The Health Law We Should Be Addressing



By Cindi Scoppe of The State

With Gov. Nikki Haley lobbying for the right to create a special, as-yet-undefined S.C. program to replace the federal health reform law, I thought it would be educational to sit in on an expert discussion of “ways in which some states are pursuing waivers in order to create their own alternative programs for delivering health care.”

It was educational, all right. But not in the way I expected.

There was precious little talk about all those innovative ideas the states are hatching to get more people insured at a more reasonable cost, with insurance that doesn’t evaporate when it’s needed most. In fact, about the only state initiatives that the panelists at Governing magazine’s Outlook in the States & Localities conference last week in Washington discussed were those in Massachusetts – which was the model for the federal law – and Utah, which has taken an approach that the National Conference of State Legislatures’ Joy Johnson Wilson insisted has much more in common with Massachusetts’ program than most reports suggest.

There are two reasons for the paucity of reform models: The goals of the federal law require complex statutory, regulatory and behavioral changes and will not be met by a simple initiative; and the states, uncertain about the legal and political climate, are having too much trouble figuring out how to pay for Medicaid next year – much less two years down the road, when the health law requires them to expand Medicaid coverage – to even think about leading the nation forward with alternatives.

“Independent of the health care act, there are a lot of people concerned that A plus B is not going to equal C,” the National Governors Association’s Matt Salo said. With the states facing a cumulative budget shortfall of $175 billion next year, he said: “There will be cuts to Medicaid, but you can’t get $175 billion in cuts to Medicaid. … What you may see is states eliminating higher education funding, or gutting K-12.”

“This is why everyone should care about Medicaid,” Wilson added. “If you have kids in K-12, higher ed, you’re going to feel it. Criminal justice, roads and bridges. That’s what people don’t get: States are not going to be able to finance the expansion [of Medicaid] with state funding.”

Although they displayed varying levels of support for the health reform law, everybody on the panel agreed that there are significant problems with Medicaid that pre-date the reform law, which is based much more than most people realize on expanding Medicaid coverage.

The federal government allows states to decide whether to cover what it calls “optional programs” in Medicaid, but those generally fall into two categories: programs such as long-term care and prescription drug coverage whose elimination would lead to either higher costs elsewhere or such widespread human suffering that politicians wouldn’t allow it; and programs that states already have cut to get through the past couple of years.

And particularly for states such as South Carolina, the ideas offered earlier in the day by U.S. Health and Human Services Director Kathleen Sebelius for cutting costs won’t help much, because they don’t offer the programs she suggested dropping.

What states need but don’t have and don’t really know how to use if they had it, the panelists agreed, is flexibility to tinker with Medicaid. One of the first candidates for tinkering – revamping, actually – is care for the 15 percent of Medicaid recipients called “dual eligibles” who account for 40 percent of the cost. These are the poor, frail elderly who are covered by Medicare but whose care is so expensive that Medicaid has to pick up the rest of the cost; they include many of the people that our state pushes into nursing homes rather than providing community care that will help them stay at home.

Compounding the problem of an inflexible federal program is a larger economic problem – again, predating the federal health reform law: Cutting Medicaid doesn’t just hurt Medicaid recipients; because the federal government contributes from $1 to $4 for every dollar states spend, cutting the state match hurts the entire economy. “States are concerned about expansion, but they are looking at real dollars flowing into their communities” as they expand Medicaid, said Governing’s John Buntin.

“The structure of Medicaid means you always have an incentive to expand the program,” Salo said. “The irony is, you’ve got a budget problem – expand Medicaid. If you cut $1 if you’re Mississippi” – he just as easily could have said South Carolina – “you lose $4 in federal funding. That’s economically devastating. There’s almost no incentive to reduce the program, ever.”

These are very real and immediate problems that governors need to be working with the Congress to address. Instead, they’re fighting “Obamacare,” which, while far from perfect, addresses problems that even its harshest critics agree (“repeal and replace”) need addressing. And here’s the irony in all that: If we could deal with the perverse incentives and the restrictions on state experimentation in Medicaid, there’s a good chance that we’d find solutions to some of the actual – as opposed to the merely political – problems with the health reform law, as well.

 

There was precious little talk about all those innovative ideas the states are hatching to get more people insured at a more reasonable cost, with insurance that doesn’t evaporate when it’s needed most. In fact, about the only state initiatives that the panelists at Governing magazine’s Outlook in the States & Localities conference last week in Washington discussed were those in Massachusetts – which was the model for the federal law – and Utah, which has taken an approach that the National Conference of State Legislatures’ Joy Johnson Wilson insisted has much more in common with Massachusetts’ program than most reports suggest.

There are two reasons for the paucity of reform models: The goals of the federal law require complex statutory, regulatory and behavioral changes and will not be met by a simple initiative; and the states, uncertain about the legal and political climate, are having too much trouble figuring out how to pay for Medicaid next year – much less two years down the road, when the health law requires them to expand Medicaid coverage – to even think about leading the nation forward with alternatives.

“Independent of the health care act, there are a lot of people concerned that A plus B is not going to equal C,” the National Governors Association’s Matt Salo said. With the states facing a cumulative budget shortfall of $175 billion next year, he said: “There will be cuts to Medicaid, but you can’t get $175 billion in cuts to Medicaid. … What you may see is states eliminating higher education funding, or gutting K-12.”

“This is why everyone should care about Medicaid,” Wilson added. “If you have kids in K-12, higher ed, you’re going to feel it. Criminal justice, roads and bridges. That’s what people don’t get: States are not going to be able to finance the expansion [of Medicaid] with state funding.”

Although they displayed varying levels of support for the health reform law, everybody on the panel agreed that there are significant problems with Medicaid that pre-date the reform law, which is based much more than most people realize on expanding Medicaid coverage.

The federal government allows states to decide whether to cover what it calls “optional programs” in Medicaid, but those generally fall into two categories: programs such as long-term care and prescription drug coverage whose elimination would lead to either higher costs elsewhere or such widespread human suffering that politicians wouldn’t allow it; and programs that states already have cut to get through the past couple of years.

And particularly for states such as South Carolina, the ideas offered earlier in the day by U.S. Health and Human Services Director Kathleen Sebelius for cutting costs won’t help much, because they don’t offer the programs she suggested dropping.

What states need but don’t have and don’t really know how to use if they had it, the panelists agreed, is flexibility to tinker with Medicaid. One of the first candidates for tinkering – revamping, actually – is care for the 15 percent of Medicaid recipients called “dual eligibles” who account for 40 percent of the cost. These are the poor, frail elderly who are covered by Medicare but whose care is so expensive that Medicaid has to pick up the rest of the cost; they include many of the people that our state pushes into nursing homes rather than providing community care that will help them stay at home.

Compounding the problem of an inflexible federal program is a larger economic problem – again, predating the federal health reform law: Cutting Medicaid doesn’t just hurt Medicaid recipients; because the federal government contributes from $1 to $4 for every dollar states spend, cutting the state match hurts the entire economy. “States are concerned about expansion, but they are looking at real dollars flowing into their communities” as they expand Medicaid, said Governing’s John Buntin.

“The structure of Medicaid means you always have an incentive to expand the program,” Salo said. “The irony is, you’ve got a budget problem – expand Medicaid. If you cut $1 if you’re Mississippi” – he just as easily could have said South Carolina – “you lose $4 in federal funding. That’s economically devastating. There’s almost no incentive to reduce the program, ever.”

These are very real and immediate problems that governors need to be working with the Congress to address. Instead, they’re fighting “Obamacare,” which, while far from perfect, addresses problems that even its harshest critics agree (“repeal and replace”) need addressing. And here’s the irony in all that: If we could deal with the perverse incentives and the restrictions on state experimentation in Medicaid, there’s a good chance that we’d find solutions to some of the actual – as opposed to the merely political – problems with the health reform law, as well.