The Bush administration's decision to give states more flexibility in running their Medicaid programs to cover more people won't work without more federal dollars, some policymakers said. The changes also may mean less money for some healthcare providers.
Speaking at the National Governors Association early last week, HHS Secretary Tommy Thompson said he would let states cut the benefits they provide to Medicaid beneficiaries if they use the savings to offer coverage to more people.
The "clarification of state flexibility" doesn't require congressional approval and is effective immediately; HHS will use its new waiver criteria to evaluate the next application it receives from a state.
The changes are based on a proposal the NGA developed in February; however, the association called for $16 billion per year to restructure state Medicaid programs and provide coverage for more people. No new money accompanies Bush's waiver changes.
"This is a very, very important first step," said Matthew Salo, the NGA's legislative director for health, of the promised flexibility. Salo added, "The funding issue is as critical, if not more so."
Leading Democrat lawmakers were wary of the administration's changes, and one consumer advocacy group said it doubted the new flexibility for states would result in more people receiving health coverage. A spokesman for Sen. Edward Kennedy (D-Mass.) said the senator hasn't yet studied the plan but would be concerned about any changes that reduce funding for vulnerable populations.
"I don't think it is as much about expansion, to tell the truth, as I think it is about cutbacks," said Judy Waxman, deputy director of Families USA.
Waxman worries that states would be able to cut benefits and use the savings for needs other than reducing the number of uninsured.
HHS spokesman Bill Pierce said political pressure will help hold states accountable, to use their new flexibility to cover more people. "The secretary is going to be watching," Pierce said.
The new waiver policy will allow states to change all but the mandatory set of benefits provided to the approximately 29 million people that Medicaid programs are required to cover. States would be able to apply to HHS to reduce optional benefits, including prescription-drug coverage, provided to the mandatory population, which includes children and pregnant women with incomes at or below the federal poverty level.
In addition, states may change the entire benefit package provided to 12 million beneficiaries who are covered, with federal matching funds, at states' discretion. The optional eligibility group includes pregnant women and children who are poor but above poverty level and elderly nursing home residents not eligible for the Supplemental Security Income program.
For example, states may switch pregnant women and children in the working poor group from the Medicaid benefit package to the less generous State Children's Health Insurance Program benefit package, Salo said.
Waxman predicted that the changes would "significantly" affect Medicaid funding for hospitals and nursing homes. Salo said the NGA needs "to look in more detail at how this would impact long-term care."
In 1998, 58% of some $100 billion in optional Medicaid spending was on long-term care. Half of the $58 billion went to nursing facilities.
"I am not sure if the flexibility will result in any better level of care or just shift the inadequate funding from one program to another," said Bruce Rosenthal, spokesman for the American Association of Homes and Services for the Aging.