States Looking to ‘Ration’ Medicaid Benefits
As the economy worsens and healthcare costs and unemployment rise, a number of states are considering a tradeoff designed to increase the number of people covered by Medicaid: broader eligibility requirements, but less extensive benefits. The Wall Street Journal reports that the debate over "rationing" of health care was last seen in the recession of the early 1990s, when economic conditions similar to today's existed. State health care costs are currently growing at 9% a year, while states face budget shortfalls that total a combined $15 billion. As a result, states are increasingly looking for "greater flexibility to make tradeoffs in benefits and coverage." Under current Medicaid rules, states can alter optional benefits, such as prescription drugs, and populations, such as childless adults, covered by their programs. They must, however, provide the same benefits across the program, meaning, for instance, that childless adults must receive prescription drug coverage if any other population does. There are other ways to ration health care, as Oregon demonstrated when it recently proposed a plan to reduce Medicaid benefits by implementing cost-sharing for 90,000 beneficiaries who are not categorically eligible for Medicaid -- but became eligible after the state expanded the program in 1994 -- in order to enroll an additional 40,000 people. The plan, which still must receive approval from state lawmakers and the Bush administration, would increase the program's eligibility limit to 185% of the federal poverty level, or $17,600 for a family of four. Utah and Washington state, meanwhile, are also looking to cut benefits for some beneficiaries to increase overall enrollment, and "[o]ther states are likely to follow."
Some advocates worry that rationing will make health care unaffordable for "the poorest of the poor," as "[e]ven most co-payments can prove a barrier to these populations." Oregon's proposal, for example, could require beneficiaries to pay a 5%, 12% and 20% co-payment for doctors visits, emergency room visits and hospitalizations respectively. Coston Kaplinski, a 45-year-old cancer patient who earns $600 a month, undergoes a stent procedure every six months that "he estimates costs more than $1,000." Under Oregon's proposal, he would pay up to 10% of the fee. "To a lot of people these are token payments, but it adds up so quickly if you have a chronic condition like mine," he said. But state Medicaid officials say that reducing benefits is necessary to avoid substantial program cuts. The Journal reports that Dennis Braddock, secretary of the Washington Department of Social and Health Services, said "he would find it far more palatable to have some people give up benefits as opposed to, for instance, cutting some 70,000 children whose families have incomes between 133% and 200% of poverty" (Gavin, Wall Street Journal, 11/14).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.