THINKING ABOUT HEALTH: Medicaid still a target of healthcare reform

By Trudy Lieberman for the Rural Health News Service

What’s going to happen to healthcare now that Senate Republicans have failed to pass their bill, which would have replaced much of the Affordable Care Act? In particular, what’s going to happen to Medicaid, the government’s largest insurance program, which covers 74 million Americans? This is a good time to clarify what was at stake and may still be up for grabs in the months to come.

Despite its importance to so many people, Medicaid has always been the health system’s stepchild. Many doctors and dentists have avoided taking Medicaid patients saying the program didn’t pay enough. Until recently, editors haven’t been keen to feature stories about Medicaid believing that their audience was not interested in reading about people most likely to be on the program – the poor, the disabled, kids, and seniors who needed it to pay for their nursing home care.

Suddenly, media stories about cutting Medicaid and the loss of coverage to millions became news. “In the course of the debate, it’s become clear that Medicaid has tremendous public support. There has been much more focus in this debate than I’ve seen in any health policy debate,” said Shannon Buckingham, vice president for communications at the Center for Budget and Policy Priorities, a Washington D.C., think tank.

So what is this program that affects so many and will undoubtedly surface again either later this year or next as a political football?

It was created in 1965 under the Johnson administration at the same time Medicare was passed. Unlike Medicare, though, which is a social insurance entitlement to which people contribute throughout their working lives, Medicaid is a welfare program. Those applying for coverage must meet strict asset and income tests, which mean they can’t own very much and they can’t earn a lot of money. Everyone who qualifies is guaranteed coverage.

The benefit package that all states must offer is generous, covering many services, including nursing home care and transportation to medical appointments. It pays for care given at rural health clinics and federally qualified health clinics. States can provide optional benefits such as prescription drugs, respiratory care, dental services, physical and speech therapy. Many states do.

States and the federal government share in the cost, and that’s where the fight in Congress comes in. As medical costs have risen – with few controls on how high they can go – states have found that Medicaid is consuming larger shares of their annual budgets, often crowding out other needs like fixing roads. The federal government continues to pay more too.

One solution for this dilemma is to change the way Medicaid is financed – from a state-federal matching arrangement into what’s called a block grant. Under a block grant, the federal government will give a set amount of money to the states. It’s a way reduce its healthcare expenditures while shifting more of the burden to the states to cover their residents who depend on Medicaid.

Conservatives have argued for years that giving the states a lump sum would mean they could manage their programs as they saw fit. That’s why during debates on Medicaid you hear phrases like “more flexibility” and “greater freedom.” But others argue that flexibility and freedom come at a cost. It could allow states to offer fewer benefits and impose restrictions that would make it harder for people to get care.

The Graham-Cassidy bill that was the Senate’s last attempt at remodeling the Affordable Care Act called for block grants and eliminated the ACA’s Medicaid expansion program that had provided healthcare to those with incomes between the poverty level and 138 percent of the poverty level. This year that’s about $16,600 for a single person and about $34,000 for a family of four. The expansion had brought some 12 million people onto the program.

The Medicaid debate is far from over and is shifting to the states. Several have applied for waivers from the federal government to allow them more flexibility. For example, a state might ask for permission to enroll Medicaid recipients in private insurance plans as Arkansas has done. While a private market solution might sound good, it could mean that people on Medicaid would have to pay higher deductibles and other cost sharing.

Indiana has a waiver that requires recipients to make small monthly payments and maintain a savings account mostly funded by the state to pay for some of their care. People who don’t make their payments may be locked out of coverage for a time. Some states like Arizona and Kentucky are eyeing work requirements. Most Medicaid recipients, however, are already working.

These potential changes raise important questions this last debate didn’t answer. Who should get coverage? Should we control rising medical costs by reducing healthcare for those who can least afford it?

Maybe the next debate will give us the answers.

How would you answer these questions? Write to Trudy at trudy.lieberman@gmail.com.

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