Published by: Shawn Gremminger GO on 3/2/2011 9:57:30 AM
It is difficult to think of a more aggressive experiment in federalism in our nation’s history than the Medicaid program. Since its creation in 1965, federal and state policymakers have grappled with how to best fund and manage a critical program, which today provides health coverage to some 50 million people.
Inherent to this experiment is a tension between federal governance and states on how much flexibility states may have in managing their individual Medicaid programs. States have always clamored for more freedom to effectively run this program without excessive regulation from Washington, correctly noting that a “one size fits all” approach does not fit the needs of our many different states.
With most states running significant budget deficits and enhanced federal Medicaid funding ending in June, the clamor for greater flexibility has never been louder. State leaders chafe at the need to ask Washington for permission – to “kiss the ring,” as described yesterday by Mississippi Governor Haley Barber – to make even minor changes to their Medicaid programs. To be sure, the waiver application process is a long and laborious one, which should be re-examined – maybe the Centers for Medicare & Medicaid Services (CMS) could do some process improvement on it! But before we all jump on the flexibility bandwagon, let’s examine what flexibility actually means.
There is a critical difference between “good” flexibility and “bad” flexibility. While operationally it may be difficult to tell the difference, there are two simple factors that help differentiate:
1. Does the flexibility harm Medicaid beneficiaries?
2. Does the flexibility actually reduce health care costs, or simply shift costs to someone else?
"Good" flexibility allows states to modify and streamline their Medicaid programs while improving access for people covered by Medicaid. Innovative waivers in diverse states across the country have done that. Waivers have been used to expand coverage to people who would otherwise lack it. They have been used to streamline Medicaid programs, making them more efficient and accountable. At times, they’ve been used to deal with unexpected needs arising from emergencies like 9/11 and Hurricane Katrina. Often, Medicaid waivers have been funded by provider taxes and intergovernmental transfers, which allow states to leverage funding available from willing health care providers to maintain robust and stable Medicaid programs when states don’t have the resources elsewhere.
"Bad" flexibility hurts beneficiaries and the people who care for them. At its worst, bad flexibility allows states to drop low-income and vulnerable people from Medicaid programs, increasing the ranks of the uninsured. It doesn’t reduce health care costs nor does it make our system more efficient. It simply shifts health care costs from states to safety net providers like public hospitals, who are dedicated to providing care for all patients, regardless of their ability to pay. Bad flexibility weakens our economy by limiting access to care for chronically ill workers who cannot do their jobs well through no fault of their own. It hurts our communities and the burden is felt by taxpayers whose local, state and federal taxes pay for the cost of care to the uninsured. Worst of all, bad flexibility costs lives. In 2009, the Institute of Medicine found that the simple fact of having coverage – Medicaid, Medicare or private insurance – made a difference in individuals’ health care outcomes. For some people, it was the difference between life and death.
The discussion over Medicaid flexibility is only just beginning. The Obama Administration has signaled its willingness to work with states to provide flexibility to deal with their budget crises. If states come to Washington with ideas on how to reduce costs while better serving patients, we hope Congress and the Administration welcomes them with an open mind. If states come to Washington with the intention of dropping people from Medicaid and assuming “someone else will take care of them,” we hope the federal policy makers send them packing.
Co-written by NAPH's Shawn Gremminger and Lynne Fagnani