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revamping of Medicaid

Vision needed to guide
revamping of Medicaid

New York’s Medicaid program, and Gov. George Pataki’s proposed cuts to it, are much in the news these days. While a lot has been said about particular budget cuts, there has been virtually no discussion about the guiding principles which inform how we should shape New York’s health care system. In turn, there has been no articulation of a vision of what the system should look like five or 10 years from now, nor how the proposed changes fit into our getting there from here. New York’s Medicaid program is very expensive, and it would be hard to argue that it could not be run more economically or efficiently. However, we should not be lulled by the problems of New York Medicaid into thinking that they are unique to this state or to Medicaid. To a large extent, some of the problems of New York Medicaid are problems of America’s health care system and of every state’s Medicaid program.
The Center for Governmental Research Inc. recently issued a report for the New York State Association of Counties that opens by citing as a major problem New York’s 12 percent annual increase in Medicaid expenditures between 1989 and 1993. While that is certainly a problem, it is actually slightly less than the national increase in all health care expenditures of 14 percent annually over the same time. Likewise, the report notes that New York’s Medicaid expenditures for long-term care nearly tripled between 1983 and 1993. Guess what? Nationally, the costs paid by all sources for long-term care during those years also nearly tripled.
These data suggest that we will not solve the problems of Medicaid by looking at that program in isolation. As we change the Medicaid program, we need to be cognizant of how each single change affects both other Medicaid services and the rest of the health care system as well.
For example, while a lot of attention has been focused on the visible impacts of eliminating various long-term-care programs such as adult day health care, little attention has been paid to the “decoupling” of the rates hospitals are paid by Medicaid and the rates they are paid by Blue Cross and other insurers. Currently the Medicaid rates and those of insurers are linked. From the narrow perspective of the state Medicaid program, it is in its interest to be able to lower the Medicaid rates while not directly affecting the other rates, for it is thus less financially harmful to the hospitals and they will mount less of a fight against such cuts.
From a broader perspective, however, this decoupling goes against what we in Rochester have long understood, that a common approach by all the payors is ultimately in everyone’s interest. Otherwise, the cuts in Medicaid end up just being made up elsewhere, i.e. by Blue Cross and the other insurers and HMOs. So what looks like a good deal for New York Medicaid and the taxpayers becomes a bad deal for employers paying for health insurance for their employees, because the costs “saved” by Medicaid just get shifted to the private sector to make up.
Likewise, there has been little discussion about whether we want to change what the CGR report describes as New York’s “more lenient income requirements than many states.” In Texas, for example, a couple living at home can only retain $211 per month for their living expenses and still get Medicaid; in New York they can retain $958 per month. We could save a lot if we ran a program like Texas’. Home care would be real cheap, since no one could keep up their home or pay the rent long enough to run up a big bill.
If we wanted to save a lot on Medicaid’s big ticket item, nursing-home care, we could do like Florida and make any patient with income over $1,338 per month ineligible for help. Since the state says the average cost of nursing-home care in this region is more than $4,100 monthly, a policy like Florida’s would clearly leave a lot of people in the lurch.
While those policies sound draconian, they are in place in very large states with lots of elderly. We have not had any serious discussion of whether we favor or oppose such policies, any more than we have about the cuts being proposed. Such a debate, of course, takes time, a commodity in scarce supply as the April 1 budget deadline looms. If we do not take the necessary time, however, we will end up with all sorts of unintended consequences, including costs cut in one sector just showing up as increases in another.
Many have long complained that New York’s health care system has been micromanaged by the bureaucracy. The current approach to the state budget is just a different sort of micromanagement of the health system, this time by the Legislature and the governor. Instead, let them first articulate their vision for the future and the budgetary constraints on that vision. Then let all those affected– patients, providers, payors–come together at the community level through the health systems agencies, and at the state level through their advocates and associations, to propose a road map for how we get there.
(Rene Reixach is executive director of the Finger Lakes Health Systems Agency.)

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