Healthcare administrators who have watched state budgets-and reimbursements for treating the poor-be devoured by explosive Medicaid growth may soon face a scarier prospect. It's a plan promulgated by Republicans to get the Medicaid beast off the back of the federal government.
Everyone agrees the Medicaid program is long overdue for reform. From 1988 to 1991, national spending on Medicaid services increased by $37 billion-a 72% jump, according to the Kaiser Family Foundation. Spending growth slowed slightly in 1992-93, with expenditures up 11% to $124.9 billion, Urban Institute figures show.
With budget-cutting fever gripping the nation and defense and Social Security off limits, the prospect of giving states control of Medicaid spending seems tempting. But GOP plans could contain a trap for healthcare administrators.
Republican lawmakers are proposing to give states block Medicaid grants coupled with a spending cap-either based on per-capita amounts for each recipient or an amount based on current state receipts. But what happens if unemployment skyrockets and state Medicaid loads soar? Because raising taxes is verboten in the present climate, states will be forced to cut payments to providers or add to the rolls of the uninsured by lopping people off programs.
An alternate plan being floated by Republican Sen. Nancy Kassebaum of Kansas would give states responsibility for welfare and Medicaid acute-care programs, in exchange for turning over to the feds acute and long-term care for the elderly and disabled. With long-term care accounting for 70% of Medicaid spending, that approach might give states more predictability in their budgets and entail fewer sacrifices for providers.
Few states have a proven record in overseeing Medicaid managed-care plans or controlling healthcare costs. California's Public Employees' Retirement System has successfully negotiated premium cuts with HMOs with which it contracts, and Medicaid managed-care efforts in Arizona and Tennessee are promising. But the move to squeeze Medicaid reimbursements means new challenges for states and providers.
Executives must work to make sure Medicaid remains an entitlement, even if it's capped. Otherwise, they run a serious risk of being hammered by inadequate reimbursements.
Executives also should push for federal standards that ensure states will continue to spend Medicaid dollars on healthcare and not divert them to nonhealthcare ventures, as happened with some disproportionate-share programs.
And they must be advocates for access and quality of care for Medicaid recipients.