Medicaid Reform Plan Threatens MH Care
Mental health and other advocates, congressional Democrats, and budget policy analysts have expressed concern about President George W. Bush’s proposal to restructure Medicaid.
Tommy Thompson, secretary of Health and Human Services (HHS), announced the plan at a press conference in Washington, D.C., in January.
According to the transcript, he told the audience, “[Medicaid] is inefficient. Its spiraling costs and straitjacket rules are forcing states into no-win situations, where they need to reduce coverage and have little opportunity to expand coverage. . . . Simply throwing money at the problem will not fix the problem.”
Who Will Be Affected?
Medicaid serves “mandatory” and “optional” populations and funds mandatory and optional services.
If a state chooses to participate in Medicaid, federal rules require that certain population groups be covered for a specified set of benefits. States have flexibility to cover additional optional groups or to add optional benefits.
Bush’s proposal would affect only optional populations and services.
In 1998, however, optional spending comprised 65 percent of total Medicaid spending, according to the Kaiser Commission on Medicaid and the Uninsured. In that year, Medicaid spent $32 billion (21 percent of total spending) to cover optional services for mandatory populations and $68 billion (44 percent of total spending) to provide services to optional eligibility groups.
Among optional services are such items as prescription drugs, inpatient and nursing facility services for individuals 65 years of age and over in an institution for mental diseases, inpatient psychiatric hospital services for individuals under age 21, and case management services.
What’s the Plan?
States would draw funds from two annual allotments: an acute care health insurance allotment and a long-term-care and community services allotment.
For optional populations and services, Thompson said, states would have “complete flexibility” in designing the benefits package and determining whom it will cover.
He said, “They could require a copay on drugs, copay on optional services.”
In response to questions, Thompson argued that rather than signaling a reduction in benefits, the plan enabled states to avoid dropping optional groups and benefits.
Under current law, Medicaid beneficiaries have two protections that are particularly important for persons with mental illness.
States can charge beneficiaries only nominal copayments for medication (at most, $3), and care cannot be withheld if beneficiaries cannot pay.
All prescription drugs with “clinically meaningful benefit” must be available to Medicaid beneficiaries, although a state can require prior authorization for use of specific drugs.
Those safeguards do not appear in the proposal.
Anthony D’Agostino, M.D., chair of the Subcommittee on Pharmacy Benefits Management of APA’s Managed Care Committee, told Psychiatric News, “Loss of those protections could seriously jeopardize quality of care for persons with mental illness by restricting their access to the most effective medications.”
He continued, “Under the administration’s plan, it appears possible that states could require a level of copayment that people on Medicaid could not afford and could also decide to make available only the less-expensive psychotropic medications.”
A total of $12.7 billion in “extra money” over the next seven years would be available to states willing to accept the changes in the program. There would be reductions, however, in the normally anticipated growth in federal expenditures in the following years to compensate for that increase.
Thompson told the audience, “We’re frontloading for seven years, with a reduction in eighth, ninth, and tenth . . . .And I’m not going to be here to solve that problem.”
States would also be able to remain eligible for Medicaid matching funds with a lower percentage of state dollars.
To get the federal match of Medicaid dollars now, they must consider population and usage increases each year to arrive at their share of the total Medicaid budget.
According to Thompson, “In the new plan, the states will have to put in only the additional amount of money that covers the costs of inflation in medical costs. It’s actually going to be a reduction in expenditures for the states.”
The effect, however, would be to decrease state funds available for Medicaid services.
Advocates Respond
APA President Paul Appelbaum, M.D., challenged the direction of the proposal in a statement to Psychiatric News.
“Medicaid’s great virtue,” he said “is that it offers a federal match for the states’ health care costs for the poor, without setting a limit on enrollment or the amount of care provided.
“Rather than using Medicaid as a base on which to build a program that would cover all Americans, however, the administration is moving in the wrong direction, providing incentives to the states that ultimately will result in reduced coverage. Indigent people with mental illness likely will be hurt most.”
Michael Faenza, president of the National Mental Health Association, said in a press statement, “Such changes would lead states to drop beneficiaries and cut benefits, and would have a devastating effect on the millions of low-income people with mental illness for whom Medicaid is the only option.”
Ron Pollock, executive director of Families USA, issued a statement calling the plan “a cruel hoax. . . . In effect, the Bush administration is forcing cash-strapped states to buy into a very bad deal so that they can receive quick money now.”
Rep. Sherrod Brown (D-Ohio) was quoted as saying in the February 9 Washington Post, “Instead of investing sufficiently to protect current Medicaid beneficiaries, [Bush] is ‘permitting’ states to kick some people off the rolls so others can come on.”
At his press conference, Thompson said, “We can’t get this legislation passed unless the governors are enthusiastically behind it and push it.”
After initially issuing a statement on February 10 that commended Thompson for “recognizing the need to reform the Medicaid program,” the National Governors Association said that states require “short-term fiscal relief and long-term help” with Medicaid costs from the federal government, according to the February 11 CongressDaily/AM.
State budget shortfalls are expected to increase from $37.2 billion in Fiscal 2002 to $60 billion in Fiscal 2004, according to data from the Kaiser Commission on Medicaid and the Uninsured.
Every state except Alabama was planning or had implemented cuts in Medicaid for Fiscal 2003, as of February. ▪
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Published online: 7 March 2003
Published in print: March 7, 2003
Notes
APA and other advocacy organizations charge that the Bush administration’s plan to restructure Medicaid moves in the wrong direction.
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