In The News

The Future of Medicaid and The Election

Meddling or Mentoring: Candidates Disagree

On Medicaid Direction

Medicaid—the financial lifeline for seniors who need skilled nursing care, but cannot pay tens-of-thousands of dollars in yearly nursing home bills—is facing the future challenges of swelling enrollee rosters and increased healthcare costs.

The debate over how to steer the low-income health insurance program through these choppy waters is an example of how each candidate views the role of the federal government. Governor Romney, a champion of state’s rights, wants to leave the day-to-day decisions of running Medicaid to local governments. President Obama feels that increased government regulation of the program would be the ideal.

“Both candidates’ plans would cause a shift of the Medicaid burden onto the states, but in different ways,” says Buckley Fricker, J.D., G.C.M., president of Buckley’s For Seniors, a companion care company for seniors.

Candidate views condensed

How this shift will affect seniors and their caregivers is difficult to predict.

The Affordable Care Act (ACA), Obama’s landmark health reform legislation, contains a good deal of specific instruction for states on how the Medicaid program should be run. More seniors would qualify for coverage under his plan. But some question whether or not the program—which has historically had difficulty managing care for the elderly—can effectively handle such a big influx of older adults.

Romney’s plan doesn’t include expanding coverage, which means that the number of senior beneficiaries wouldn’t change. He also allows states the freedom to adopt the care coordination practices that they feel are optimal for their individual situation. But his block grant proposal for helping states manage their Medicaid costs raises concerns that states might not be able to afford to implement these plans.

A lesson in cost-sharing

At its core, Medicaid is a partnership between the federal and state governments. Each side pays a portion of the cost of covering health care services for the nation’s poorest citizens.

The amount the federal government pays varies by state and is determined by the federal medical assistance percentage—a figure calculated by comparing a state’s income to the national income. By law, the federal government cannot contribute less than 50 percent or more than 83 percent of Medicaid funding per state.

The federal government typically picks up a larger portion of the Medicaid tab than a state does.

Expansion puts strain on uneasy alliance

One of the biggest issues impacting the stability of this partnership is the Medicaid expansion plan outlined in the ACA.

The law initially said that future government funding for the program would be denied to states unless they expanded their Medicaid rosters to cover all citizens who make less than 133 percent of the poverty rate.

According to the Centers for Medicare and Medicaid Services, this would extend Medicaid coverage to an additional 17 million people over the next decade.

The Supreme Court recently struck down this requirement—giving states the choice of whether or not to expand coverage.

Should a state decide to widen their coverage requirements, the federal government has promised to pay 100 percent of the cost of any new Medicaid enrollee until 2017, after which states would start footing a portion of the bill for these additional beneficiaries.

This option has led to a polarizing debate centered around one question: To expand, or not to expand?

More patients, more problems

While it would provide much-needed coverage to many Americans, Medicaid expansion also presents a host of problems.

One fear is that there won’t be enough doctors to go around.

Doctors don’t have to accept Medicaid patients and, according to a recent report from the Centers for Disease Control and Prevention, one-third of American doctors said they would not accept new patients paying with Medicaid.

The study also found a correlation between a physician’s motivation to treat Medicaid recipients and how much they were being reimbursed for that person’s care. The larger the reimbursement amount, the greater the number of physicians accepting Medicaid.

For states that expand the Medicaid program, the ACA does mandate a temporary increase in reimbursement rates for primary care doctors who take on Medicaid patients. But these increases are not extended to specialists (geriatricians, oncologists, etc.) and would expire after 2014.

Another expansion concern involves so-called, “dual eligible” seniors—those who receive benefits from both Medicare and Medicaid. These individuals make up about 15 percent of the Medicaid population, but account for 39 percent of Medicaid costs each year, according the Centers for Medicare and Medicaid Services (CMS).

Because they rely on two separate programs run by different entities (Medicare by the federal government, Medicaid by the state), care coordination for these vulnerable seniors has been notoriously poor.

Extending Medicaid coverage would increase the number of seniors who fall into the dual-eligible category, compounding the existing problems associated with care management.

The question of government interference

Recognizing the need to cut costs and curb government spending, both Romney’s and Obama’s proposals for Medicaid attempt to streamline health care services and reduce waste. But, each candidate approaches these goals in a different way.

If Obama stays in the White House for another four years, the ACA will likely be upheld which means:

  • The debate over Medicaid expansion will continue.
  • The existing Medicaid matching formula will be replaced with a “blended rate” that combines several different federal funding formulas to come up with an amount of money that would fluctuate based on the health of the economy and the number of Medicaid enrollees in a particular state.
  • The federal government would be more involved in the running of each state’s Medicaid program. If states accept funding, they would have to play by the rules outlined in the ACA.
  • Dual-eligible seniors would be encouraged (and perhaps, eventually mandated) to enroll in managed-care plans (HMOs, PPOs).

A Romney administration would most likely mean:

  • A halt to Medicaid expansion efforts.
  • A swapping out of the federal medical assistance percentage rate with a block grant program. Under this program states would receive a yearly allowance based on their individual population growth and the average inflation rate.
  • The federal government would be mostly hands-off, allowing each state to structure their Medicaid program and use their allowance as they see fit.

No easy answers for the older poor

Both candidates are facing a, “steep battle,” when it comes to reforming Medicaid, according to Fricker.

She feels that Obama’s plan offers the states more guidance and may be less disruptive to the program as a whole; thus making it less confusing for seniors.

Still, there are those who remain wary of too much government involvement, especially when it comes to placing dual-eligible seniors into managed care plans—a proposal outlined in the ACA.

The goal of such plans is to improve care for the low-income elderly while decreasing costs, but the transition could be a bumpy one, according to Mary Johnson, policy analyst for The Senior Citizens League, a nonpartisan senior advocacy group.

Johnson expresses concern that dual-eligible beneficiaries may encounter problems as they switch to managed care plans, including: unanticipated coverage gaps and potential interruptions in care. She points out that there are still a lot of unanswered questions when it comes to how the health care of these individuals will be monitored and delivered.

“For many dual-eligibles, it’s critically important to maintain long term relationships with doctors who are familiar with their health history. This safety net of doctors and providers may be disrupted for many dual eligibles in the near-future.” she says.

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