Medicaid transforming into single-payer surprise

The battle over Medicaid’s proper role in health reform has been a hotly contested tug of war thus far, but that likely will change as more governors join the fray and flex their collective muscle.

States are facing severe budget deficits and an increasing number of governors – Republicans and Democrats alike – realize they must make changes quickly to keep Medicaid from swallowing up spending on education, transportation and public safety.

President Obama’s brimming 2009 stimulus package provided some short-term cash to the states to shore up Medicaid – the jointly funded federal-state health program for lower-income people.

But in exchange for the booster shot of funding relief, states had to agree to maintain their 2010 Medicaid eligibility levels or risk losing all federal matching funds for the program. That left them in an untenable situation.

In January, 33 governors and governors-elect wrote to Mr. Obama and congressional leaders requesting “flexibility and relief” from the “excessive constraints placed on us by health care-related federal mandates.”

States desperately need to reduce Medicaid spending because they already are foundering in a sea of red ink – a situation that will only get worse this June when the stimulus funding ends that initially helped many of them pay for added enrollment.

Typically, Health and Human Services Secretary Kathleen Sebelius responded to the cries for help by dispatching federal bureaucrats to help states explore options to hold down spending while still urging them to keep Medicaid enrollment at current levels until the health overhaul law takes full effect in 2014.

The governors’ pleas for flexibility are notably bipartisan. California’s Democratic Gov. Jerry Brown is asking for permission to cut $1.7 billion from his state’s Medicaid program by limiting most recipients to no more than 10 physician visits a year.

Arizona’s Republican governor, Jan Brewer, proposed tightening eligibility so the state could cut 280,000 people from its Medicaid rolls.

While Mrs. Sebelius said Arizona can trim its rolls under a different law, unfortunately most other states are in a straitjacket – requiring them to keep enrollment high and expand coverage by 2014 to all citizens under 133 percent of poverty – or about $30,000 a year for a family of four.

A number of recent estimates found this will mean adding an additional 20 million people to the rolls by 2019. Under the new law, Medicaid will grow to 84 million enrollees and will cost nearly $900 billion by 2019 – just eight years away.

The Kaiser Family Foundation views these expansions as steps that could recast “Medicaid as an affordable health care program for working people and families.” But it also warns that could turn into bad news if the new Medicaid enrollees “cannot find doctors, dentists, specialists or other providers to see them.” That is already happening.

While Medicaid is an important safety net for many people who have no other options for health coverage, adding millions more recipients to the program without increasing the system’s capacity will make it even more difficult for current recipients to get the care they need.

Medicaid is arguably the worst health care program in the country. Recipients are promised a long list of benefits, but doctors who participate in the program are paid so little and their paperwork is so onerous that many no longer accept new patients.

As a result, poor patients are rushing to hospital emergency rooms, where waits can stretch for hours. Many have only routine health complaints that easily could have been handled in a doctor’s office.

Medicaid also is rife with fraud. New York state, where almost one in four residents is on Medicaid or its affiliated State Children’s Health Insurance Program, tried to tackle wasteful spending after a 2005 investigation found that as much as 10 percent of its Medicaid spending was lost to fraud and abuse.

Reforming the program nationally, of course, should have been Job One with the Congress and President Obama when they drew up their health reform plans. Sadly, Medicaid is as bureaucratic and rule-driven as ever.

Yet, the Obama administration and congressional allies are clearly intent on expanding the program to enroll millions more people at the very moment states are begging for more flexibility and relief.

The potential bright spot is that the governors hold the power cards for health reform over the next two years and seem intent on demanding more flexibility to run the programs themselves. In this tug of war, all Americans – well-off or poor – should be rooting for the governors.

Grace-Marie Turner is president of the Galen Institute and served in 2005-06 on the federal Medicaid Commission. She’s co-author of the forthcoming “Why ObamaCare is Wrong for America” (HarperCollins, 2011).

Published in The Washington Times, March 15, 2011.

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