The Real Impact Of Cutting Medicaid -- Just When We Need It Most

by Harold Pollack

(This first appeared at Kaiser Health News)

An excellent Chicago Tribune story by Rex Huppke details the impact of cuts to home and community-based services in Illinois. Huppke recounts the story of 81-year-old Lorraine Phifer, who cares for her son William, who has cerebral palsy. Phifer has a wheelchair van, but she can't maneuver him into it by herself anymore. He has also required help with a wheelchair lift to get into and out of bed. Staff from the University of Illinois at Chicago Assistive Technology Unit have come out to the Phifer home and provided valuable help. That unit now faces a 70 percent budget cut.

UIC's intellectual disabilities family clinics, which offer a range of services that are hard to access elsewhere, also face deep cuts. My intellectually disabled brother-in-law occasionally uses these facilities, too. I'm not a disinterested observer.

Few of my fellow policy wonks have occasion to write these last words. Most policy debate occurs at great personal distance from the world of safety-net care. To be sure, every policy debate has its quantitative dimension. Congressional Budget Office projections and actuarial reports matter, because there are real human consequences when the numbers don't add up. When the numbers are all we talk about, though, policy debate bears discomfiting similarity to arguments among armchair warriors maneuvering toy soldiers on a plexiglass board.

Debates about health care for seniors generally acknowledge these elemental realities. Nearly everyone involved has a parent or other relative who receives Medicare. And most expect to rely on Medicare, too, when they grow old. Seniors are a powerful constituency. If they find a proposed policy too unsettling, it probably won't happen.

The tone and the politics change when things turn to Medicaid and related safety-net services. Dozens of states are making painful cuts right now. The disadvantaged people most directly affected are playing conspicuously small parts in the accompanying political process. In Washington and in state capitals, too, few influential stakeholders have any strong personal stake in such matters. Few have sat on either side of the counter in some welfare office, county hospital or public health clinic.

Thus, the New York Times Lizette Alvarez reports that Florida's Republican-dominated legislature is set to scrap traditional Medicaid services and shift Medicaid recipients into state-authorized for-profit HMOs or provider sponsored networks. Florida also seeks permission to deny recipients some benefits now being offered. These changes could occur as quickly as next year. For those immediately affected, this program represents a more radical experiment than any provisions of last year's health reform. Florida legislators are quite explicit that their purpose is to save money: "The Medicaid system is irretrievably broken," State Sen. Joe Negron (R) says.

Florida indeed faces growing Medicaid burdens. These arise because of surging enrollment in a state hammered by recession and the foreclosure crisis, and which has one of the nation's highest rates of uninsurance. Concerns that the state's predicament is driven by lavish benefits and inefficiencies can be put to rest. Florida ranks 43^rd in per-recipient Medicaid costs.

Florida's proposed Medicaid changes are based on a dubious pilot project that has disrupted life for thousands of Medicaid recipients. Part of the problem was that for-profit HMOs proved unable or unwilling to serve many disabled or medically complicated recipients. WellCare, one of the largest participating HMOs, exemplified these problems. WellCare encountered legal difficulties over alleged Medicaid fraud and charges of "cherry-picking" the healthiest recipients, as the Miami Herald reported.

Ultimately, low Medicaid reimbursements led WellCare and other HMOs to precipitously exit much of the market, forcing tens of thousands of families to change health plans. A Georgetown research team released a very critical analysis of these operational problems, concluding:

The five-year pilot program has yielded little in the way of concrete evidence of either efficiencies or cost reductions. In fact, the pilot has raised significant questions about the ability of its managed care model to effectively meet the needs of beneficiaries….

Despite this track record, Florida lawmakers seek to expand this program statewide. Whether Medicaid recipients would actual benefit seems beside the point.

Politicians in Washington are following a similarly unpromising path. The CBO estimates that Republicans' proposed plan to block-grant Medicaid would reduce federal program expenditures by 35 percent by 2022 and by 49 percent in 2030 relative to current law. In return, states would have greater flexibility to restructure Medicaid benefits.

How governors would actually use this flexibility is another matter. Medicaid is flexible right now. The Center on Budget and Policy Priorities reports that about 60 percent of state Medicaid spending consists of expenditures to cover people or to reimburse services that are not required under federal law. Given Medicaid's low per-person cost and its relatively restrained projected cost growth, there's little room to comfortably cut. Safety-net services are already shoestring operations. Under-funded and stressed, they have many shortcomings. There is no way to meet the above spending reduction targets without shifting costs and risks onto the states, covering markedly fewer people and services, or further underpaying Medicaid providers.

No one can firmly say how states would respond to the reduced federal support. I fear that's precisely the point. Block grants provide both states and the federal government with useful political cover to cut important benefits. If a particular state eliminates Medicaid home care services or by dropping the working poor from coverage, Congressional Republicans can say: "Don't blame us. That's what this state chose to do." Meanwhile governors can say, with equal justification: "Don't blame us. We're doing the best we can, given limited federal resources."

I wish that Rep. Paul Ryan, R-Wis., architect of the House Republican budget plan, could accompany my wife and her brother to waste hours sitting in a gritty welfare office. I wish he had the responsibility of helping an intellectually disabled person with a nasty toothache, when the state Medicaid program no longer covers dental care.

Ryan's proposals won't become law anytime soon. Still, they exemplify this political moment's misguided mood and priorities. During the worst recession in decades, we are cutting needed services precisely when the need for them has grown.

Despite heated rhetoric about federal debt, this proposed budget does surprisingly little to reduce the deficit. Even if this plan did more, Americans would be wise to reject it. Our policy debate seems predicated on the philosophy that we must sharply shrink government despite the accompanying human costs. That vision is mighty appealing, especially to those who feel comfortable and safe without public help.

President Barack Obama helpfully identified what Republicans left out: our collective obligation to protect one another against misfortunes that could crush any one of us left to face them alone. When I consider the 81-year-old women gutting it out to care for her disabled son, or the aged and disabled people in South Carolina losing their adult day care, hospice or meals on wheels services due to current Medicaid cuts, I can only tell Rep. Ryan: "There are more things in heaven and earth than are dreamt of in your philosophy."