State Officials’ Medicaid Proposals Include Variety of Cost Curtailments

The National Governors Association and the National Conference of State Legislatures have drafted proposals that recommend ways for Congress to cut Medicaid spending by $10 billion over the next five years, a move that is called for in the fiscal year 2006 budget resolution, the New York Times reports. The groups plan to submit final proposals to Congress later this year (Pear, New York Times, 5/9).

The 12-page NGA draft includes the following provisions:

• Making it more difficult for individuals to transfer assets in order to qualify for Medicaid;
  


• Increasing the use of "reverse mortgages" to fund long-term care;
  


• Raising copayments for Medicaid services;
  


• Providing incentives and penalties to encourage individuals to be more responsible for their own health care;
  


• Arranging purchasing pools to help small businesses buy health coverage for employees;
  


• Creating a package of benefits similar to SCHIP for nonelderly, nondisabled Medicaid recipients (CQ HealthBeat, 5/6);
  


• Enabling states to establish "different benefits packages for different populations or in different parts of the state" (New York Times, 5/9);
  


• Streamlining the federal Medicaid waiver process or changing the federal statute "to eliminate the need for waivers altogether";
  


• Creating a "new national dialogue" for addressing issues related to aging, such as funding for end-of-life care; and
  


• Using health care tax credits for individuals, employers and state purchasing pools to slow the growth of the Medicaid-eligible population.

NGA officials said the draft offers "a set of concepts" discussed by a working group comprised of 11 governors. The officials added that the draft "does not in any way represent current NGA policy," which requires a supermajority vote of the executive committee or all governors (CQ HealthBeat, 5/6). The draft was marked "for comment only -- not for distribution."

According to the NGA draft, Congress should establish "financial protections to ensure that beneficiaries would not be required to pay more than 5% of total family income." In addition, the NGA proposal states that "Medicaid overpays for prescription drugs" and suggests that Congress increase the discounts and rebates on pharmaceuticals supplied for Medicaid. Governors also would like "broad discretion" to set premiums, copayments and deductibles.

A number of NGA's proposals "resemble ideas advanced by President Bush as part of his 2006 budget," the Times reports. However, the governors "also reject some of the president's recommendations that they believe would shift costs to the states," according to the Times.

NCSL has discussed a proposal to provide states with a fixed amount of federal funding for long-term care under a "sort of block grant that would automatically be increased each year to keep pace with medical costs and demographic changes," the Times reports. State officials would have flexibility to use the money for nursing home and home health care, but the services would not be considered an entitlement.

State legislators have not agreed to the proposal, "which they know would be contentious because the legal entitlement to benefits is a bedrock of the Medicaid program," according to the Times. NCSL's draft also would change a provision requiring states to treat any health problems discovered in routine examinations of children younger than 21.

A coalition of health care providers, labor unions and beneficiary advocates, including AARP and Families USA, "is already gearing up to fight any significant cutbacks in Medicaid," the Times reports.

Jane Perkins, a lawyer for the National Health Law Program, said NCSL's proposal to change the children's care requirement "would be a tragedy" because children under the program "are likely to have the greatest needs, more chronic illnesses and disabling conditions."

Some advocates also have said that NGA's proposal to charge higher copayments for emergency care could discourage people from seeking treatment. As a result, Medicaid recipients would be more likely to seek care only after their conditions were more severe and treatment was more costly, the advocates claim.

However, John Adams Hurson, a Democratic member of the Maryland House of Delegates and president of NCSL, said, "I am ... a liberal Democrat, but we can't sustain the current Medicaid program. It's fiscal madness. It doesn't guarantee good care, and it's a budget buster. We need to instill a greater sense of personal responsibility so people understand that this care is not free."

State officials have said "their goal is not just to save money, but also to avoid wholesale cuts in coverage" such as those proposed in Tennessee and Missouri, the Times reports (New York Times, 5/9).