Medicaid Back in Spotlight as Remedy for Insurance Crisis

The public support for a possible Medicaid role in filling the insurance-coverage gap has led more health-policy experts to focus on the practicality of such a role for Medicaid. Recent expansions in some states' Medicaid programs and other public-health programs have been credited with the 1.3 million-person drop in the number of uninsured from 2006 to 2007.

Medicaid has several advantages that argue for its use in helping to reverse the nation's uninsured rates, according to Barbara Coulter Edwards, a principal with Health Management Associates, a firm that operates hospitals. Unlike any new program that might be created to cover the uninsured, Medicaid has existing networks, low administrative overhead, and existing relationships with private health plans through its managed care plans, and it partners with federal and state governments through its dual-funding structure.

Several specific approaches to a greater Medicaid role have been suggested, although none of them specifically delves into the mental health components of Medicaid—the nation's largest public payer of psychiatric care.

One approach would scrap the requirement for budget neutrality in the waiver requests through which states apply for permission from the Centers for Medicare and Medicaid Services to alter their Medicaid programs. The chief problem of this approach is that federal budget officials in any presidential administration could balk at the elimination of, or great reductions in, budget-neutrality requirements, according to Dorn.

Another approach would make Medicaid an income-based program that covers every uninsured person whose annual income is under a certain amount. This approach could produce huge savings because much of the administrative costs of determining eligibility under current complex categorizations would be scrapped for simpler income verification.

“Of course the big disadvantage of this approach is that lots of folks who qualify for Medicaid today would lose coverage,” Dorn said. For example, some beneficiaries in nursing homes receive other federal benefits that could push them over the income limits.

A third approach to expanding Medicaid would create a new eligibility category for low-income adults without regard to other characteristics. This approach would help the poorest uninsured adults, while not taking coverage from people who have it today, according to Dorn.

Some have voiced caution, however, in using Medicaid expansions to cover uninsured people.

Nina Owcharenko, a senior policy analyst for health care at the Heritage Foundation, a conservative think tank, said that such expansions would add to Medicaid's already ballooning price tag, which cost state and federal governments about $338 billion in 2007 and is expected to reach $717 billion in 2017. This growth threatens to consume state budgets, which already earmark an average of 22 percent of funds for Medicaid.

“You've got to wonder if it's crowding out other state priorities [such as] transportation, criminal justice, education, and a lot of other issues that are of concern to people at the state level,” said Owcharenko.

Another problem that proponents of a Medicaid expansion face is whether states can commit to covering large numbers of additional uninsured people when they repeatedly demonstrate difficulty in maintaining previous coverage commitments when state tax revenues drop.

“Medicaid is counter cyclical, so just when the economy is at its worst, and the state is least able to pay, the demand for the program is the greatest,” said Edwards, former acting director of the National Association of State Medicaid Directors.

More information on Medicaid expansion to cover the uninsured is posted at <http://allhealth.org/briefing_detail.asp?bi=136>.▪