Medicaid Care vs. Coverage

Soaring public health insurance costs should be inspiring politicians to call for more fiscal discipline in programs like Medicaid, the federal health insurance program for 35 million low-income Americans, in which costs jumped 9% last year. Instead, Congress has generally hopped on board pricey, crowd-pleasing bills like the proposed Same Insurance as Congress Act by former Rep. Ron Klink (D-Pa.), which would let all Americans join the Federal Employee Health Benefits Program, a Rolls-Royce health plan whose premiums rose 10.5% this year and 9.7% last year.

Fortunately, the state leaders who actually manage Medicaid are expected to give the Beltway a much needed reality check today. The National Governors Assn. is to formally endorse a plan that would both curb Medicare costs and expand the reach of this program for low-income uninsured people. The governors want Health and Human Services Secretary Tommy G. Thompson, himself fresh from the governorship of Wisconsin, to let them scale back the current federally required Medicaid benefits in exchange for agreeing to cover more people. As Utah Gov. Michael O. Leavitt, a Republican, put it, “The goal is simple: providing some access to basic health care for everyone, rather than a rich plan of health benefits for just a small group of people.”

In an address to the governors Sunday, Thompson suggested that the Bush administration will grant states this flexibility. Thompson also rightly promised to delay a regulation, issued by President Bill Clinton the day before his term ended, that guarantees all Medicaid patients the right to see a medical specialist upon demand, among other benefit expansions. Thompson should scale back Clinton’s requirements, which would be likely to quicken the exodus of HMOs from Medicaid programs.

Of course there should still be national standards for Medicaid, and any scaling back ought to ensure that states still provide a comprehensive package of the most essential and cost-effective treatments, including basic preventive care and management of chronic diseases.

Thompson should be cautious about the governors’ proposal to use Medicaid money to pay for the employee share of premiums under employer-sponsored health plans. California and other states have found that such subsidies benefit employees in companies that already offer health insurance, at the expense of those in companies that do not offer any coverage.

The governors’ proposed Medicaid overhaul is no cure-all. In 1993, the Clinton administration allowed Oregon to increase Medicaid access by curtailing Medicaid benefits--denying once-covered procedures like tonsillectomies and hernia surgery, for example--and the program’s results have been mixed. The reform did help reduce Oregon’s uninsured population from 15% to 11%, but doctors find ways to get around the rationing.

The governors deserve kudos nevertheless. By putting the issue of health care costs front and center, they may well force federal legislators to think more like the state officials who have to match--and stretch--Medicaid dollars.