Texas and some other states are implementing some creative attempts to solve the dual problem of care needs and the financial health of the state. It remains to be seen how these efforts will work out, though some concerns about their impact have already been raised. For Texas to have a healthy and prosperous future a progressive people-centered solution to this problem must be found. A simplistic focus on cutting costs will only create a much larger societal cost that will have to be paid in the future. Definitions and Background.
Medicaid was founded in 1965 as part of the series of social welfare efforts collectively called the Great Society. The program was designed as a safety net for those who do not otherwise have access to the health care system. Adults can qualify for the program based upon need and/or disability. Children qualify primarily based on financial need and are usually covered until they reach adulthood. In only its first year of existence the program cost $1 billion (Malanga 2007). Costs for the program are shared between states and the federal government.
About one-third of Texans on Medicaid are elderly or disabled. Two-thirds are children. Eighty-three percent of Texans with Medicaid have incomes at the federal poverty level or below (Texas Medical Association 2006). For working families who do not qualify for Medicaid, SCHIP (State Childrens Health Insurance Program) fills some of the coverage gaps. This program is run through private insurers, but still subsidized by the federal and state governments. Unlike Medicaid participants who pay no premium, SCHIP participants must pay deductibles and a reduced premium.
The exploding cost of Medicaid has pushed alarmed politicians into action. A theoretical assumption that a privately managed Medicaid system would save the state money is behind a current trend to reassign participants to privately-managed policies. According to Brant Mittler, the State of Texas is placing nearly 2 million¦who receive Medicaid benefits into health maintenance organizations (HMOs) and other managed care plans (1995). This trend has continued and been replicated in several states. Serious questions about a reduction in care have arisen since this process began, however.
The Financial Crisis The rising cost of healthcare and the influx of new program participants have combined to stress the resources of federal, state and local governments. The Texas Medicaid system is a vast bureaucracy. It accounts for 26% ($39. 5B) of state spending (Center for Digital Government 2007). The numbers are alarming. At its current pace, spending on Medicaid in Texas will lead to a financial crisis. Medicaid spending is the fastest increasing element of the states budget, rising at the rate of 21. 8 percent yearly during the 1990s (Mittler, 1995).
The sheer size of the Medicaid-related system in Texas has given rise to powerful political forces that favor the status quo. These forces have made it difficult to root out the expanding problems of fraud and waste within the system. In 2000 the State of Texas made overpayments of $40,070 to HMOs participating in the Texas Access Reform Plus program (Health Care Financial Management Association 2002). This is one small example of a vast problem of mismanagement. It is just this type of mismanagement that reformers cite as a reason to switch to a privately managed delivery system.
Physicians and patients pay the price for the waste, fraud and mismanagement. Providers are often not fully reimbursed for their costs. This is leading an increasing number of providers to refuse patients who are reliant on Medicaid as their sole form of health insurance. Recently, some changes in the reimbursement structure have been made. A recent law suit by associations representing physicians has resulted in increased reimbursements to care providers from the state. Under the terms of the settlement reached, $1. 8 billion was allotted for this purpose.
Over $700 million will come directly from state general funds (Kaiser Family Foundation 2007). The drive toward a privately managed system comes from two forces. The insurers who would benefit from such a system have a powerful lobbying force. Secondly, fiscal and social conservatives who believe privatization is the only possible solution are actively advocating for HMOs. Many want dramatic cuts in funding, but only to the extent that it is politically palatable to the public. The Care Crisis The latest data suggest that if a health care crisis is not already taking place, it looms on the horizon.
Twenty-five percent of Texans have no health insurance the highest rate in the United States (NCPA 2005). While the financial crisis is important, the crisis in care has much deeper ramifications for society as a whole. Medicaid is the primary safety net for uninsured Texans. Currently Medicaid Serves more than 2. 7 million vulnerable, disabled and elderly Texans (Center for Digital Government 2007). In terms of having a direct effect on the lives and productivity of citizens, Medicaid surpasses almost all other social-welfare based programs. Middle and lower income Texans without health insurance face a difficult situation.
Health care costs are rising. In areas such as El Paso, Houston and Killeen, residents must deal with health care costs that rank above the national average (Texas Health and Human Services Commission 2007). The low reimbursement rates for providers such as pharmacies have had ramifications on patient care. In independent pharmacies 20 percent of prescriptions filled are for Medicaid patients. In a sense these pharmacies are being asked to subsidize the Medicaid program losing money on nearly every Medicaid prescription they dispense (NCPA 2005).
Physicians, also feeling the pinch of low reimbursement rates, are also restricting access for these needy patients. According to a survey of physicians; Only 18% of physicians in Austin, Texas accept all new Medicaid beneficiaries (NCPA 2005). Proposing solutions / Political Realities The State of Texas is taking some steps to address the Medicaid situation. At the unveiling of his new health care policy, Texas Governor Rick Perry said that: By optimizing available funding for health services¦and providing new sources of financing for private insurance, we are taking a historic step toward a better, more accessible health care system. (Center for Digital Government 2007) Substantial change to the program is easier said than done.
Any efforts at reform will have to overcome powerful corporate and political interests who dont want greater scrutiny of the program but only greater funding for it (Malanga 2007). A three way battle between those who want the program expanded, those who want it cut and those who favor the status quo will almost inevitably politicize what is a very human issue. Half of states now spend less than one-tenth of one percent of their Medicaid budgets to fight fraud (Malanga 2007).
It is clear in the near future that Texas and many other states will have to find a way to contain spiraling Medicaid costs. Already strained budgets cannot afford continued growth at the present rate. Focusing only on saving money, however, would be a mistake. Results are not always predictable or effective. For example; Although cost-containment actions can produce short-term savings .. increased complexities in the application and renewal process can result in large coverage losses¦ (Dunkelberg 2004) Every Texan who is unable to obtain health insurance creates a ripple effect through the economy.
It is clear that the Medicaid system in Texas needs to be reformed. Policy-makers must go beyond cost-cutting and take a big picture view of the situation. In addition to the Governors current effort, suggested reforms should focus on the following areas: ¢ Expanding coverage of the SCHIP program to ease the burden on working families. Politically, this will be the most difficult reform. A sustained campaign by public interest groups, rather than financially interested parties, must be organized. Much of the public is uninformed about the exact nature and reasons for the SCHIP program.
But for working families, it is a critical tool that can enable them to keep working and being productive members of the economy. In the long-term this can benefit the state more than drain its resources. ¢ Streamlining application and renewal processes Application to the Medicaid program is an onerous strain to the patient and a bureaucratic marathon for the state. Many qualified applicants must appeal their case, first through the system and finally through an administrative law judge before finally getting approved. After already spending money to fight the case, the state is then liable to provide retroactive coverage to the patient.
A better application process, developed in consultation with medical and other professionals, can help focus the processing of claims. ¢ Devote a higher percentage of Medicaid funds to fraud prevention Attacking the fraud problem may appear costly, but its benefits far outweigh its costs. Periodic audits performed by outside agencies can identify and eliminate fraud and misconduct. Simultaneously, evaluations of medical effectiveness and review of new treatments should accompany periodic financial reviews. Conclusion Reducing the number of Texans without health insurance is a necessary and productive outcome of the Medicaid program.
To summarily make cuts that would have the opposite effect may bring short-term savings, but it is not good for the long-term health of the state. If it is necessary for the program to sustain additional cuts, these cuts should not be done in an across-the-board fashion. A temptation always exists to cut preventive services first. In reality, these services can be a massive cost-saver for the state. By keeping clients vested in the health care system, potential problems can be caught earlier large-ticket treatments can be delayed or prevented all together.
Getting people involved in their own healthcare is not a perfect science, but any effort to do so pays dividends for the patient and the state. This applies to all in the state whether they are Medicaid recipients or not. In short, a healthier state is a more productive state. A more productive state increases tax revenue to pay for such programs as Medicaid. Politicians must keep this equation in mind when attempting to solve the crisis. Ultimately, it is the taxpayer who will pay for this program. To date, strong support for the program still exists.
As budgetary concerns come to light, however, the public is expecting an effective, progressive reaction. Without this, support could erode. Fortunately, changes could be made that would better allow the program to pay for itself. Flexibility in addressing this problem is necessary to intelligently address care issues while instituting budgetary controls. Cutting funding may not be the only way to address ballooning costs. Instead, a more careful approach that targets waste and fraud while at the same time protecting access and encouraging prevention is the best option for Texas future.
Sources Center for Digital Government. Texas Medicaid Reform Will Include Incentives to Utilize IT. News Report Jun. 2007. Center for Personal Assistance Programs (CPAS). Texas Medicaid Home and Community-based Services (HCBS), 2002. Jan. 2003 PAS Center < http://www. pascenter. org/state_based_stats/medicaid_hcbs. php? state=texas . > Dunkelberg, Anne and OMalley, Molly. Childrens Medicaid and SCHIP in Texas: Tracking the Impact of Budget Cuts. Executive Summary: Kaiser Family Foundation Jul. 2004.
Health Care Financial Management Association. Texas Makes Medicaid Overpayments of $40, 070 to Heath Maintenance Organizations in 2000. Health Care Financial Management Apr. 2002. Kaiser Family Foundation. Texas Judge Approves Settlement to Boost Medicaid Payments to Physicians, Dentists Who Treat Children. Medical News Today 14 Jul. 2007. Malanga, Steven. How to Stop Medicaid Fraud. 1999. The Manhattan Institute 20 Nov. 2007 < http://www. city-journal. org/html/16_2_medicaid_fraud. html >. Mittler, Brant. Can Managed Care Solve the Medicaid Crisis? National Center for Policy Analysis No. 155, 10 Apr. 1995. National Community Pharmacists Association (NCPA).
Communities at Risk: Texas Medicaid Fact Sheet. 2001. NCPA Brief Analysis, 20 Nov. 2007 < http://www. ncpa. org/ba/ba155. html >. Texas Health and Human Services Commission. Comparison of Living Indices Between Selected Texas Metropolitan Areas and the U. S. Jul. 2004. The State of Texas, 20 Nov. 2007 < http://www. hhsc. state. tx. us/research/dssi/ESI/Costliving. html >. Texas Health and Human Services Commission. Medicaid Reform Strategies for Texas. HHS Press Release, Feb. 2007. Texas Medical Association. Medicines 2007 Federal Agenda. TMA Press Release 6 Dec. 2006.