As lawmakers in Washington wrestled last week over cuts to the federal Medicaid program, the Bush administration continued efforts to encourage states to do their share to cut costs at their level.
At last month's meeting of the National Governors Association in Washington, President Bush gave states a directive: Come up with new ideas to save on Medicaid costs.
Unhappy with Bush's request to save money by clamping down on mechanisms that allow states to get more federal matching funds for Medicaid, the governors mostly flocked to other ideas, including red tape-free copayments and lowering the boom on seniors who transfer assets to qualify for Medicaid's nursing home coverage. But those changes will take time. Meanwhile, some states are trying to rework their Medicaid plans. Florida and South Carolina have explored the idea of giving Medicaid recipients vouchers or debit cards to cover healthcare (Feb. 7, p. 6).
One state that appears to be making headway on the issue is New York, which has the largest Medicaid budget in the country, spending roughly 44% of its $100 billion budget on the program annually. That state hopes to shrink its spending by scaling back the number of Medicaid patients in hospitals and nursing homes.
By treating more patients in their homes with visiting nurses, savings could be achieved by closing less-used healthcare facilities, Gov. George Pataki has said. According to his office, 40% of hospital beds and about 10% of nursing home beds in New York already go unused .
The federal government seems to embrace such efforts. HHS Secretary Mike Leavitt was quick to announce his support last week for a $1.5 billion waiver Pataki was seeking to make the changes, although it would still need to be approved through normal HHS procedures. And on the hospital side, Kenneth Raske, president of the Greater New York Hospital Association, said he was happy to see the healthcare system attempt to control Medicaid costs "through real reform."
"This is the most important single event to occur in recent years, in so far as it will allow material restructuring and also transitional funding," Raske said. "This waiver will help do major things that couldn't be accomplished without funding."
But Richard Gottfried, chairman of the New York Assembly's Health Committee, questioned the amount of savings that can be realized from closing hospitals.
"You are still going to be treating people somewhere," Gottfried said.
Daniel Sisto, president of the Healthcare Association of New York State, which represents about 550 hospitals and nursing homes, said the state's healthcare system could probably handle the closing of some facilities, as long as those closings include comment from local government and communities.
Florida, meanwhile, seems bent on cutting services to trim its Medicaid spending. Republicans in the Florida House last week introduced a 20-page bill supported by Gov. Jeb Bush outlining a plan to slow the growth of Medicaid by redirecting the delivery of health services to HMOs and similar managed-care networks.
Florida legislation also would reclassify services such as dental and vision-and even pharmaceutical-benefits as "optional." Managed-care groups in the state could decide if they wanted to offer any or all of the three. More than a dozen health services not required by the federal government would not have to be offered under the bill, including dental and vision care, prenatal and newborn care, chiropractic services, dialysis treatment, children's hearing services and hospice care. The changes would begin in South Florida, where more than half of the state's Medicaid beneficiaries live.
Many Florida Democrats responded to the plan by calling it "too fast-moving" and suggested the Senate either revise the bill or rewrite it to make the changes occur more slowly.
The Florida Teaching Hospital Council, which represents hospitals in Orlando and Miami, agreed that South Florida was a good place to start because of its mature market. However, bringing the plan to Orlando and Tampa "may be a bit trickier," they said.
In Mississippi, lawmakers are trying to cut almost $170 million from the state's Medicaid program, mainly by dropping the number of prescriptions the state covers from seven to five. Also, patients will be limited to two brand-name drugs.
The plan would slice Mississippi's contribution for Medicaid in next year's fiscal budget to $514.7 million from $683 million.
Pennsylvania Gov. Edward Rendell estimates his state would lose $200 million under the Bush proposal to cut Medicaid by $60 billion over 10 years (See related story below).
"If additional resources are drained from our program due to federal budget cuts, it will be impossible for us to continue to manage our program without dropping coverage for needy Pennsylvanians," Rendell wrote in a letter to U.S. senators last week.
"In particular, if we have to absorb cuts like those proposed by the president, we could be forced to eliminate all medical assistance services for at least 60,000 elderly, disabled and indigent," he wrote.