Medicaid Today and Tomorrow

Introduction

Medicaid has become an influential program in our country. It has been put in place with the purpose of assisting the less fortunate of our country, especially the women and children, that need healthcare but would otherwise not be able to afford it. Medicaid does a lot of good, yet because it is run by the states instead of the federal government, it has run into numerous problems in its existence, many of which have manifested and evolved into greater problems over the past few decades. We will look into what Medicaid is, what it started out as, and what problems it faces in our current age.

Background

Medicaid, also known as Title 9 by the Social Security Act, is a voluntary program which offers federal subsidy to the states that participate. This program targets the medically needy people with expenses that would otherwise go uncovered. Medicaid was first enacted in 1965 as a companion to Medicare. Public interest was high for public welfare programs in the 60’s. It has since evolved, growing from a program that served mostly female-headed households on welfare to one that serves the whole range of health sector problems, addressing infant mortality, chronic disability, and nursing home care in addition to the wellness of poor people. Medicaid is known as a payer of last resort, meaning that it takes effect only after all other resources have been used up. This includes Medicare, which plenty of the older recipients are on as well. While Medicare and Medicaid differ in the way they operate, they are supposed to equate to give out about the same amount of coverage overall for patients. Between 1965 and 1979, state expenditures around the country increased six-fold among education, public welfare, and health. Health alone grew from 3 billion to 16 billion during this time. By 1982, Medicaid involved 60 percent of state expenditures. But Medicaid brought up enormous deficits in the 80’s, as 15 states reported deficits, which ranged from 800,000 to 62 million, and 13 others needed appropriations to offset smaller deficits. This made Medicaid a prime target for reform in the 80’s, when America became so concerned with costs. At this time, Medicaid was giving 37% of its expenditures to the elderly, 30% to the blind, disabled, or mentally retarded, 28% to AFDC adults and their children, and 5% to other small groups.

Medicaid has since developed and adjusted, in many ways improving its quality and accountability to today’s status. One such way is with the Reconciliation Act, first created in 1981, which allows states to offer benefits selectively to particular groups of health care recipients. In doing so, states do not have to offer the same benefit packages to all groups of need, such as prescription drugs to both the elderly and to children. Overall, the Reconciliation Act reduced welfare benefits, which allowed states to offer different options in paying for and delivering care. New hospital systems and alternative delivery systems, such as HMO’s, were brought into play. States also began to manage costs and services instead of simply paying bills. During this time, as the economy improved, Congress passed a series of laws requiring Medicaid programs to expand, many of which were targeted to children and pregnant women, but also to homeless, elderly, and disabled. The response was a large enrollment surge in the program, rising from 25 to 35 million between 1984 and 1992, at the time 1 in 7 Americans. At this, program costs grew too, at an astounding margin from $27.7 billion to $112.9 billion in less than a decade, though it was not even growth throughout the period. Nevertheless, these increases were the largest increases since the beginning of the Medicaid program.

Medicaid is still a large part of the national spending on healthcare, accounting for 15 percent of all national health care in 1999. Plenty of other programs dealing with children are involved with Medicaid, such as AFDC, SSI, and SCHIP. Children are considered based on their own condition, rather than the condition of their parents. The AFDC, which stands for Aid to Families with Dependent Children, and SCHIP, or State Children Health Insurance Program, both assist in covering children that would otherwise not have healthcare, with Medicaid as a supplement in many cases. This goes both for children living with their parents and with other legal guardians, and as a result children may be available for benefits even when their parents/guardians are not.

Medicaid, Medicare, and other healthcare programs have gotten a reputation of being on of the main causes of higher government expenditures over the years, which has led to a waning in it’s popularity over the years as it has grown throughout the ‘80’s and ‘90’s. Medicaid is much more helpful than realized by the majority of people today. Eligibility for Medicaid depends primarily on income. After that, other things are taken into account, such as age, disabilities, pregnancy, and financial resources other than income. There are few, if any, copayments for people on Medicaid, and only for certain states. This is to be expected, since poor families would seem largely unable to make such payments more frequently. In order to earn federal financing help, states are required to provide a basic set of services, and then are permitted to add optional service on top of it. Mandatory services include hospital care of both inpatient and outpatient service, nursing home services, home health services, laboratory and x-ray services, Medicare premiums, deductibles, and copayments. In addition, certain services are to be added on for children, such as preventative health, family planning, and clinic services. Optional services include prescription drugs, intermediate care facilities for mentally retarded, inpatient mental healthcare for elderly and children, and other individual needs like optometric, podiatric, dental, chiropractic, and transportation services.

Economics and Problems

Medicaid is a very influential and important program, but it is not without a long list of problems. One such way, perhaps the most far-reaching reason, is that complications arise from the vastly different ways that each state runs their own version of Medicaid. Medicaid is used as a conduit for giving states a very large amount of federal revenue, as well as an entitlement program. Because of this, it was not set up the same throughout the entire country, and its implementation went different ways across each state. Every state has begun and developed Medicaid in their own ways since it first was created. Some states began the program from the very beginning, while others were hesitant or even resistant to join along. Arizona, for example, was the last state to begin their own Medicaid program, as we learned in a case study in class. The state was required to call its program differently because of differences between their own program and the general type of Medicaid program.

What’s more is that individual rules for each Medicaid program change frequently, as with any bureaucracy. This means that the changes have changes made upon them over time in different directions, so comparing the evolution of Medicaid from state to state is another challenge within itself. It has been reformed over several decades, and has actually made many gains in this way. This program is the target for reform primarily because of it’s size and because it is widely misunderstood, like most welfare programs. Human welfare has become less of a synonym for “human well-being” and more of a synonym for “public relief.” It is envisioned that Medicaid helps unemployed and minorities when in fact Medicaid helps a great deal of people that are quite unable to help themselves, such as the disabled, elderly, children, or pregnant women. This discrepancy has caused the program to lose popularity with Americans, especially in the 80’s. However, even then, many of those surveyed still said that they thought healthcare for the needy was important, even if the cost was a growing concern.

Within the Medicaid system for every state, there are certain groups that are required to be covered for Medicaid with other groups to be optionally covered. Mandatory groups to be covered include families that qualify for welfare, families in which a parent is making a transition from welfare to work, families with children dependent on welfare, low income pregnant women and children, elderly and disabled people, and those covered by the SSI, or Supplemental Security Income program. Because of problems considering coverage, one idea has been to change the scope of what is covered. State programs can get federal funding for more broad coverage. The implication of strict eligibility is that money saved in Medicaid costs is more than offset by the costs of other program, which end up increasing overall costs. So, by covering more care in Medicaid, states can actually lower overall expenditures.

The rules for Medicaid are most commonly seen as confusing because of several issues that are not usually properly explained to patients, 3 of which are 1. transitional coverage, 2. impact of failure to meet reporting requirements, and 3. differences in income disregards across eligibility groups. Transitional coverage refers to differences in coverage when patients move. There is no way for each state to transfer coverage to another state, since each state program is pretty distinct. So customers must reapply when they move to another state, which leaves a period where they are not covered. A big problem might be getting customers to understand that simple fact: one state’s Medicaid has nothing to do with another state’s Medicaid. As far as low income, the definition varies year to year what exactly falls under low income. In 2001, the cut-off point was an annual income of $8,590 for a single person and 14,630 for a family of three. Since the states make their decisions based on who is already covered and what care is given, many poor people are left a great deal of time without vital services like optometry, prenatal care, or prescription drugs.

One of the most problematic types of problems concern claims themselves and the ways they are submitted. Claims can be erroneously rejected for dozens of small inconsistencies in how they are filed, such as improper terminology and coding. With the growing expense of Medicaid, many programs have used advance payments to assist patients. But over time, some states have actually stopped or taken back advance payments from practices that use Medicaid, forcing the businesses to recoup the losses themselves. This problem with cash flow and reimbursement has made a large impact on the providers. Physicians have been increasingly uneasy to go along with Medicaid because of how much it can throw off their personal practices. In fact, many providers, especially physicians, do not want to participate in Medicaid also because the reimbursement rates are low when compared to the rates of the private sector. This difficulty in access for Medicaid patients has been addressed in some states by increased enrollment into managed care plans. This action improves access at the cost of sacrificing choice.

Another large problem with Medicaid is with the people on a certain program that must move to different states. Since each program is run within the state it’s located in, patients must reapply in each state as they move, which means there are undetermined amounts of time that they are not covered. Furthermore, different states have different criteria for what qualifies for Medicaid, so a family considered to be covered in one state may not be below the poverty line in another state. This can lead to frustration and, ultimately, lowered amounts of enrollment in the system.

Another large problem has a great deal to do with how Medicaid corresponds with other welfare programs. Local welfare staff are usually supposed to take responsibility in informing Medicaid families and making sure that they apply when, where, and however necessary. This creates a problem because welfare and Medicaid are administered by different agencies, most local welfare staff are not trained to be helpful with Medicaid policy. In fact, Medicaid and welfare have different objectives for their customers. Welfare aims more to get it’s customers off of the program and into self-sustainability. Medicaid, being more about covering health, is more set on covering its patients needs and expanding coverage. So it can be seen as quite an awkward position for those welfare workers to try to increase their patients use of one program while working to get them off of another. They want to look into the best interests of their own job, but are also instructed to give information about a totally different organization that they are not even a part of. This is a huge problem, and it gives rise to other ones.

Many policies are erroneously terminated for miniscule problems with the applications. The people supposed to help with the applications, on many occasions, have no idea how to help the applications or fix them if an problem occurs. After all, the local welfare staff is not trained to deal with problems of Medicaid. This makes a huge problem as far as both reliability and accountability are concerned. How can anything be relied on being completed when so many people’s issues are left unanswered? The system has no way of helping a great deal of people simply because they have no access to someone who legitimately knows that they are doing. And this is not even the only issue at stake. If there is a problem, who can honestly blame the welfare staff? Why would they be held responsible on their job for a program that they don’t work for that has objectives different than their own? Many a time these people are just as frustrated as the patient, because they want to be able to help people but are not given a way to effectively do so, in the event that they try to please patients for Medicaid’s objectives. And this is one reason that the problem doesn’t get confronted more quickly. Through the system’s runaround with other systems, the different organizations across the state, and the state bureaucracy, patients are frustrated to the point that they don’t know who to complain to, let alone how to get proper and adequate coverage. More erroneous terminations are due to the system by which the applications are taken. The automated eligibility systems that are in many cases used to determine Medicaid eligibility were ones built for welfare’s needs, not Medicaid’s. This, as well, has been a problem that has yet to be very seriously confronted. Welfare among many groups has waned in recent years, especially within immigrant groups. This has been attributed to additional verification of citizen and immigration status in addition to everything else within Medicaid.

Possible Solutions

Amidst all of the problems with Medicaid, one must ask what are the solutions to any of these problems. Reform has been productive throughout the 80’s and 90’s, so further initiative shouldn’t be hard to come by. Most states are looking into further restructuring their health care systems. Many of them took very drastic steps to changes. Different approaches of the early 90’s ranged from flexible spending accounts in Oklahoma to one single payer system, resembling the Canadian system, in Vermont. This is primarily because each state requires different needs and has different constraints of budget. While talk has gone on about the feasibility and practicality of federal health care, state reform has been the gateway and, if nothing else, would serve as transition. Reforming healthcare in America has centered around 3 basic principles.

The first, and most modest, approach is to build on the existing system and expand the system to more low income people. This seems successful enough, but only as long the public opinion of welfare is both positive and properly informed. As we saw in the 80’s, when public opinion is skewed about health care issues, the programs that provide healthcare can los popularity very quickly. This is very realistic, because it doesn’t require anything sacrificed from the current state of affairs of Medicaid. It can almost be looked upon as business as usual. So, reception of continuing on may depend heavily on what opinion one has of Medicaid now.

The second is to reduce coverage for the poor and instead enroll them in the private healthcare of people used by other Americans. This idea was a central part of proposals put forth by Bill Clinton’s Health Security Act, the Cooper/Breaux Managed Competition Act, and the Chafee/Thomas Health Equity and Access reform Act. Among other proposals, these programs mainly differ on how much they sway towards cost containment or managed competition. This general idea would increase the overall coverage of those in poverty, but each individual proposal varies on the actual value of insurance costs. Also varying are the explicit costs of serving the poor. Plans like these would have to be judged on to what degree they treat patients from across the country in the same way.

Third, most radical, is the idea of fully replacing our healthcare system with a federally sponsored program, as is found in Canada. Dave Chappelle once made a joke that politicians should provide free Canadian Social Security cards to all citizens, so in the event of injury or sickness people can go across the border to get themselves checked out. But implementing a system like that for Medicaid in our country may not have nearly as much success, since the states are dealing with Medicaid in such different ways. Giving the same support per state might be more problematic than it would seem, not to mention the chaos that could ensue while changing programs in such a wide-reaching way. Overall, this might be unattainable, and if it is attainable, it runs the risk of causing more harm than it prevents.

President Bush has continuously moved policy towards allowing states sovereignty over Medicaid. In fact, in 2003, Tommy Thompson, Secretary of Health and Human Services, outlined a plan to give states a choice between remaining in Medicaid or in an alternative that would allow them to have more freedoms in expanding, restricting, or eliminating benefits to millions of patients. The groups that would be relabeled as optional groups would include elderly patients over 65 and disabled beneficiaries under 65. Under this proposed plan, states would no longer need waivers to deviate from federal guidelines, giving them what Thompson referred to as “carte blanche” for Medicaid decision-making. Another point to note is that the federal funding for states that would choose this option would come in 3 lump sums, or “block grants” as they were referred to; one would cover acute care, one would cover long term care, and the last would provide for the cost of administration and other safety net fees. The states did not receive this plan well, primarily because the federal appropriations had previously been open-ended and were now to be very defined in relation. The effort put forth into this measure actually more solidified it’s opposition than it had been before. Overall, this issue ended up resorting to partisan politics, as many other issues do when put onto a national level. But this is one situation in which the tradition of Medicaid was actually defended. This shows how some reform has been fiercely resisted by some states, and illustrates why reform is taking so long as it is.

President Bush’s administration also unveiled a proposal known as the HIFA initiative, or Health Insurance Flexibility and Accountability. This would allow states to provide limited coverage to low income adults with no children, particularly ones that would otherwise not be eligible for Medicaid. In doing so, it would also permit certain reductions in care for current patients. HIFA appeared to be another attempt to restructure Medicaid by this administration, with state subsidy that would offer more limited coverage than traditionally. In short, it gives states a way to adjust spending without having to expand and restrict Medicaid. This can be seen as another effort to change the general structure of Medicaid across America.

When it comes down to it, one might argue that Medicaid, despite its problems, is working overall, and that aside from the problems with misunderstanding of rules for both patients and welfare workers, things do not need to change a great deal. While it can be agreed upon that good is being done, hopefully the standards that Medicaid has been brought up to are not quite satisfactory. Not to mention, our economy is ever shifting, the programs keep evolving, and public opinion can fall out at any time. It makes a great deal of sense to keep fighting to improve the system, both so that more Americans in need can be helped and the ones that already are benefited are not harmed if the current program is abandoned.

Conclusion

Medicaid has had a very eventful history in our country, and it is likely to keep shifting and evolving. The current system is constantly changing and adjusting to several mediums for reform. Regardless of it’s problems, Medicaid has done an enormous deal of good for the medically needy in our country, ranging through all the different groups that were not merely limited to the poor. As it continues to be reformed, hopefully it will continue to cover more people that need it in a manageable and affordable way.