health care system and economy. News story after story drummed these facts home: leaving Medicaid would cause Texas to lose over $16 billion a year (at 2009 levels) in our federal matching funds — the number one source of federal dollars in our state budget. We would lose federal funding for over two-thirds of Texans in nursing homes, over 55 percent of Texas births, for virtually all residential services and community services and supports for Texans with disabilities, and health coverage for the nearly 3 million Texas children covered today by Medicaid and CHIP.

News coverage also quickly reflected the alarm of Texas health care leaders at the notion of a Medicaid apocalypse including the president of the Texas Medical Association, and the heads of state associations representing nursing facilities, community health centers, family physicians, and hospitals. Most colorfully, Dr. Ron Anderson, President and Chief Executive Officer of Parkland Hospital System, went on Dallas radio to call the concept “so bizarre as to be unworthy of consideration.”

The Governor’s book tour comments were followed a few weeks later — coincidentally it appears — by the scheduled release of a report mandated under 2009 state law which directed the Texas Health and Human Services Commission (THHSC) to study “the effect on the health care infrastructure in the state if the state Medicaid program is abolished, or a severe reduction in federal matching money under the program occurs.” That report underwent some late revisions to directly address the new question of a state-initiated, (rather than federally-driven) Medicaid withdrawal.

The report from our state Medicaid agency is a very good and helpful compilation of important information. Like earlier reports by Wyoming and Nevada, the Texas report lays out in detail the critical role of the federal-state Medicaid partnership in caring for poor and low-income Texans who have disabilities or are over age 65, providing prenatal care and delivery services, supporting safety-net hospitals in managing the burden of Texas’ 6.4 million uninsured, and providing comprehensive health care for millions of Texas children. The report details the expected “down sides” to shutting down Texas Medicaid, among them:

– The loss of a significant chunk of our state’s health care economy — with no offsetting reduction in federal taxes. Medicaid and CHIP spending accounts for over 15 percent of Texas health care.
– Most former Texas Medicaid enrollees would be uninsured. Seniors and other Medicare dual eligibles would remain insured by Medicare but would lose their Medicaid wrap-around coverage or assistance with out-of-pocket costs; the relatively small share of Texas Medicaid enrollees with incomes above 133 percent FPL (largely long-term care recipients) plus children in Texas CHIP could enroll in the Exchange. (The agency expects that interpretation of ACA will not allow for persons defined as Medicaid eligible in that law to qualify for Exchange premium tax credits.)
– THHSC estimates an annual increase of $4 billion or more in uncompensated hospital care due to emergency admissions to former Medicaid enrollees. Substantial cost-shifting to county governments and hospitals for care to these newly-uninsured would occur.
– The addition of such a large group of uninsured (another 2.6 million or more) to Texas already-huge 6.4 million uninsured (2009 Census CPS) could trigger a serious adverse selection crisis in Texas’ commercial insurance market, by adding to the estimated $1,551 in annual excess premium costs already being borne by insured Texas families.
– The state’s share of Medicaid spending would be just enough to continue longer-term care (community and institutional) and coverage for children in foster care, with no net savings and all of the negative effects and risks described above.

The report doesn’t neglect the conservative point of view. The agency proposes several scenarios for major future changes to Medicaid, most of which would require major federal law changes. They include:

– A “consolidated annual funding” approach to Medicaid, much like the per-capita cap proposals of the 1990s, would be a block grant that would growth annually based on inflation, population growth, “and other factors.” The agency envisions that states would have fewer floors on who is covered and what services they get than in today’s federal Medicaid law.
– The current formula for “FMAP” is criticized for failing to take into account relative poverty and uninsured rates across the country.
–Texas could pursue an 1115 waiver to allow clients to buy high-deductible coverage linked to a health savings account.
– Texas could pursue federal law changes to allow states to provide more limited “benchmark” benefits to low-income children and pregnant women.
– The federal government should pay 100 percent of the costs of Medicaid emergency care as well as other uncompensated care provided to undocumented residents.
–The Affordable Care Act’s maintenance of effort that prevent Medicaid and CHIP eligibility rollbacks should be waived or eliminated

Affordable Care Act impact revisited.
The report also revisits THHSC’s early (and high!) estimates of the Medicaid-related state budget costs expected to accompany Affordable Care Act implementation. The agency notes that excluding some of their earlier worst-case assumptions (e.g., assuming the state will assume 100 percent of the costs of Medicaid primary care rate increases from 2015 forward) reduces their net state-dollar cost projection to $5 billion for 2014 to 2019. The report notes that THHSC’s $5 billion net cost estimate (which assumes 91-94 percent take-up rates in the expanded Medicaid coverage of adults, offset by $760 million in additional Medicaid managed care premium tax collections) is still higher than the Kaiser Foundation-Urban Institute analysis that projected a high-end state cost from 2014-2019 of $4.5 billion — largely due to the latter’s much lower 75 percent take-up assumption.

THHSC’s report did not mention the over $74 billion in federal matching funds that would accompany the new Texas Medicaid spending, and declined to assume any economic multiplier effect from those dollars. They did note that short-term multipliers (such as the 3.64 used by Families USA) are assumed by some economic models, but they also note an unpublished report from two economists which asserts that “every $200 million in federal matching funds reduces gross state product by $1.8 billion, a multiplier of -9.0.”

Medicaid Red Herring?
The report points to the need for Medicaid’s “unsustainable” growth rate to be controlled to keep it within population, general inflation, and GDP growth. This argument, while not without merit, points to perhaps the most serious problem with this highly politicized discourse around state Medicaid spending. The “Medicaid Opt-out” talking point is based on and reinforces a misperception; namely, that Medicaid is uniquely troubled by rising care costs. In reality, the CBO reports that growth rates for Medicare, Medicaid, and “All Other” U.S. health spending have out-stripped GDP growth consistently since 1975. Medicare logged the highest cost growth in excess of GDP, and Medicaid “tied” with All Other health spending over that entire period, despite having grown at a much slower rate than the rest of the system since 1990.

As a nation, we face a serious challenge of reining in health spending growth across our entire population and economy, not just in Medicaid. The “adult conversation” we need to have on reducing federal deficits and debt can’t take place as long key leaders believe they can solve the nation’s health care and debt challenges simply by cutting or eliminating Medicaid.

What we are Learning.
Perhaps the experiences of Wyoming, Nevada and Texas will be enough to dissuade other states from traveling too far down the Opt-Out road. But if those too-good-to-be-true talking points (Drop Medicaid! Save Money!, Nobody Gets Hurt!) do arrive in your state, be prepared to seize the teachable moment and help tell the real story of Medicaid and CHIP. It is so important that the new round of freshman lawmakers get the facts about Medicaid and CHIP’s critical role in caring for Americans. In the process, you can not only protect your state’s most vulnerable citizens, but also raise critical awareness that real solutions to our country’s health care spending woes will only come from hard work that looks across all populations and sources of coverage.

– Anne Dunkelberg, guest blogger
Center for Public Policy Priorities, Texas

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Health Homes: Creating a Stronger Medicaid Program While Reducing Costs

Friday, December 17th, 2010

Arizona’s decision to eliminate coverage for some heart, liver, lung, pancreas and bone marrow transplants has received a lot of attention because of its immediate life-and-death implications: potentially denying organs to 100 adults currently on the transplant list.

And it’s not just conservative states turning to these types of drastic measures. Under immense fiscal pressure, states across the country are cutting Medicaid benefits and reducing already-low Medicaid provider reimbursement rates. These cuts harm access to needed care for America’s most vulnerable citizens.

There Is a Better Approach
CMS recently released guidance on a new state option created by the Affordable Care Act that could lower Medicaid costs and bring in additional federal dollars while improving patient care. Beginning in January 2011, states can qualify for two years of enhanced federal funding to set up health homes for Medicaid beneficiaries with chronic physical or mental illnesses.

Unlike benefit restrictions, the health homes initiative tackles a root cause of unnecessary Medicaid spending: our fragmented health care delivery system. We know about five percent of Medicaid beneficiaries account for nearly 60 percent of Medicaid spending. Who is this small section of the population? It’s people with complex health care needs whose care is too often split between multiple providers who are not paid to communicate with one another. This lack of coordination leads to avoidable ER visits, hospital readmissions, and duplicated tests and procedures. To reduce these unnecessary costs, the new health homes option simply reimburses providers for coordinating the care of high-risk enrollees.

The evidence is clear: states can lower health care costs through health home initiatives. In North Carolina, a Medicaid medical home program saved the state between $154 and $170 million in 2006 alone. Illinois saved $220 million in the first two years that its Medicaid medical home program was fully implemented.

Given the severity of state budget crises, the health homes option on its own may not create enough savings to get states out of the red. But it’s just one of many options to reduce Medicaid spending while improving patient care. As long as options like this are on the table, there is no excuse for denying access to needed services for vulnerable Americans.

– Katherine Howitt, Policy Analyst

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Posted in Affordable Care Act implementation, care coordination/quality | 1 Comment »

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