May 5, 2005 – The funding crisis facing the one of the country?s largest public healthcare programs has pitted low-income people concerned about their health against policymakers determined to control the growing cost to taxpayers of caring for the uninsured. As Congress moves to gut Medicaid by $10 billion over five years as part of an agenda of shifting funding priorities, various groups are working to voice the fears of those who depend on the program for survival.
One of these is Margie Austin of Pennsylvania, a single mother of four who relies on Medicaid to treat a nerve disorder and to care for her two disabled sons. In a recent testimonial collected by the health advocacy organization Families USA, she said that without subsidized health coverage, her youngest son, who has Down?s Syndrome, "may have to be in an institution, and that?s one thing that I fear more than anything."
Catrina Weber of Ohio is sure she would be dead if she lost her medical care. She struggles to raise her young son under the burden of debilitating chronic arthritis, respiratory illnesses and deep depression. "Medicaid is a lifesaver," she testified.
Against the muted backdrop of these stories, the pending reduction in Medicaid funding passed last week in the 2006 congressional budget resolution. The cut reflects the Bush administration?s supposed plan to control the budget deficit, currently about $400 billion, by curbing spending on social programs. The $10 billion figure is a compromise between the House bill, which proposed a net reduction in Medicaid of $15 to $20 billion over ten years, and the Senate proposal to maintain current funding levels.
In recent years, many state governments have sought to manage rising medical care expenses by tightening eligibility criteria, cutting services, or reducing reimbursements to service providers.
Supported through state and federal matching funds, Medicaid operates theoretically without funding limits to provide health services to more than 50 million enrollees. Nationwide, the program supports about 40 percent of the low-income population, roughly 40 percent of both black and Hispanic children, and more than 40 percent of people living with HIV/AIDS, according to the Kaiser Family Foundation (KFF), a privately funded health research group.
Medicaid enrollment and expenditures have grown in recent years, mainly due to rapidly rising healthcare costs in both the private and public sectors and an increase in the uninsured population. Advocates contend that in many communities, Medicaid is all that shields people from illness, overwhelming medical costs and economic destitution.
Advocates See Misplaced Priorities in Healthcare Cuts
Opponents of the Medicaid cutback argue that the budgetary "excess" scorned by Capitol Hill lies not in public healthcare, but in generous tax breaks funded at the public?s expense.
Henry Aaron, a senior fellow at the Brookings Institution, a centrist political think tank, said that while there may be room to reduce certain Medicaid expenditures, overall, "Medicaid is not a fat program."
Advocacy groups are calling for expansions of Medicaid to offer more services to a wider range of uninsured people.
An analysis by KFF showed that from 1998 to 2004, spending on Medicaid per person grew at only about half the rate of private insurance premiums.
Alwyn Cassil, public affairs director of the Center for Studying Health System Change, a health policy research institute, explained that in terms of keeping costs under control, Medicaid is "in many cases, doing a better job than the private sector."
Beyond issues of cost, critics question the supposed deficit reduction goals that drive the defunding of Medicaid, a program that accounted for 8 percent of federal expenditures in 2004.
An analysis of the budget resolution by the Center on Budget and Policy Priorities (CBPP), a progressive think tank focused on poverty, reveals that the $10 billion slated to be hacked from Medicaid will not significantly reduce the deficit, or even offset the pending tax cuts. According to Leighton Ku, a health policy fellow with the CBPP, Congress in effect "blew an even larger hole in the deficit" with the resolution; compared with projections based on current funding levels, the new policies expand the fiscal shortfall by $168 billion over five years, largely through an estimated $106 billion in tax breaks and billions in increased military appropriations.
Aaron noted the peculiar logic of reducing the tax burden of "people with incomes in the upper one-percent of the income distribution, while at the same time saying that it?s necessary to cut back on ? the major healthcare protection of low-income, elderly, disabled, blind and just poor people."
States Waive Public Health Obligations, Say Critics
Public health groups are focusing their advocacy not so much on the fiscal impact of the $10 billion cut, but on the trend the cut symbolizes and perpetuates: deep, widespread rollbacks to Medicaid coverage and services on both the state and federal levels.
In recent years, many state governments have sought to manage rising medical care expenses by tightening eligibility criteria, cutting services, or reducing reimbursements to service providers.
The Kaiser Family Foundation reported that over the past four years, all fifty states and Washington, DC have restricted payments to health care providers to hold down costs. Furthermore, from 2003 to 2004, 23 states responded to fiscal pressure by cutting back federally subsidized health coverage for children and families.
States can also obtain special waivers from the federal government to override mandatory coverage and eligibility standards. According to KFF, several states have used waivers as a mechanism for downsizing Medicaid programs through measures like waiting lists for services, varying tiers of service for different populations, and higher payments required of beneficiaries.
The government of Tennessee, for instance, recently used the waiver provision to push forward drastic cuts to the state?s Medicaid program, TennCare, which in the past boasted one of the most comprehensive coverage plans in the country. The governor?s proposed cutbacks would terminate the eligibility of more than 320,000 enrollees. (See previous coverage)
Another potential minefield for coverage reductions is the service and eligibility categories considered "optional" under federal statutes. States could reduce expenditures by selectively eliminating elective services, such as medications for mental health patients, and by limiting the eligibility of low-income adults, many who are not guaranteed Medicaid coverage under federal law.
In Missouri, reported the CBPP last month, Governor Matt Blunt?s strategy for "containing costs" would eliminate coverage for parents with incomes exceeding 22 percent of the poverty level, or $3,500 for a family of three. The Governor?s broader overhaul proposal would exclude some 125,000 people from the Medicaid system.
The consequence of making Medicaid less accessible, said Ku, is that people will be discouraged from seeking medical help, even if they technically qualify for it. Faced with higher co-payments, for instance, low-income people tend "to skip medications or... doctor?s office visits because they can?t pay for them." By compelling people to delay treatment until they reach the emergency room, the intensifying pattern of rollbacks "hurts the people who are most in need by virtue of being poor and sick."
Wearing Blinders on the Medicaid Battlefield
In the ongoing budget process, the federal government?s main Medicaid initiative takes the form of a proposed special commission to "study" the program, which advocates suspect might open a Pandora?s Box of regressive reforms.
Judy Feder, dean of Georgetown University?s Public Policy Institute, an academic think tank, said the commission could spur "an undoing of guaranteed protections for our most vulnerable populations." Critics fear that Congress will follow the Bush administration?s recommendation to impose funding caps for Medicaid, transforming the program from an "open-ended" public health resource into a more rigid set of federal-state expenditures.
Dave Kendall, senior fellow for health policy at the Progressive Policy Institute, a liberal political advocacy group, said that even if the proposed commission does not enact further rollbacks on the Medicaid, it will most likely "be sidetracked into the immediate question of how to cut ten billion dollars over the next five years" rather than "taking a real hard look at what the program is doing, and how could it be doing it better."
Kendall predicts that legislators would dismiss longer-term systemic reforms, like programs to curb pharmaceutical expenses, and default to short-term cost controls -- such as strengthening barriers to coverage for nursing home care or restricting how states budget their healthcare spending.
Ron Pollack, executive director of Families USA, said, "The longer-range effort has got to be, how can we restructure Medicaid to make it more responsive, in light of a private healthcare system that is increasingly unaffordable for more and more people?"
To that end, advocacy groups are calling for expansions of Medicaid to offer more services to a wider range of uninsured people. Yet ideas for broadening the program?s scope seem far removed from current political realities. "Right now," said Henry Aaron, "the Medicaid battle is between those who want to cut and those who don?t. Nobody is proposing significant expansions."
John Holahan, a health policy researcher with the Urban Institute, a liberal think tank, likened legislators? focus on reducing expenditures to "running around with blinders on" while avoiding a social responsibility to protect people?s health.
Advocates also warn of the "boomerang effect" of cutting Medicaid: an increased number of ill uninsured people will overburden emergency care providers and drive up overall healthcare costs. "If the federal government cuts funding in one place," said Pollack, "there are going to be increases in other places, whether it?s at the state and local level, or whether it?s in the private sector."
In Leighton Ku?s view, the human cost of the cutting Medicaid will fall on those who cannot budget away the burdens of illness and poverty: "The federal government says, ?We can?t pay for it,? the state says, ?We can?t pay for it.? So instead, they?re shouldering the costs onto the poorest people of all."
