HRSA/MCHB 2005 FEDERAL/STATE PARTNERSHIP MEETING

PUBLIC HEALTH ACROSS THE LIFESPAN

The Future of Medicaid: How Will it Continue to Serve Children and Pregnant Women?

ALAN WEIL: Good morning. I appreciate the opportunity to be here today. I know many of you heard from Matt Salo yesterday, who works for the National Governors Association, and is paid to speak for states and governors, and I want to be clear that although I'm the director of an organization that works very closely with states, I do not purport to speak for them.

I speak from my experience as the director of the Medicaid agency in Colorado some years ago and someone who has studied and thought about and worked with people who are trying to make Medicaid work over the years.

And I thought the way to frame the question of the morning is will the new Medicaid, whatever new means, meet the needs of children and pregnant women?

Now, Medicaid has many roles, and some of them are probably familiar to not just you but most people. It is of course the primary source of insurance coverage for poor children and a major source of coverage for pregnant women and children, even those above the poverty level.

It's also a critical source of coverage children with severe and modest disabilities, physical, mental, and it's a source of funding for safety‑net hospitals and clinics.

And when people talk about Medicaid and they also talk about long‑term care and the elderly and people with disabilities, this is sort of the traditional language of Medicaid. And when people talk about reforming Medicaid, they are thinking of it as an insurance program as a source of coverage, and often there is attention paid to safety‑net facilities.

But Medicaid has many other roles, as well, and I'm sure I'm going to miss many of them, but here are a few of Medicaid's hidden roles that are probably not familiar to most people and certainly not familiar to most people in the country, and I dare say not familiar to most people who are talking about modifying the program.

Medicaid is a source of funding for children in foster care, a primary source of medical services as well as social support services to reduce out‑of‑home placements. It's a source of funding for school based healthcare which used to be quite controversial, but has become mainstream around the country, and without Medicaid many of these services would not be delivered.

It's a source of funding for children at risk for involvement in the juvenile justice system, mental health, out‑of‑home placement, the entire juvenile justice system would look very different if we did not have Medicaid funding for services for children.

It's the source of funding for translation services, I use similarly as an example, and other features of a culturally competent healthcare system. With so much attention being paid at the rhetorical level to cultural competence and, more particularly, to racial and ethnic disparities in healthcare indicators, it is important to acknowledge the role that Medicaid plays in trying to reduce those disparities.

And as much as politicians of both parties and governors and federal officials are great fans of the State Children's Health Insurance Program, as I am, as well, it's important to note that the SCHIP program is capped, and so when you have an expensive child, it is very fortunate that the Medicaid program is there that is not capped that enables you to meet the more complex needs of children with special healthcare needs.

So if we are thinking about Medicaid reform, we need to not just think about the sort of standard roles, but we need to think about these hidden roles as well.

Now, you have heard some of the ideas about Medicaid reform, and I won't dwell on the many proposals out there. I think it's fair to say that the 10 billion dollars of savings identified by the secretary's Medicaid Commission are by and large quite incremental. I don't mean to suggest they aren't important or potentially harmful to some, but they are certainly incremental in the sense that they don't fundamentally alter the structure of the Medicaid program. But there are certainly proposals out there, some of them very popular among many, that would do much more, and I'd say there are two primary features of the dominant themes in Medicaid reform today.

The first is the theme of flexibility. Now, flexibility means many things, but it is normally spoken of as flexibility in benefit design and cost sharing and some proposals make sure that you don't get flexibility with respect to certain populations, particularly in many instances the poorest children and sometimes pregnant women.

So some reforms provide flexibility but don't provide it for sort of the core current Medicaid population of moms and kids. Others would provide that flexibility to all populations served.

They could eliminate many, usually not all of the federal eligibility categories, so there would be much more flexibility in who you cover.

Eliminate the current requirement in Medicaid program that benefits be provided uniformly on a statewide basis and comparably across eligibility categories. So you could have different benefits one place to another, one person to another. Currently you need a waiver to do that.

There would be the ability to define narrow benefits for a specific population, so if you had a targeted problem, you could target some benefits but not provide the broader array of services that Medicaid does right now. And there would be, again, proposals vary, quite a bit of flexibility on premiums, co‑payments and deductibles; charging premiums to enter the program, increasing co‑payments for services, imposing deductibles, all things that are either prohibited or very tightly prescribed under the current program and often prohibited for children and pregnant women.

That's one category of reforms. Another category is much more complex. It has to do with fixed contributions to consumer accounts, health savings account models, the idea that basically you take the dollars in the Medicaid program, you divide it up into the people you cover, you hand them each a check and say go find yourselves some health insurance coverage, and you figure it's the same cost so they ought to be able to get the same benefits. I've made it sound simple. In fact, the proponents make it sound simple, too.

Now, there are, I think it is important to note, some very interesting and positive opportunities created by these reforms. The first is that the flexibility on benefits and cost sharing could make states more comfortable, expanding coverage. After all, if you look at the State Children's Health Insurance Program, a key feature or a key reason why states amend brace that program so quickly is because it wasn't an entitlement, they had flexibility on benefits, of course they also had an enhanced match rate, which is not a minor factor for states. But I think it's fair to say that flexibility does make programs more enticing to states to participate in, more a sense that they can control them, and that's a potential positive. I would note, however, that we already have a pretty solid base of coverage for kids and pregnant women, so the flexibility to expand would only be sort of with the next group, because we already have a base of coverage in Medicaid right now.

A second opportunity created by reform is a possibility for closer integration with employer sponsored coverage. The idea is to make Medicaid look a little bit more like employer coverage to help people move between employer and public coverage, and although there are concerns about the benefits, there is a potential advantage of better continuity of coverage, better continuity of provider networks, the ability to actually find a medical home and stick with it as your income rises and falls, and I think that's a potential real benefit to these reforms.

And third, consumer direction could enable families to obtain more needed services. It is true that the Medicaid benefit package is defined, that the state and the federal government define that package, and that given more flexibility some people might be able to purchase services that they are not currently permitted to purchase because of the definitions in the Medicaid program. And I think we should be aware of the potential benefits created by these reforms. There are some risks as well. I will not dwell on them, but I certainly think they need to be said. Cost sharing could create barriers to receiving services. This is sort of obvious. But it is often not noted. The data on this are really incredibly strong, and I think one of the frustrations is people say, well, we're going to increase cost sharing but we're really not going to do it at a level that reduces people's use of services.

Well, we already know that even very modest levels of cost sharing will do exactly that, and so there's a mismatch between the statement of what the intended effects will be and what we know from the evidence. Scaled down benefits could yield unmet needs. Again, this seems fairly obvious. If you don't cover a service, poor people won't get it by and large, and if we believe those services are necessary, which they would only be covered by Medicaid if they were, people going without them will suffer consequences.

Underfunded social service systems could lose support. As I said, Medicaid dollars flow into all sorts of social systems outside of the core healthcare system. If you fundamentally alter Medicaid, it's hard to know what happens to foster care, but I'll tell you if you block grant Medicaid, in five years foster care systems are going to look awfully different than they do today, and I don't think primarily in a positive direction. Protected populations could lose coverage. There are lots of little quirky rules in Medicaid that drive states crazy that do also protect certain populations at risk, and if ‑‑ with increased or complete flexibility there is no reason to believe or to be confident that coverage would remain. Unregulated private plans could market inadequate products. We do have experience in Medicaid of turning the program sometimes over to private plans. The overall track record for manage care and Medicaid is really quite positive, but we do have some historical experience of extremely negative consequences, and of course the negative consequences fell to the recipients of the program, the positive consequences fell to the pocket books of some not so scrupulous private plans. And if we sort of turn this over, I think we have to expect that we are going to see some of each. And if we shift financial risk to families, some families will be on the losing side. Some will gain.

If you took your private insurance plan that you have through your employer and took it home in cash, most of you would be better off because most of you aren't going to use a whole lot of healthcare services. So you say great, I'm better off. But a few of you would be a whole, whole, whole lot worse off. And as we shift that kind of service to families, that's a risk.

Now, I'm not going to focus on EPSDT because it's come up so many times, but it is part of the definition of the Cadillac. And I think I took this slide from a presentation Sara Rosenbaum gave at Alliance for Health Reform event just a month ago on Capitol Hill. And, you know, you sort of hear about the rhetoric around EPSDT, and its, you know, everything everyday, whenever you might want it; and then you actually look at what's covered and you think about the needs of poor children and the developmental needs of children, and it's kind of hard to find things here that you wouldn't really want people to get. At least that's my interpretation of it.

Now, Medicaid reform is on the table. It is worth noting that we have had other visions of Medicaid reform in the past. We have talked about express lane eligibility, which would make it much easier for kids to get in the program.

I want to show you a slide from the work I did at the Urban Institute. We focused in a major national survey on 13 states, and we look at uninsured kids. You probably know that there are some states, these are now rather dated, I apologize, but I know the picture doesn't look very different.

In Massachusetts only three percent of kids were uninsured, and in Texas it added up to 19 percent. And you hear about this tremendous variability. But what's interesting is that the two blue bars are kids eligible for Medicaid and SCHIP, and the magenta is those not eligible; and in fact the magenta are almost the same across the country.

So if we could focus more on enrollment of eligibles, we would largely eliminate the differences across states in coverage. There have been talks of raising the federal floor of coverage so that all kids or more kids are covered. We have talked about family coverage as a vehicle for bringing kids in, and we have talked about the federal government assuming a larger share of long term care costs and other costs that kids coverage is competing for.

So it's not as if the debate we are having today about Medicaid reform and when people say we need to change the program that the options on the table today are the only ones that you might imagine.

So I am going to close with my bottom line, but I have to tell you in advance that my bottom line takes up four slides. I just couldn't fit it into one. And I tried to write out the words as carefully as I could at 6:00 on the airplane yesterday and because I really want to capture how it feels to me from where I sit.

The first thing about the bottom line you will hopefully forgive me for being a little nasty, but the more vehemently someone insists Medicaid reform is not about saving money the less you should believe them. It is just absolutely clear that you have to say over and over again, this is about improving the program, better quality and the like, and there's no question that there are many people who want to reform the program who have that as a goal, but the more they say it's not about money, the more it's about money.

And I guess I want to reinforce something that Carol said that I will say slightly differently, which is that what my bottom line is driven by is this frustration.

Most proponents of major reform to Medicaid insist that their reforms will not harm patients or enrollees, they insist that it's good for the folks served by the program. And here's what I have to say.

If you want to have a debate about how many resources this rich country can devote to serving moms and kids and you believe we can't afford to make that commitment, I will happily have that debate, and I think it's a debate that the American people could engage in, and I actually think I know where they would end up.

But once you shift the terms of the debate to say that what we're talking about doing won't hurt anyone, it becomes impossible, I think, to engage in the way the debate needs to be structured.

And so, my second paragraph in the bottom line. In order for Medicaid reforms design to save money to make a credible claim that they will do anything other than shift the financing burden to poor families, which proponents deny that they will do, they must be based on credible evidence that they will promote efficiency in the underlying healthcare system. You can't take money out of the system and not hurt anybody unless you increase efficiency. So that's got to be the logic, and that's the logic that we ought to hold people to.

Continued. The entire healthcare system is searching for efficiencies, and I know it will come as a great surprise, has not yet discovered the magic bullet. This is a problem throughout the healthcare system. In particular, while theories and rhetoric abound and are we will funded, I might add, thus far there is no credible evidence to suggest that increasing the financial burden faced by insured people yields more efficient care. And there's a fair amount of evidence that such increases can reduce efficiency and the effectiveness of healthcare when applied to lower income populations. This is the data. These are the data. You can pick whether it's singular or plural. There just isn't ‑‑ there are theories, but ‑‑ and there's certainly rhetoric, but there is, as of today, no credible evidence that this ‑‑ that these theories would actually create a more efficient system. In fact, while evidence is still limited, the most promising efforts to create efficiency rely upon a more active purchaser and more finely‑crafted cost sharing policies created with specific diseases and treatments in mind. I'm talking about evidence‑based medicine. I'm talking about disease management and care management. These are not about throwing people out with a check and saying buy the best healthcare you can find, these are about sophisticated purchasers helping direct the healthcare system to be more efficient. If you look around the private and public sectors, that's what people are doing, because that's what people think makes the system more efficient.

Thus, I conclude, although there's still one more slide, the general tenor of some proposed Medicaid reforms runs directly counter to the most promising evidence with respect to efficiency. I would have as a footnote that the risks of error are far larger for the Medicaid population than they are for the population in general because we are talking about children who are going through developmental phases that if you miss the remedies, there's no way out, and we are talking of course about a very low income population that if you don't cover them with needed services they are not going to be able to reach into their pockets and pay for them.

So my conclusion, very simple, while efforts to modify and update Medicaid create opportunities for improvement, and we should keep our eyes on those opportunities, poorly‑crafted Medicaid reforms do indeed place the health of children and pregnant women at risk.