APRIL 13, 2012

Medicaid Flexibility: The Key to a Sustainable Safety Net

As we inch towards the state budget deadline, welfare spending reductions in Pennsylvania continue to be contentious. The reductions that are proposed concentrate on 20 percent of spending, since 80 percent is tied to Medicaid and state officials are barred by the feds from improving the quality or efficiency of the program.

Welfare spending is already outpacing personal income and state revenues; without changes, welfare spending is projected to grow 8 percent per year. How can we ensure sustainable welfare spending without harming those in need? By reforming the program driving the majority of the spending: Medicaid.

There is an effort to give states some control over Medicaid. Legislation recently introduced in the US House of Representatives, HR 4160, would create a Medicaid block grant, allowing states the freedom to design eligibility, benefits and coordinated care around the unique needs of their population. In exchange for this regulatory flexibility, Medicaid funding would be frozen at 2012 levels.

Getting rid of the current matching formula that rewards increases in state spending with additional federal funding (all from taxpayers) will go a long way in refocusing Medicaid benefits.

State Flexibility Act Endorsement Letter

posted by ELIZABETH STELLE | 03:55 PM | 0 comment

APRIL 9, 2012

Medicaid Waivers & the Looming Fiscal Crisis

In the waning days of 2008, the state of Rhode Island secured a global waiver for its Medicaid program. The waiver exempted the state from many federal rules and mandates in exchange for a five year spending cap of $12.1 billion. The architect of the waiver was then-Rhode Island Secretary of Health and Human Services Gary Alexander. He's now heading Pennsylvania's Department of Public Welfare.

A December 2011 study by the Lewin Group found Rhode Island's experiment is lowering spending and improving care. Patients are finding better access to doctors, reducing the need for expensive emergency room use. The savings total more than $55 million—not bad for a small state.

In the Wall Street Journal last week Sec. Alexander said taxpayers across the country could save $200 billion if every state followed Rhode Island's lead.

But unfortunately, the federal government won't allow other states to follow Rhode Island's lead. A cornerstone of President Obama's health care plan is to enroll even more Americans in Medicaid. Medicaid currently costs taxpayers more than $400 billion annually in federal and state spending. The surge in enrollment will force states to spend an estimated $118 billion more over the next decade—creating fiscal crises across the country. State governors recognize the desperate situation and have been asking for a Rhode Island-type alternative for nearly two years.

Congressman Todd Rokita from Indiana has introduced a block grant bill that would mimic Rhode Island's waiver and cap states' Medicaid and SCHIP funding at 2012 levels in exchange for regulatory flexibility. States should rally behind this legislation and continue to press upon the Obama Administration the necessity of state flexibility—it is essential if states want to continue to serve the neediest citizens without raising taxes.

posted by ELIZABETH STELLE | 10:38 AM | 0 comment

MARCH 23, 2012

PPACA Will Put a Quarter of Pennsylvanians on Medicaid

There is no shortage of media coverage marking PPACA's two year anniversary, but one statistic from the Pennsylvania Department of Public Welfare did grab my attention:

Instead of reforming Medicaid, the law greatly expands the program, adding over 800,000 Pennsylvanians by 2019. By the time it is fully in effect, one in four Pennsylvanians will be on Medicaid [emphasis added].

Today, nearly 1 in 5 Pennsylvanians are enrolled in Medicaid, government insurance that provides terrible care with a huge price tag. Medicaid delivers episodic treatment, provides poor preventative care, offers sub-standard services to many beneficiaries and at times harms the poor.

For example:

• Only 45 percent of primary care physicians are willing to accept most or all new Medicaid patients that come through their doors.
• Medicaid patients use ERs about twice as often as the uninsured and privately insured.
• The likelihood of getting an appointment for a child to see an otolaryngologist (ear, nose and throat doctor) is 37 percent versus the private insurance rate of 100 percent.
• The odds of dying in the hospital following heart surgery are 6.2 percent for Medicaid patients versus 5.1 percent for uninsured and 1.5 percent for those with private insurance.

The whole idea behind PPACA was to make insurance affordable for every American. But what good is insurance if you have to drive hours to find a doctor and then receive worse care than the uninsured?

Throwing more Pennsylvanians into an expensive and failing system is not the answer. The answer is healthcare freedom, whether that's giving individuals and employers more choices by shopping across state lines and offering mandate-free plans, or encouraging consumers to take more control over their health dollars via Health Savings Accounts and list billing.

Pennsylvanians can't endure more people dependent on crummy and expensive government insurance.

posted by ELIZABETH STELLE | 04:50 PM | 0 comment

DECEMBER 22, 2011

No Rush on Health Insurance Exchanges

In late November the Department of Insurance announced that Pennsylvania would begin implementing a state health insurance exchange as laid out in PPACA (the Patient Protection and Affordable Care Act). The judgment was made after a series of hearings around the state and a study conducted by KPMG.

There is little reason for the administration to rush to implement a state exchange until the Supreme Court decides the fate of PPACA. The next federal government deadline for implementation grants was recently extended from December 2011 to June 2012—after the Supreme Court is expected to rule on the constitutionality of PPACA.  If Obamacare is struck down, there is no reason to implement a government-run exchange.

A state health insurance exchange cannot be implemented without enabling legislation, and it doesn't appear that HB 627 or SB 940 are going to be a legislative priority anytime soon.

The following links contain good information about state exchanges:

• Should Missouri Create a Health Insurance Exchange?—Cato Institute (summary available here)
• Obamacare 'Exchange' Opposite of 'Free Market'—Mackinac Center
• Ten Reasons Why Arizona Must Reject Exchanges—Goldwater Institute
• Health Insurance Exchanges: What If They Issued 347 Pages of Regulations and Nobody Cared?— Pacific Research Institute
• Why Health Exchanges Don't Work— Pacific Research Institute

posted by ELIZABETH STELLE | 00:38 PM | 0 comment

DECEMBER 19, 2011

Protecting Medicaid for the Poor

The Pennsylvania Department of Public Welfare has trimmed Pennsylvania's Medicaid rolls by 150,000 people since August. Welfare spending advocates and organizations receiving welfare dollars have criticized the move, contending the department is acting illegally by ending Medicaid benefits for eligible Pennsylvanians. In reality, the department is reviewing the more than 150,000 cases that were overdue for their six month reviews when the Corbett administration came into office. At least 4,000 of those removed from Medicaid rolls were deceased and others had moved to different states.

Why the push to contain Medicaid costs? A recent NASBO study highlights how health programs for the poor are claiming a bigger share of states' spending this year. Nowhere is this more evident than Pennsylvania, where Public Welfare surpassed Education as the largest department in the state budget.

Enforcing the review requirement for Medicaid cases is not about stopping benefits for low-income Pennsylvanians, but protecting benefits for those who truly need assistance without increasing the burden on taxpayers.

posted by ELIZABETH STELLE | 00:05 PM | 0 comment

SEPTEMBER 22, 2011

Changing the Incentives in Medicaid

Medicaid spending is set to skyrocket under the federal health care overhaul in the next two years, but it already consumes 31 percent of Pennsylvania's budget. It is no surprise that the Department of Public Welfare is looking for ways to make the program, known for providing expensive and low-quality care, more cost-effective.

Last week, Welfare Secretary Gary Alexander revealed the department is looking at a form of Reverse Health Savings Accounts for Medicaid beneficiaries.

We are looking at a model to save hundreds of millions of dollars by steering Medicaid beneficiaries to the most cost-effective settings. To reward beneficiaries we would give them some incentive. . . so if the state saves $1,000 on a medical procedure we may give the beneficiary $100 or $200 as a reward.

Reverse Health Savings Accounts encourage enrollees to use health care services more discriminately. For instance, beneficiaries would be rewarded for using a primary physician for non-life threatening illnesses instead of a hospital emergency room.

According to health experts, this specific approach has never been tried in a state before, but adjusting patient incentives so they use health care effectively is nothing new. We recommended this approach nearly three years ago. Unlike more comprehensive reforms, such as block grants or waivers, this reform is very achievable since it doesn't appear to need federal approval.

posted by ELIZABETH STELLE | 01:45 PM | 0 comment

MAY 19, 2011

Rescuing the States from Medicaid

State Medicaid spending has increased four times faster than elementary and secondary education spending and nine times faster than transportation spending over the past two decades. In Pennsylvania, Medicaid spending grew from 12 percent of the General Fund in 1980 to 24 percent in the proposed budget. Such growth is wreaking havoc on Pennsylvania's state budget and crowding out other priorities, like education.

The 2009 federal stimulus bill made the situation worse, by imposing new federal requirements that tied the hands of state officials and limited their ability to reform Medicaid. These regulations were set to expire in 2011, but the passage of Obamacare prolonged these mandates to 2013, leaving financially strapped states with two options, cut benefits or cut doctor reimbursements.

This is bad news for Medicaid patients who have a hard time finding a doctor. Half of all physicians refuse to accept new Medicaid patients. And when it comes to benefits, Medicaid claims are, on average, denied at three times the rate that of Medicare and private insurance.

Both houses of Congress have introduced a much needed remedy to this fiscal nightmare. The 2011 State Flexibility Act (SFA) is designed to give the states more autonomy over Medicaid spending. Last winter, Governor Corbett advocated for more Medicaid flexibility, writing, "The best ideas for improving Medicaid do not come from Washington - they come from the states."

Representatives Joe Pitts (PA-16) and Glenn Thompson (PA-5) are cosponsors of the House version of the bill. Allowing Pennsylvania to customize Medicaid will improve both the efficiency and quality of care.

posted by ELIZABETH STELLE, JONATHAN HUMMA | 05:40 PM | 0 comment

APRIL 6, 2011

House Republicans Introduce Welfare Reforms

Public Welfare is both the largest—at over $27 billion in total spending— and among the fastest growing programs in the Pennsylvania state budget.  In fact, this year, welfare surpassed education in terms of General Fund spending (state taxes), and criticism as been levied at Gov. Tom Corbett's budget because it cuts education subsidies while increasing welfare spending. Indeed Auditor General Jack Wagner has identified rampant fraud and abuse in welfare programs that may cost taxpayers upwards of $1 billion.

House Republicans today introduced a package of welfare reform bills designed to reduce welfare spending by weeding out fraud and abuse.

The initiative, entitled WelFAIR: Fairness, Accountability, Integrity and Responsibility, includes four bills passed by the House Health Committee this week and four more bills targeted for passage this month.

Bills passed in committee:

• HB 960; Requires use of Verification System: Implements an electronic cross-reference system within the Department of Public Welfare (DPW) to ensure only those eligible for benefits receive them.

• HB 1254; Prohibiting Tobacco Purchase: Prohibits the purchase of tobacco or tobacco-related products with welfare-issued electronic benefit transfer (EBT) cards.
• HB 1261; Residence Verification: Ensures eligible welfare applicants are afforded assistance based on their county of permanent legal residence. Currently, applicants often apply for assistance in counties with more generous benefits even if they don't live there.
• HB 1251; Strengthening Fraud Penalties: Strengthens penalties on welfare fraud to bring the current Welfare Code penalties in line with existing welfare fraud penalties in the Crimes Code.

Bills still in committee:

• Requiring Photo ID's: Requires the use of photo identification to ensure benefits aren't misused.
• HB 1297; Drug Testing for Felons: Requires random drug testing for welfare recipients with previous felony drug convictions within five years of assistance. Individuals would be tested before benefits could be approved.
• Special Allowance Reform: Transitions the special allowance program into a loan-based initiative, providing loans instead of handouts for those moving from welfare to work.
• HB 1301; Medical Assistance Transportation Program Reform: Implements new guidelines and restrictions on the existing Medical Assistance Transportation Program to prevent abuse.

Legislators were hesitant to put a price tag on the savings, but it's obvious that with an estimated 10 percent of Medicaid spending going to ineligible recipients, these measures could reap significant savings.

Medical Assistance already consumes 31 percent of the state's budget and costs are set to skyrocket as Obamacare increases eligibility in 2014.

For more on how to cut welfare waste watch my testimony on welfare reform.

posted by ELIZABETH STELLE | 05:50 PM | 0 comment

MARCH 11, 2011

Medicaid Reforms Needed as Welfare Spending Surpasses Education

Under Gov. Corbett's budget proposal, Pennsylvania would spend more on welfare than education for first time. A large chunk of that welfare spending is in Medicaid, a joint state-federal program that provides low quality health care. In some cases, Medicaid patients receive worse care than those with no health coverage.

Medicaid consumes 31 percent of the state budget—the largest share of any state, according to acting Department of Public Welfare Secretary Gary Alexander. Additional mandates under Obamacare are estimated to increase Medicaid costs by $841.2 million, on top of this growth. At the same time, Congress and the Obama administration tie the hands of state officials to make much needed reforms.

Pennsylvania is not alone; Texas is experiencing a 9 percent growth in Medicaid costs annually, only to be accelerated as Obamacare comes into full fruition. Our friends at the Texas Public Policy Foundation have outlined a complete revamping of Texas' Medicaid program called TexHealth. The reforms mirror successful pilot programs in Florida.

TexHealth would give beneficiaries control over limited Medicaid dollars to spend on the doctors and services they value. The amount of the subsidy would be tied to a sliding scale based on income and assets. TPPF estimates the program could serve more Texans than are served now, for less money.

Under a defined contribution plan, TexHealth will provide better access to health care services and be available to potentially 4 million more individuals than currently served, for less money... Initially, the state would spend $22.26 billion per biennium in subsidies to low-income Texans, $12.4 billion on long-term services and support, and $9.22 billion for implementation and administration. This would total 5 percent less than the state spent on Medicaid in the 2008-2009 biennium.

The tricky part is convincing Washington to untie the hands of state officials to implement reform. TPPF suggests three possible methods to restore state control over the Medicaid budget:

• Joining an interstate compact.
• Requiring a health insurance exchange to put Medicaid clients into a subsidized, private insurance market.
• Applying for a 1115 waiver from the feds.

Pennsylvania should consider similar reforms and submit a waiver to put all Pennsylvanians in charge of their health care dollars—not bureaucrats. Encouraging more personal responsibility is the only way to improve the quality of care and keep health care costs from consuming state budgets.

posted by ELIZABETH STELLE | 09:38 AM | 0 comment