Alarming advocates for poor patients, the Bush administration late last week proposed lifting a requirement that states apply for federal permission to tinker with their Medicaid programs.
HHS Secretary Tommy Thompson announced that President Bush will push for changes that will give states the freedom to redesign benefits, change requirements for beneficiaries and make other alterations without having to ask permission from the federal government.
Currently, states must apply for a waiver from HHS to alter Medicaid.
Under the plan, which requires congressional approval, $3.25 billion in additional federal Medicaid funding will be available during the first year of the program, fiscal 2004. A total of $12.7 billion will be allocated into the program during a seven-year period, Thompson said.
Thompson said the program, based loosely on the State Children's Health Insurance Program, would boost funding to states and expand insurance to those who are currently uninsured and do not qualify for Medicaid.
"The bottom line is Medicaid is outdated and inefficient ... and forcing states into a no-win situation," Thompson said, saying that states face expensive federal mandates in the face of declining revenue.
The Bush administration has encouraged states to experiment with health programs for the poor, approving at least 2,529 applications for Medicaid waivers, demonstration projects and amendments to SCHIP. Nineteen states have applications pending for waivers for demonstration models.
Some of these waivers have met with opposition from providers and advocates for the poor. For example, last year Utah was given a waiver allowing officials there to start a five-year demonstration program to provide an additional 25,000 uninsured people some coverage. However, inpatient hospital stays are not covered as part of the benefits and people already in Medicaid had to pay a $100 fee for inpatient admissions.
Critics called the Utah waiver and others that allow states to make drastic changes harmful to the very lowest-income families.
At a press conference announcing the Bush plan last week, Utah Gov. Mike Leavitt said the waiver has been a benefit, allowing the state to provide health insurance to individuals who have to work two or three jobs to make ends meet but still can't afford to buy coverage on their own.
"This is about protecting access for the most vulnerable during difficult times," Leavitt said.
Under the proposal, states would be paid from two pools of money, one for acute care and one for long-term care. Amounts would be based on the state's individual spending levels for 2002 in Medicaid and SCHIP and increased annually based on a formula.
Ron Pollack, executive director of consumer group Families USA, attacked the proposal, saying it undermines the intent of Medicaid to provide adequate healthcare to those who can't pay.
"This is a frontal attack on the Medicaid program's bedrock that all people eligible for health assistance under Medicaid are guaranteed that they will receive it," he said. "Such a change could result in needy families losing health coverage and being placed on waiting lists, key benefits being eliminated from coverage and families being forced to pay premiums, deductibles and copayments that are unaffordable. In effect the Bush administration is giving a green light to slash healthcare for the people who need it the most."
Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, also said that in light of the fact that states and the federal government spend $250 billion each year on Medicaid, the extra money being allotted is insignificant.
But given tight state budgets, sweeping changes to the state and federally funded Medicaid programs are practically ensured this year. As many as 1 million individuals could be dropped from Medicaid nationwide. According to a recent report by the Kaiser Commission, 49 states and Washington will cut or have cut their Medicaid programs, some doing so twice. This despite an expected 9% growth in Medicaid spending, double what the states originally had estimated. Alabama is the exception.
"Over the past year, states have clearly tried to avoid taking dramatic steps, but over time they have realized they have to go back and take additional action," said Victoria Wachino, associate director of the Kaiser Commission.
Massachusetts will eliminate coverage for 50,000 people starting in April. In Tennessee, up to 250,000 adults and children are being dropped from its Medicare roll as a result of changes to its program. And in California, which faces a $30 billion deficit, a proposal to raise income eligibility thresholds will throw about 350,000 people off the state's Medicaid program, Medi-Cal.