Posts Tagged ‘Medicaid’

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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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A Health Advocate’s Guide to the Debate on Deficit and Debt Reduction

Monday, December 13th, 2010

Recently, a blizzard of deficit and federal debt reduction plans has emerged from across the political spectrum. Many of them—especially those coming from the center/right—propose major changes in the benefits and/or financing of Medicare and Medicaid in the name of getting the nation’s “fiscal house in order” and restoring economic growth.

For different reasons and in different contexts, these public insurance programs already have been getting some rough treatment in public debate.

For Medicare, the recent context has included continuing debate over cost containment provisions in the Affordable Care Act—a debate that includes allegations of death panels, rationing, and the forcing of seniors onto “government-controlled” health care. (Note: It doesn’t have to make sense; it’s just a sound bite.)

For Medicaid, the challenge has rested mainly at the state level. Cash-strapped states have struggled to keep up with increased demand for Medicaid amidst falling revenue streams and other realities arising from the recession. Many states have filed suits to block the ACA-mandated expansion of Medicaid eligibility. Some have gone so far as to threaten withdrawal from the Medicaid program.

However, as a new political alignment prepares to take the reins in Washington, new federal level threats are aimed against Medicare and Medicaid, which form the foundation of our nation’s health care safety net, particularly for older adults, people with disabilities and children. The deliberations of the official Deficit Reduction Commission (DRC) appointed by President Obama, along with related policy proposals, such as the one released by the Bipartisan Policy Center (an organization financed by Peter G. Peterson – a long-term proponent of reduced federal spending on entitlement programs), bring these threats into focus.

Putting the Deficit Debate into Context
As Henry Aaron of the Brookings Institution observed in the New York Times, the various official and unofficial “commission” reports aim at three distinct problems: the short-term increase in the national debt, a projected shortfall in Social Security funds, and a projected long-term rise in the national debt. Let’s look at the short- and long-term issues in turn.

It’s the economy, stupid (and the wars and the Bush tax cuts)
Most economists agree that the current short-term increase in public debt is attributable almost entirely to the wars in Afghanistan and Iraq, the Bush tax cuts (mainly benefiting the wealthy) and the recession. Also, lingering effects of the recession, not health spending or the debt, pose the most immediate and serious threat to our health security and general well-being. Persistent high unemployment rates reduce the proportion of people who have employer-sponsored health insurance, and also reduce the revenue to fund Medicare, Medicaid and Social Security while driving Medicaid enrollment up. With enhanced federal support for Medicaid slated to expire in June even while states face continued significant revenue shortfalls, pressures on Medicaid will be greater than ever.

Meanwhile, the actions and words of President Obama’s financial advisors make it clear that they do not regard the possibility of a “double dip” recession as being out of the question, especially without additional fiscal stimulus. By spurring job growth, additional stimulus would support the economic recovery and restore growth, creating the conditions necessary to bring down the short-term debt. Reducing unnecessary military spending and restoring more progressivity to the tax code also would help. However, the type of stimulus that would include additional federal funds for state Medicaid programs appears to be off the table.

Medicare and Medicaid in the crosshairs
Finally, and most significantly for health care advocates, the various commission reports all addressed the issue of long-term projected increases in Medicare and Medicaid spending. The CBO has projected that the growth of federal debt long-term is attributable almost entirely to the growth of health care spending, particularly Medicare and Medicaid. Based on this, various debt-buster report recommendations to reduce health care spending in Medicare and Medicaid vary from the benign (increasing funds for fiscal oversight, reducing fraud and payment errors, and collecting the Medicaid drug rebate for all dual-eligibles) to the alarming (increasing Medicare cost-sharing, setting a global cap on federal health spending equal to GDP growth plus one percent, turning Medicare into a voucher program, and eliminating the federal commitment to matching state Medicaid spending on no less than a dollar for dollar basis).

Beware of GIGO (Garbage In Garbage Out)
Before entertaining any drastic action to cut Medicare and Medicaid, policymakers should subject the assumptions underlying the Deficit Reduction Commission and similar reports to careful scrutiny. First, although you would never know it from any of these reports, there is actually very little evidence to support any particular debt-to-GNP ratio as a target that we must adhere to or risk financial disaster. (See this and this for discussions that call into question the basic premises of the deficit commission. An opposing view is here.)

Policymakers also should closely examine underlying assumptions in the CBO forecast. Projections of explosive debt growth are very sensitive, both to assumptions and to policy change. (See, for example, the difference between the 2009 and 2010 CBO forecasts.) James Galbraith and others have pointed out that the CBO baseline assumes an unlikely combination of circumstances that includes low inflation (except in health care) and, notwithstanding that low inflation rate, significantly higher interest rates. CBO also assumes that there are no long-term cost savings effects from the ACA. While it may be prudent not to assume a continuing cost-containment effect from the ACA, it also would be prudent to give the law a chance to work before performing radical surgery on the core of our health care safety net.

Finally, neither the assumed need for debt reduction nor the use of arbitrary caps to reduce the percentage of our economy devoted to Medicare and Medicaid are helpful lenses through which to consider the question of health care cost containment. On the one hand, reduction of the debt is taken as a primary good, with benefits assumed but not demonstrated. On the other hand, discussion of the impact of proposed cuts on health programs serving older adults and others served by Medicare and Medicaid is nowhere in evidence. It is impossible to judge the reasonableness of proffered recommendations without looking at their costs, as well as any alleged benefits.

A few facts are important to keep in mind:

– Medicare already offers coverage benefits that are less generous than those typically available through employer-sponsored insurance.
– Older adults already devote a substantial share of their income to health care –well above what younger groups spend.
– Medicaid beneficiaries are both the poorest and sickest members of society. A retrenchment in Medicaid is therefore likely to create substantial hardship both for the low-income frail seniors and younger adults and children with chronic illnesses and disabilities on whom most Medicaid dollars are spent.
– The same proposals that envision reducing the value of Medicare also envision reducing Social Security benefits, creating a double whammy for all who do not participate fully in the labor force because of old age, disability or other categorical dependency.

The cost of public programs providing health coverage and services is tied to the overall growth in health care costs. Focusing only on public spending in this equation obscures this link and leads toward draconian solutions that harm vulnerable populations rather than smarter, more system-wide approaches. Arbitrary cuts in public spending for health care would be a cure worse than the disease. What we need is not an arbitrary cap on health spending, but long-term integrated approaches to reducing the rate of growth in health care costs that also improve quality and value. The Affordable Care Act plants the seeds of such a program. More could be done, but that will require less demagoguery and ideological rigidity than was on display during the debate on passage.

Is the threat real?
For now, the debt reduction juggernaut may be temporarily stalled. Even Congress might blush before recommending major cuts to popular programs immediately after voting to increase the deficit by $900 billion, as they are now considering doing. But it is not dead. When the debate turns again to debt reduction, it is critically important for advocates of quality affordable health care for all to block a stampede caused by debt-phobia that would undermine health security for millions of Americans.

– Michael Miller, Policy Director

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An Important (and Imperfect) Child Nutrition Reauthorization Passes

Wednesday, December 8th, 2010

During this lame-duck session of Congress, the House of Representatives took action and, against the odds, passed the child nutrition reauthorization (CNR) bill. The Healthy, Hunger-Free Kids Act of 2010 (S. 3307), already passed by the Senate. First Lady Michelle Obama strongly supported this legislation as part of her Let’s Move! campaign aimed at reducing childhood obesity. President Obama is expected to the sign bill into law shortly.

The CNR bill provides $4.5 billion in new funding for the federal child nutrition programs. Together, these programs ensure that over 30 million low-income children every year are able to access healthy food. Programs like the National School Lunch Program, School Breakfast Program, Summer Food Services Program, After School Snack and Meal Program, and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) are reauthorized as a part of this legislation.

While this bill represents an important step forward in advancing the health of low-income children, it is far from perfect. Our most significant issue with the bill is that Congress chose to reduce Supplemental Nutrition Assistance Program (SNAP, commonly known as the food stamp program) benefits by $2.2 billion beginning in November 2013 to pay for a large portion of the bill. Needless to say, we are deeply concerned and disappointed that Congress chose to fund child nutrition reauthorization by taking other food assistance funds away from low-income children and families. However, it is widely believed that the SNAP program was eventually going to face this type of cut. Even though we firmly believe it to be the wrong choice, it provides some small consolation to know the funds are being used to benefit low-income children. It also remains our hope that Congress will take additional action prior to November 2013 to find a way to restore this SNAP funding.

Although there are shortcomings, the bill makes a long list of important improvements to the child nutrition programs, which is why we supported its passage. Some of the highlights are as follows:

–  Direct Certification for Children Receiving Medicaid Benefits: The bill establishes a pilot program to allow children enrolled in Medicaid with family incomes below 133 percent of the federal poverty level (FPL) in select school districts to automatically qualify for free school meals. Currently, schools do not have the authority to use Medicaid enrollment to determine eligibility for free school meals. By ending the requirement of a separate paper meal application for children under 133 percent FPL on Medicaid, this provision will greatly expand access to free and reduced-price school meals for low-income children and will ease the administrative burden on school officials to collect individual paper applications.
– Community Eligibility for Universal Meal Service: Under the bill, schools in high-poverty areas may elect to offer free meals to all students without collecting individual applications to determine eligibility. Similar to direct certification for children on Medicaid as discussed above, this provision will ease the administrative burden on school officials to collect individual paper applications so that the maximum number of low-income children can benefit from having access to free and reduced-price school meals.
– Categorical Eligibility of Foster Children: This provision adds foster children to the list of those automatically eligible for free meals. Foster children will no longer need to demonstrate their income when applying for school meal benefits, streamlining enrollment for these children to ensure they receive the meal assistance they need.
– School Lunch Reimbursement Rate Increase: Currently, the federal government reimburses schools $2.68 per lunch per student for students who qualify for a free lunch. This reimbursement rate has not been changed since 1973. The bill increases this rate by six cents per lunch if the lunches meet new nutrition standards to be established by the Secretary of Agriculture, Tom Vilsack. This increase is designed to incentivize schools to offer more nutritious lunch options.
– Equity in School Lunch Pricing: Currently, schools may use the federal reimbursement received for free and reduced-price meals to subsidize the “paid” meal price charged to middle- and upper-income children. Essentially, school districts are setting a price for “paid” meals that is too low to pay for the cost of providing these meals and then using the reimbursement rate for free and reduced-price meals to cover the shortfall. This practice prevents funds from being used to provide the highest quality meals possible to low-income students because the reimbursement is diverted to subsidize middle- and upper-income students’ meals. The bill requires schools to increase their “paid” meal charges over time until the revenue per meal matches the federal reimbursement levels for the free meal category. This will better ensure that funding for low-income children’s meals do not subsidize paid meals.
– National Nutrition Standards for All Foods Sold in Schools: The bill requires the Secretary to establish science-based nutrition standards for all foods sold in schools, and these standards must be consistent with the most recent published Dietary Guidelines for Americans (these guidelines are jointly issued every five years by the Departments of Agriculture and Health and Human Services). Special exemptions can be made for foods sold during school-sponsored fundraisers. This new authority will help to limit children’s exposure to unhealthy foods during the school day.
– New Nutrition Education and Obesity Prevention Grant Program: The bill allows state agencies to submit a plan to the Secretary to implement a nutrition education and obesity prevention program for low-income children that promotes healthy food choices consistent with the most recent Dietary Guidelines for Americans. Allocating new funding specifically targeted at reducing childhood obesity for low-income children will help to address the childhood obesity epidemic.

Here at the New England Alliance for Children’s Health, an initiative of Community Catalyst, we congratulate our state partners in the region as well as everyone across the country who worked tirelessly to pass this important piece of legislation. Because of these collective efforts, we’re going to make important progress in promoting childhood health, reducing childhood hunger and obesity, and improving and simplifying the child nutrition programs.

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

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The ACA brings a 21st Century Consumer-Centric Approach to Coverage Enrollment

Friday, December 3rd, 2010

Right now millions of people qualify for Medicaid and other public benefits but are not enrolled. Failure to modernize the outreach and enrollment process is a major reason why so many people are falling through the cracks of the health system. Banks have figured out how to develop systems so consumers can do nearly all their banking online. Consumers can even apply online for their vehicle registrations. Indeed, the time has come for a consumer-friendly approach to enrollment into Medicaid and other public programs. The good news is the Affordable Care Act (ACA) provides the framework for using IT to fundamentally change the enrollment process, making it easier for those who are eligible to gain coverage. This is a major victory for consumers.

As part of the ACA, the Office of the National Coordinator (ONC) was asked to develop technology standards by September 2010 for enrollment of consumers into health coverage. ONC put together a workgroup made up of a broad spectrum of stakeholders representing states, federal agencies, information systems companies, unions, and consumers. Community Catalyst Executive Director Rob Restuccia was appointed to the workgroup, and asked me to staff the process.

From the beginning, members of the Enrollment Standards Workgroup strongly advocated for consumer-friendly standards. However, members on the group who advocate on behalf consumers — including Rob, me and a number of others — clearly played an important and successful role.

Not only did the Workgroup meet its charge – regulations incorporating the workgroup’s recommendations were promulgated by Health and Human Services (HHS) Secretary Sebelius on September 17 and can be found here – but also the recommendations could transform the experience of consumers applying for and enrolling in state programs, including health insurance Exchanges.

Some of the key things the regulations call for include:

– A consumer-centered approach to enrollment. The regulation states that modernization of new and existing electronic systems are a priority in achieving a consumer-centric approach to eligibility and enrollment.
–  No wrong door. As ACA is implemented, consumers may become eligible for one of a variety of health coverage options: Medicaid, CHIP (for children), subsidized coverage through an insurance Exchange, unsubsidized coverage through an Exchange. The standards provide that there should be a single seamless process of applying for coverage for all of these programs – regardless of where a consumer enters the system. In fact, the standards provide, if possible, consumers should also be determined eligible for other government programs, such as food stamps, at the same time.
– Reliance on electronic verification of eligibility information. Rather than requiring consumers to submit paper documents to prove their reported information, the standards provide for state systems to verify the data by checking behind the scenes with the databases of other government agencies such as the Immigration and Naturalization Service (INS) and state employment departments. The goal is to make the process of determining eligibility be as real time and paper-free as possible.
– Meeting the consumer where they are. The enrollment process “accommodates the range of user capabilities, languages and access considerations,” and the process and technology standards support consumer assistance in people’s community or at their provider’s office. Community Catalyst strongly advocated for these provisions because clearly the potential of ACA to enroll 32 million NEW people in health care coverage will not be achieved unless enrollment comes to consumers and accommodates their needs and abilities.

While the regulations are a giant step forward, the Enrollment Standards Workgroup and HHS realize that this new paradigm for enrollment and eligibility is a heavy lift for states with aging Medicaid eligibility systems, budget crises, and infrastructures that may not support a quality of customer experience. The Enrollment Workgroup heard this directly from a number of states that testified before them in Washington last month and along with HHS has taken the following steps to address this:

– Workgroup standards call for a library of rules to be assembled at the federal level so states can use the work of other states in developing their systems. This rule-based approach should also enable clearer eligibility and enrollment communications to consumers.
– In addition to awarding Exchange planning grants in the amount of $1 million to nearly all states, the Office of Consumer Insurance Information Oversight (OCIIO) intends to award grants to innovator states or groups of states to develop enrollment and eligibility technology that can then be shared with other states.
– As part of a proposed set of rules for Medicaid eligibility systems, the Center for Medicare and Medicaid Services (CMS) has proposed to reimburse states 90 percent of the cost of developing and enhancing their Medicaid eligibility systems if they meet certain standards (including those that came out of the Enrollment Workgroup) through 2015.

The Enrollment Workgroup will to continue meet and to advise HHS and states on implementation of enrollment and eligibility standards. A new subgroup on consumer engagement will further define what a customer-centered approach means in terms of technology and process, looking at current best practices, and making recommendations by January to the larger workgroup and to OCIIO.

Community Catalyst plans to continue to participate in the Workgroup and the consumer engagement subgroup. Hub readers should let us know if you have suggestions or examples of current excellent practices that should be shared with the Workgroup. Please contact Rob Restuccia.

– Sue Kaufman, Health Care Consultant

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Exchanges and Advocates: Helping Your State Create a Successful Exchange

Monday, November 29th, 2010

One of the most talked-about provisions in the Affordable Care Act is the creation of health insurance Exchanges to help people and small businesses get coverage. HHS recently released their Initial Guidance to States on Exchanges, which gives you the basics, but how do you actually decide what to focus on in creating an Exchange?

Community Catalyst is here to help. Based on our work on Exchanges over the past few years, we’ve developed a Top Ten Priorities for Health Insurance Exchanges.

Here’s an abbreviated list to get you started:

1. Should Your State Operate an Exchange?
First, advocates need to decide whether you want your state to run the Exchange, or defer to the federal government. While it makes sense for most states to create their own Exchange, this may be more difficult in states with hostile political environments. Right now, we don’t know much yet about what the federal Exchange will look like. So for now, states should focus on creating a state-run Exchange, and revisit the federal Exchange question when more is known in the future.

2. Make Sure Consumers Have a Role
No matter what your state’s political environment looks like, one of the most important concerns is the makeup of the board governing the Exchange. Consumers should be represented in a real way – meaning on the same terms, at least, as other stakeholders.

And the governing body of the Exchange governance should exclude representatives with conflicts of interest because of a financial stake in the health system — including hospitals, physicians, insurers, and brokers. California’s recent Exchange law has strong conflict of interest language for Exchange board and staff.

3. Let the Exchange Negotiate with Insurers
A goal of the Exchange is to provide people with affordable, high-quality health plans. To do this, an Exchange needs the authority to negotiate with health insurers based on quality, premiums, and other factors (and not just accept all plans, like Utah’s Exchange).

At a minimum, a state should not require the Exchange to accept all insurers without any competitive process. In Massachusetts, the Exchange requires all insurers in the small group market to submit health plans, and has the authority to select plans based on “quality and value.”

4. Work Closely with Medicaid
The state should create a “no wrong door” policy between the Exchange and Medicaid. No matter where a person initially applies, the state’s eligibility and enrollment system should ensure the person gets signed up for the appropriate program. Massachusetts uses a single application form for health coverage. The state then determines if the person is eligible for Medicaid or the subsidized plan through the Exchange. Your state will likely need to invest in information systems to update their system – luckily, states can now get a 90 percent federal match for money spent updating Medicaid eligibility systems, including work to coordinate with the Exchange.

5. Protect the Exchange from Adverse Selection
Everyone is worried the Exchange will fall to adverse selection – that is, only people with serious health conditions will enroll and, therefore, it will become very expensive. The Affordable Care Act already does a lot to reduce the likelihood of adverse selection – insurers must use one risk pool for plans, essential health benefits must be offered in plans inside and outside the Exchange, and risk-adjustment will help even out the differences between the markets inside and outside the Exchange.

But these tools will not be enough if states do not apply the same rules to plans inside and outside the Exchange. To protect against adverse selection, states should require plans sold outside the Exchange to have the same benefits, cost-sharing, patient protections, and marketing rules as health plans inside the Exchange. States could also prohibit brokers from steering enrollees to particular plans inside or outside the Exchange.

Want more? For more detailed tips on Exchanges (and 5 more priorities!) see the new Community Catalyst paper, here.

– Christine Barber, Senior Policy Analyst

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