Medicaid facts: Key societal issues must be addressed

Friday, April 1, 2005

The state of Missouri Medicaid: Over the past decade, Missouri's Medicaid program has become a national model for its efforts to reduce the uninsured in our state through targeted Medicaid expansions funded through an innovative state-federal partnership. Only 14 states have a higher percentage of their population insured.

Now the state's budget crisis is dictating that Medicaid spending be reduced by $626 million in state and federal funds for fiscal year 2006 to balance the budget. The proposed cuts will mean that 89,046 Medicaid enrollees will lose their health-care coverage in the coming fiscal year. This will result in a substantial increase in Missouri's uninsured population.

The cost of the uninsured: While I understand that Medicaid is an expensive program, it is also clear to me that there is a cost to reducing coverage under Medicaid and increasing Missouri's uninsured population. As a hospital president and someone who has worked in health-care administration and finance for over 35 years, I know that the uninsured wait longer to seek treatment and access the health-care system in much less efficient ways. This means that often they enter the system when their health is worse -- and sometimes compromised -- and that when they reach the system they are costlier to treat.

When the medically indigent can't pay for medical services, costs are shifted to commercially insured patients. So while the state will save money, the employers who provide health insurance for their employees and individuals who pay for their own health insurance will see their costs go up disproportionately.

This debate is important to you and your family. With almost one in five Missourians enrolled in Medicaid, the outcome of this debate will determine how you or your parents and grandparents will obtain needed nursing home and in-home care or whether your uninsured children or grandchildren will have health-care coverage.

Because this debate is important to all Missourians, I feel it is important that a correct set of facts be put before the public so that Missourians can make informed decisions about the future of this most important -- but complex -- program.

Medicaid spending: It has been widely reported that Missouri spends a greater percentage of its total budget on its Medicaid program than all but one other state. Although technically correct, not all of the expense comes from Missouri general revenue. Medicaid was designed as a program to provide health-care coverage to the poorest of poor. Over time, the program has expanded to include other objectives, such as providing health insurance to the working poor and children of low-income parents.

In spite of these advancements, in 2003 there were 38 states whose Medicaid general-fund expenditures, as a percent of total Medicaid expenditures, exceeded Missouri's. Of Missouri's total 2003 Medicaid budget, 20.9 percent came from general revenue as compared to Ohio, which ranked first in the nation with 77.4 percent of its Medicaid budget funded from general revenue.

To help pay for the new expanded populations covered under Medicaid, health-care providers -- hospitals, nursing homes and pharmacies -- pay the state federally-approved provider taxes. In fact, today about half the state's cost of the Medicaid program is borne by health-care provider taxes.

The cost of Medicaid enrollees: To those who believe we simply have allowed too many people to enroll in the Medicaid program, the solution would appear to be quite simple: the Medicaid rolls need to be reduced.

This leaves Missourians with the impression that all Medicaid enrollees cost the state an equal amount of money -- that a child enrolled in Medicaid for primary care and hospital care will cost as much as an elderly person enrolled in Medicaid for nursing-home care.

In fact, in fiscal year 2004, the state spent the following amount per year on each of these populations:

* $1,909 per child (all children)

* $2,816 per adult (excluding elderly and disabled)

* $14,364 per disabled enrollee

* $15,037 per elderly enrollee

As you can clearly see, there is no average Medicaid beneficiary. Each elderly and disabled person costs the state almost eight times as much as each child. Medicaid's costs vary according to the needs of the enrollee.

The debate has also suggested that Medicaid expansions throughout the past decade -- to cover children, their parents and caregivers -- have caused the current state budget crisis. In fact, it was legislation that raised eligibility for the elderly and disabled, during a 2001 special session of the Missouri General Assembly, that more significantly affected the state's budget.

As a result of this legislation, Medicaid expenditures for the elderly and disabled increased by:

* $265,561,199 in state fiscal year 2003

* $200,260,472 in state fiscal year 2004

* $359,866,363 for the eight-month period (July 2004 to February 2005) of fiscal year 2005

The long-term cost of long-term care: Missouri, under its current tax structure, cannot continue to afford its role as the long-term care insurance provider of last resort for the elderly and disabled. As structured, by 2025 the nursing home and in-home care needs of the elderly will cost Missouri's Medicaid program more than $2.1 billion. Over the next two decades, the number of people over the age of 65 in Missouri will increase from 774,000 in 2005 to 1,258,000 in 2025.

Solutions: I support the call of the governor to reinvent the state's Medicaid program and feel that an informed public will help us arrive at reasonable reforms of the Medicaid program.

In the short term, I urge the governor and the General Assembly to take as many steps as possible to mitigate the impact of the proposed cuts by considering the following.

* Implementing provider taxes for other health-care Medicaid providers where possible under federal law.

* Seeking financial relief for mandatory payments that the states are required to make to the federal government that help underwrite the costs of the Medicare prescription drug program. This so-called "clawback" provision will cost Missouri approximately $125 million in 2006 and nearly $250 million a year in state general revenue in 2007 and every year thereafter.

In the long term, Missouri should ask the federal government to:

* Assume more of the responsibility for the long-term care costs of those who are enrolled in both Medicare and Medicaid. Approximately 75 percent of the elderly and disabled who are enrolled in Medicaid are also enrolled in Medicare.

* Provide tax credits to low-income uninsured Missourians to purchase needed health-care coverage.

Clearly, the Medicaid program as we know it today will have to change if the program is going to remain viable in the coming years. The ensuing debate is important to all of us. The sick don't go away just because their health insurance did. The costs don't go away just because they weren't budgeted.

And the Medicaid funding problem won't go away until the societal issues -- not just the financial issues -- are addressed to truly reform the system.

James W. Wente of Jackson is president and chief executive officer of Southeast Missouri Hospital and a current member and past chair of the Missouri Hospital Association Board of Trustees.

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