State Strategies For Controlling Medicaid Costs

MR. STEVE ROBERTS

10:06:55
Thanks so much for joining us. I'm Steve Roberts, sitting in today for Diane Rehm. Nearly 60 million low-income Americans, many of them children and seniors, rely on Medicaid for health insurance. The Affordable Care Act sought to expand the program is a way to provide coverage for an additional 15 million people living close to the poverty line. But a number of states are seeking more control of Medicaid expenses and rejecting expanding the roles.

MR. STEVE ROBERTS

10:07:18
Joining me to talk about what changes the state Medicaid programs may mean for the nation's poor: Ron Pollack of Families USA, Gail Wilensky of Project HOPE and Alan Weil of the National Academy of State Health Policy. Welcome to you all. Thanks for being here.

MR. RON POLLACK

10:07:32
Thanks for inviting us.

ROBERTS

10:07:33
And you can join our conversation. You may have questions for our guests as always at 1-800-433-8850. Send us an email at drshow@wamu.org or in Facebook, Twitter and all the ways you can communicate with us. Ron, let's start with the news. In the last few weeks, we got news, for instance, that actually the number of people uninsured in America had dropped for the first time in -- since 2007, and one of the reasons was an expansion of Medicaid. Fill us an up-to-date on the latest trends here.

POLLACK

10:08:07
Well, there has been an expansion of coverage in the Medicaid program. It's really played a heroic role in terms of making sure that the number of uninsured, now at 48.6 million, is not considerably higher. And, of course, under the Affordable Care Act, there's a likelihood that this number is going to increase significantly. Now, it's going to increase in a different manner than what was originally expected with the Affordable Care Act.

POLLACK

10:08:38
Under the Affordable Care Act, it was supposed to be a requirement for the states to expand coverage or increase eligibility. But due to the decision of the Supreme Court in June, it is now in effect a state option, and we'll see which states pick it up. I'm actually optimistic because not only does the law have two facets to it, one is it provides a real carrot to the states so that they establish this expansion.

POLLACK

10:09:10
It also had a stick that was based in the 1965 original Medicaid law which said, if a state failed to fulfill all the requirements of the statute, the secretary of health and human services could cut off all...

ROBERTS

10:09:28
But that's what the Supreme Court ruled against.

POLLACK

10:09:30
That's correct.

ROBERTS

10:09:30
Right.

POLLACK

10:09:31
But the court did not invalidate the carrot. And as we'll get into, I'm sure, that the program, it'll provide a significant incentive.

ROBERTS

10:09:40
Gail, one of the clichés about Medicaid is, well, it covers the poor. But one of the misimpressions is and lack of information is when a large percentage of the people under Medicaid are actually seniors, often middle-class seniors who have used up their assets and they're now in nursing homes. Talk about that dimension of Medicaid.

MS. GAIL WILENSKY

10:10:02
I will, but let me make a small correction.

ROBERTS

10:10:04
Yep.

WILENSKY

10:10:04
Most of the reduction in the uninsured is -- I read the bulletin from the census -- came from allowing people that are 24 to 26 to stay on their parent's house.

ROBERTS

10:10:15
Parents. Yes. No. That was important dimension. Absolutely.

WILENSKY

10:10:18
Although Medicaid has traditionally been a very important way whenever we have an economic downturn to provide health insurances, people lose employment-related insurance. I don't want to say it's unimportant. The biggest kicker though, my impression was from these young adults that are allowed to stay...

ROBERTS

10:10:34
And interestingly enough, of course, this is one of the provisions that the president is pointing to 'cause it's a specific, tangible benefit that has already kicked in. But talk about Medicaid.

WILENSKY

10:10:43
Medicaid needs to be looked at as two quite different programs historically, one where most of the people are the moms and kids. That's about two-thirds of the population but not majority of the money. There's another piece that covers the disabled and people who are older. We call them the dual eligibles because they are on Medicaid and Medicare. They are not the large number of people but, boy, do they spend a lot of money. So we've got about 9 million people who are in the dual eligible category.

WILENSKY

10:11:20
But the duals and the disabled account for two-thirds of the money. Some of those people, as you've indicated, aren't poor when they start. But because nursing home care at the -- toward the later years provides not just medical care but shelter and food and all of the rest, it tends to be very expensive and can eat up assets quickly.

ROBERTS

10:11:43
And, Alan, the background here also is that this is a program that has a large state participation. And as Ron mentioned, there's a lot of discussion out in the states about how to deal with these new rules because the cost is so great. Give us a sense of what this really -- the obligation -- the cost obligations on the state level here and the impact this has on state budget.

MR. ALAN WEIL

10:12:14
Well, states have always had a love-hate relationship with the Medicaid program. One the one hand, it's spending that they often feel they can't control. It grows very quickly. It's an entitlement program. On the other hand, states have a long history of trying to maximize the number of federal dollars they can draw from the program to support health care providers and the health needs of their population.

MR. ALAN WEIL

10:12:35
On average around the country, states commit about 16 or 17 percent of their own revenue to the Medicaid program, putting it second after K-12 education. And the growth in the program tends to exceed the rate of inflation as health care costs have in general. Under the Affordable Care Act, the expansion is paid for 100 percent by the federal taxpayer in the first...

ROBERTS

10:13:00
The expansion of these eligible folks that Ron mentioned.

WEIL

10:13:04
Exactly. Those who become eligible by reason of the Affordable Care Act because they are low-income but they weren't already covered...

ROBERTS

10:13:12
And it goes up to 133 percent of poverty for a family of three. That's about $24-, $25,000. So this is a significant group of people being added.

WEIL

10:13:19
It's a significant group. And if, you know, the estimates are about 15 million would gain coverage. A hundred percent of that is paid for by the federal taxpayer for the first three years. It then drops to 95 and then down to 90 in the long run. So out of the total cost of the expansion, states are only responsible for about 4 percent, which is an awfully good deal. Medicaid is a matching program, and states, on average, pay a little less than half of it.

WEIL

10:13:45
So getting, you know, 95 plus percent paid by the Federal Treasury is a good deal as long as you believe that the federal government is good for the money in the long run. And it's on a base that is quite large. And I think the challenge states confront is that it's already a large part of their budgets, and even though the growth percentage might be quite small, they're unsure whether they're going to get the funds to pay for even this relatively small share of the program.

ROBERTS

10:14:13
And that leads to a great deal of unrest in state capitals but also a lot of experimentation. Ron, I read that about six states have already said they're going to opt out of this. They're all in the Deep South. They all have Republican governors. But there are other states like New Jersey, also with a Republican governor, that are wavering here. What's the latest picture, given this coming change in the law?

POLLACK

10:14:40
Well, the question is, how seriously should we take what are the current pronouncements by governors? So the scorecard right now is that there are a dozen states that have said they're going to expand coverage, plus the District of Columbia. There are a couple of states that are leaning in that direction. It's all according to a map developed by The Wall Street Journal. There are six states that have said they're going to reject it. And you're right, they're in the Southeast.

ROBERTS

10:15:10
Florida, Texas, Georgia, all in the Deep South.

POLLACK

10:15:13
Yes. And then there are about five that appear to be leaning no and about half that are -- that haven't said anything. Now, I personally believe that post November, we're going to see the overwhelming majority of the states opt into this. You know, right now, we're in a funny political season. And I think for those who are Republican governors, especially those with aspirations for future political office, they want to show that they're against the Affordable Care Act.

POLLACK

10:15:42
And -- but I think once you take a look at the amount of money that the states are going to receive, particularly in the first three years, it's enormous. I looked at the dollars for states like Texas and Florida and Louisiana that are three of the prominent so-called rejectionist states, in Texas in the next 10 years, over $90 billion from the federal government, Florida over $83 billion.

ROBERTS

10:16:10
Gail, do you agree with this assessment? Or do you think these governors are more serious about rejecting this amount of money?

WILENSKY

10:16:15
Well, historically, high-match federal programs where the federal government pays most of the money, like the Children's Health Insurance Program introduced in 1997, has drawn widespread participation. So I'm inclined to agree with Ron that we are probably going to see more participation than is being suggested. But 10 percent of a very large number, which some of these southern states are going to be facing, like Texas and Louisiana and Florida, is not going to be trivial. And so what happens after...

ROBERTS

10:16:50
Ten percent meaning their cost, their share of the cost.

WILENSKY

10:16:52
Their cost, exactly.

ROBERTS

10:16:54
So even though a lot is paid, they still are on the hook for a part of it.

WILENSKY

10:16:57
And unlike the federal government, they've got to be functioning in the black every year. They can't run deficits. So what could happen is some of the states may say they're going to do it, sign up initially and start to slide when they have to come up with the money. We shouldn't underestimate the pressure that 10 percent of an expansion for Texas and Louisiana is going to make.

ROBERTS

10:17:23
And, Alan, fill us in also on the larger picture of the states budgets, particularly given the economic downturn. What's the economic setting in which these governors are making these decision?

WEIL

10:17:33
Well, state finances have turned to the positive just recently but after the worst downturn they've ever seen. And so states are climbing out. And, really, their revenue, on average -- and again there's always significant variability around the country. But on average, state revenues have not returned even to where they were when we began this downturn. So you can see five or 7 percent growth, but it's off a significantly lower base than we had just a few years ago.

WEIL

10:18:01
And it's going to take five or six or seven years of robust growth just to get us sort of back on the curve that we thought we were on. And that's exactly the context that Gail is describing. You've got unattended to infrastructure cost. You've got teachers and public employees who haven't received salary increases. You've got...

ROBERTS

10:18:22
You've got legacy responsibilities and turn to pension plans, which is a huge burden.

WEIL

10:18:27
Exactly. And all of those are now competing for what, thankfully, for the first time in a few years, is starting to be a growing pie, but it's still pretty small.

ROBERTS

10:18:37
We're going to be back with your calls and your questions. And we're going to talk to Arkansas state director and get into some of these details, what some of these states are doing to try to cope with this economic problem. I'm Steve Roberts, sitting in for Diane. I'll be back with my panel in just a moment.

ROBERTS

10:20:03
Welcome back. I'm Steve Roberts, sitting in today for Diane. Our subject this hour is Medicaid, one of the most important and biggest and also least understood federal programs. And my guests to talk about some of the trends, both nationally and at the state level: Ron Pollack of Families USA, Gail Wilensky, a major figure in the Bush administration on these issues and is now with Project HOPE, and Alan Weil of the National Academy for State Health Policy.

ROBERTS

10:20:30
Also, we have on the line with us, John Selig. He's at the Department of Human Services in Arkansas, and this is one of the states which is really trying to figure out ways on a state level to cope with this financial problem that we've just been discussing, tight revenues, demands for services. And, Mr. Selig, welcome to "The Diane Rehm Show." We're happy to have you with us.

MR. JOHN SELIG

10:20:55
Thanks, Steve.

ROBERTS

10:20:56
Give our listeners a sense of sort of what the problem you're facing in Arkansas and how you're trying to solve it.

SELIG

10:21:02
Sure. Well, you know, before there was any discussion of expansion of programs, we were quite concerned as have been -- as most states have been about the growing cost of Medicaid and certainly outstripping the state's ability to keep with it. You know, our program has been going at five to 10 percent a year. And as we looked at it, what we have tried to not do in Arkansas is make some of the deep cuts that have been made elsewhere, or in a lot of cases, simply hand our program over to managed care company and say, you do it because we can't.

SELIG

10:21:34
Our governor, Mike Beebe, asked us to really look at how to control the cost better. And what we really saw in talking with people locally and around the country was that there's just a lot of inefficiency and waste in the system where we're paying for extra hospital days we don't necessarily need to. We're paying for antibiotics when people really didn't need the antibiotics, implants that are too expensive, extra test, you know, untreated chronic conditions.

SELIG

10:22:03
So in Arkansas, what we're really trying to do is go after that waste and inefficiency and give people more coordinated care and frankly, try to keep them as well as possible so they don't have acute episodes. And we're doing that in a couple of ways. One is we're trying to give everyone a medical home where they've got a primary care physician who really tries to keep them as well as possible and help them manage their chronic conditions.

SELIG

10:22:31
And then if they do get sick, we are identifying one provider in each case, for each condition or each episode of care where we say, we really want to incentivize you to coordinate the care across this episode. In other words, we don't just want to pay fee-for-service as we've done in the past, which is really kind of paying for volume. That's how most of the American health care system has worked.

ROBERTS

10:22:53
Right.

SELIG

10:22:54
Or if you do more tests, more procedures, you know, you get paid more hospital days, you get paid again for each of those procedures.

ROBERTS

10:23:00
So the incentive almost works in favor of overprescribing and overbilling.

SELIG

10:23:05
That's right. That's right. And what we want to do is change that and say -- we're going to identify the lead physician, the lead provider and say, we're going to incentivize you to try to coordinate the care, use best practices, get good quality but keep cost down and not pay for things we don't need. Just a specific example would be, in some cases, you can get great care in this hospital, but there's no one making sure that you get good aftercare when you get home. So you end back in the hospital. And that's very expensive for a program like Medicaid.

ROBERTS

10:23:34
And one of the keys here is to -- what's been described as I've read it about bundling payment so that that quarterback, as that (word?) is sometimes been called, gets a set fee. And so the -- your intent, I gather, is to try to turn the incentives around to make people more efficient since you cannot get paid more for more tests and more prescriptions and more procedures.

SELIG

10:23:59
That's right. And what we're doing -- it's not like what you would often take for bundle where we would simply give all the money upfront to that provider and say, you divvy it up among everybody else. Our providers here said, we really can't handle that. Our system isn't that integrated and that sophisticated in a sense. So what we're doing instead is we pay people like we normally would.

SELIG

10:24:22
But then we identify, as you said, that quarterback, and we say, let's say for hip and knee replacement, it's the orthopedic surgeon. We say, we're going to hold you accountable in a sense. Look, we're going to get the total cost of care, what it cost for the hospital, for the implant, for the aftercare, for your work, yourself. And if on average, over the course of a year, you can get high quality and you can have reasonable cost, we'll share some of the savings with you. That saves Medicaid money that will -- obviously, the provider does better, and the clients get in better care.

ROBERTS

10:24:55
And you have enough data, you have to get any sense of how this is working.

SELIG

10:25:00
Well, we just implemented it now, so we don't have data yet. But we're getting some very good -- just to give you one example -- kind of feedback that we wanted to get and that we're seeing. We had a -- we give reports to these quarterbacks on how they're doing. And we send a report out to our doctors and had one of our OB/GYNs contact us. And he said, I see a lot of red on this report, and he was quite upset 'cause he thought he was a pretty good provider. And actually we thought he was, too.

SELIG

10:25:26
And so we started digging in to it with him, and it turned out that what was causing his cost to be higher on average than others was the hospital cost. And we dug further and found out that the hospital he was using was keeping patients -- the mothers on average an extra half day or day longer than other hospitals, and that was causing his cost to go up. And he said, well, I can talk to the hospital about that, and he did do that. And they said, well, we do that because we can get paid for it.

SELIG

10:25:54
You know, that's exactly the kind of things we want to get out, so he contacted us back. He was quite happy. He said, I can certainly manage this. You've given me data that I never had before, information about what's happening across this episode of care. And we can do this better in the future.

ROBERTS

10:26:09
Well, its a...

SELIG

10:26:09
So -- go ahead.

ROBERTS

10:26:12
That's a fascinating example. Let me ask my panel of experts here. Gail, this make sense to you?

WILENSKY

10:26:17
Sure. It's called recreating managed or coordinated care in a state that hasn't traditionally has it -- hasn't had that kind of an infrastructure. It will be a question of whether or not providing the physicians with this information will allow them to pressure the hospitals or the other physicians to change their behavior. That's really going to be the issue.

WILENSKY

10:26:45
It makes great sense given the lack of the infrastructure and the previous reliance strictly on fee-for-service and Medicaid, which absolutely rewards volume, does not encourage coordination, does not encourage higher quality care. It'll be a question as, can this one physician, who's the lead physician, muster the kind of influence to change other people's behavior or not? Time will tell.

ROBERTS

10:27:11
What your reaction, Alan?

WEIL

10:27:13
Well, I think it's a terrific example of the kind of innovation that occurs within the Medicaid program and the importance of state level administration of the program. As Gail indicated, this is a model that fits a state without a tradition of managed care. And you have other states where the private sector is very actively pursuing payment reform, and Medicaid needs to be a part of it.

WEIL

10:27:33
Some places it initiates it, some place it follows it, some places a partner at all. It depends on what's happening in the health care market as a whole. In some states, you have very robust and well-developed care systems or managed care organizations that do have an infrastructure to improve, and you can contract with them in places where you don't have that or you don't have the appropriate oversight. You build it yourself.

WEIL

10:27:55
So you can look around the country and see examples of states trying to figure out, given their health care context, given the cost pressure they're under, what initiatives can they try. We aren't so great always at evaluating those efforts of knowing exactly which ones work. We don't always spread from one state to another. Only the best practices. Sometimes, the not-so-good practices get spread as well.

WEIL

10:28:17
But the concept of constant efforts to reinvigorate the program and use the latest thinking in cost containment, quality improvement, I think, you just heard a great -- one great example of it, and there are many others.

ROBERTS

10:28:30
Ron Pollack, what's your take?

POLLACK

10:28:32
Well, I agree with both what Alan and Gail were saying about the comments John had offered. One of the things I want to emphasize, this is not just an issue for the Medicaid program.

ROBERTS

10:28:43
Sure.

POLLACK

10:28:44
This is an issue for America's health care system.

ROBERTS

10:28:45
Exactly. It's the same problem. It just got large. And...

POLLACK

10:28:48
Absolutely. So if we do experimentation in Medicaid or Medicare, we really have to take these concepts into the broader health care system. Now, for Medicaid, is obviously is very important because as Gail was saying earlier, there -- the big dollars in terms of expenditures occur for those people who are older and sicker, have chronic health problems. And you need to coordinate care.

POLLACK

10:29:13
Many of these people have chronic health problems, have multiple chronic health problems, and they're seeing different specialists. One specialist doesn't know what the other specialist is doing.

ROBERTS

10:29:21
And they keep going back to the ER. I just went through this with my 91-year-old mother over the last few years. And that mounts up very quickly.

POLLACK

10:29:30
Yes. And...

SELIG

10:29:31
Steve...

ROBERTS

10:29:32
Yes, John? I wanted to get your take on what my panel here has said. Everybody agrees it's a good concept. What do you -- what are the biggest problems in getting this implemented on the state level in Arkansas?

SELIG

10:29:45
Well, they noticed both Gail and Ron mentioned a couple of important things. As Gail mentioned, it's just one provider talking to a hospital. They're not going to be -- we're really asking people to change the way they practice medicine, the way they run their practices. And this is not something you can do on a small scale where you do it just with one condition or with even one payer.

SELIG

10:30:05
What we're trying to do is really do this at scale because if you're asking doctors to change the way they practice, they're not going to change the way they practice just for hip and knee replacements or just for pregnancies, so we are working -- actually, this is a public and private initiative. We've got Blue Cross and one of our local insurance companies named QualChoice. We're working kind of hand in glove on this together and are asking Medicare to join us.

SELIG

10:30:31
And we're doing it statewide across all the conditions because we think you really have to go to scale if you're asking people to change the way they think about medicine and change the way they work.

ROBERTS

10:30:41
And that's really the point Ron Pollack was making, that this is really not just a problem for Medicaid. It's -- the principle extends to virtually every dimension of health care delivery systems, right?

SELIG

10:30:50
Right. I mean, in Arkansas, premiums in the private sector have doubled in the last 10 years. So businesses and private families can't afford it either.

ROBERTS

10:31:00
I'm Steve Roberts, and you're listening to "The Diane Rehm Show." Let me also ask about -- and stay on the line if you can for a minute, Mr. Selig, 'cause one of the state innovations, it's -- what's happening in Arkansas is happening in a lot of places. People are trying to figure out ways to control costs, and you have, for instance, the state of Indiana, Gov. Daniels there trying to say, well, we -- Ron was talking earlier. Some states are willing to go with the expansion, others are not.

ROBERTS

10:31:33
Then there's a third group that's sort of trying to figure out a middle ground. Indiana is a good example, Gail. Gov. Daniels is saying, well, instead of allowing all of these people to go on to Medicaid under the Affordable Care Act, that maybe we can somehow subsidize their premiums under the new health care law in these health care exchanges. This will be another way of getting coverage for the uninsured. Give us a sense of how Indiana and other states like that are dealing with that issue.

WILENSKY

10:32:03
Indiana has been very innovative these last four or five years, even through what has clearly been a challenging economic time. And I've had a couple of conversations with Gov. Daniels or been in small groups when he was discussing somewhat of his frustration to not be allowed a little more flexibility in terms of how they innovate. There was a provision early on in the Senate bill that allowed individuals above the poverty line to use their subsidy either to buy care in the exchanges where you can get private insurance or to be on Medicaid.

WILENSKY

10:32:40
Unfortunately, that dropped off somewhere along the way. I thought that was a really good idea, both substantively and politically a very important outreach to the Rs or the more private-oriented individuals in the Congress and in the United States. We need to engage in a little creativity. The part that we are going to especially need to engage in creativity is when it comes to the disabled and the people on Medicare and Medicaid.

WILENSKY

10:33:13
As Ron indicated, they frequently have multiple chronic conditions. They are complex patients. They've gotten the least attention, and they spend the most money. Unfortunately, they probably get the poorest care, given how much money is provided. But we need to make sure when we experiment to make sure we get health status, health outcome measures.

WILENSKY

10:33:36
Medicaid has traditionally been very big on process requirements and almost never requires information about what actually happens to the health of the people affected. I'll give up a lot of process. I want to know what happens to their health.

ROBERTS

10:33:50
But -- go ahead, Ron.

POLLACK

10:33:51
You know, I think it's important to understand what the status of the law is now that the Supreme Court has ruled. First, for anybody who is in a family with income below poverty, their only choice under the Affordable Care Act is to get coverage through the Medicaid program. Now the question you raised was for people who are somewhat above 100 percent of poverty, maybe up to 133 percent of poverty.

ROBERTS

10:34:15
Which is a group that presumably would be covered under the expansion under the Affordable Care Act. That's the group, about 15 million.

POLLACK

10:34:21
That -- there is -- the group between 100 and 133 percent of poverty, just 133 percent of poverty's indicator, always about $25,000. Family affords about $31,000. Those people can buy coverage and get tax credit subsidies for their premiums, but we're going to need some further clarification from the Obama administration.

POLLACK

10:34:46
But I think the Obama administration is going to say what the Congressional Research Service said, namely that the generous subsidies that are provided to states -- 100 percent for the expansion, 2014 through 2016, then 95 percent, then down to 90 percent -- that, I think, is only going to be available to a state that goes to 133 percent of poverty in the Medicaid program. And so I think there is going to be every incentive for a state, ultimately, irrespective of what's being said right now, to expand the Medicaid program.

ROBERTS

10:35:18
Alan.

WEIL

10:35:19
I just want to note that Medicaid has a long history of purchasing private health insurance on behalf of its enrollees. It has historically been in the name of cost avoidance. Medicaid is, by law, the payer of last resort. And if you are employed and you have a source of coverage through your job, and you're Medicaid-eligible, Medicaid is more than happy to have you have private insurance and then wrap around it to make sure you receive the benefits you need.

WEIL

10:35:44
And I think that's the point that all of these various examples you need to keep in mind. We're talking about families living on $15-, $20-, $25,000 of income. A typical commercial insurance policy, particularly at a smaller business or even a medium-sized business, is going to have deductibles -- $500, $1,000, copayments, cost sharing -- that are going to be serious impediments to care, to receiving care for people in that income group. So it's not just getting coverage. It's the quality of the coverage.

ROBERTS

10:36:14
And, John Selig, give me your sense of when you hear Gov. Daniels in Indiana and other places. What are you hearing from other states? Are you sharing your information yet? Is there a lot of interest in the Arkansas experiment? Are there good ideas coming from other places? Give us your sense of this landscape.

SELIG

10:36:32
Well, yeah, we're getting a lot of calls about what we're doing. Of course, one of the, I think, hallmarks of Medicaid as opposed to Medicare is that it really is a state-run program with some -- with federal oversight, and states do run very different programs. And we're all experimenting, to one degree or another, on how to best control these costs. The Affordable Care Act does a lot to expand access, as we've discussed.

SELIG

10:36:57
It didn't do as much to control costs, and that's what states are trying to do. And, frankly, I have to say the federal government has been working very well with us as we've been -- and has been quite flexible 'cause we're asking them to do things and approve things that they haven't approved before. And so far, we've been pleased with the response we've gotten.

ROBERTS

10:37:16
OK. That's John Selig from the Department of Human Services in Arkansas. Also with me, Gail Wilensky of Project HOPE, Ron Pollack of Families USA, Alan Weil of the National Academy of State Health Policy. We'll be back with your calls, your comments, your questions. I'm Steve Roberts, sitting in for Diane. Stay with us. We'll be here.

ROBERTS

10:40:03
Welcome back. I'm Steve Roberts, sitting in today for Diane. Our subject this hour: Medicaid, what's happening both at the federal level after the Supreme Court decision on the Affordable Care Act and also some of the experiments that are going on in the state level. Joining me, Ron Pollack of Families USA, Gail Wilensky of Project HOPE, Alan Weil of the National Academy for State Health Policy. 1-800-433-8850 is our email address and, of course -- oh, it's always drshow@wamu.org, our email.

ROBERTS

10:40:28
And I want to run through a couple of these emails. A lot of people want to talk here. And let's start with Patricia, who says, "Please tell us what percentage of Medicaid money goes to people in nursing's homes versus poor families. Also tell us how many members of Congress have parents or relatives or friends getting Medicaid in nursing homes that have spent down their assets in order to qualify for Medicaid." Gail.

WILENSKY

10:40:50
The Medicaid dollars that go for the aged and disabled are about two-thirds of the Medicaid spend. So it's the bulk of it, although not the bulk of the people. When you actually look at nursing home revenue, it's about 40 percent Medicaid, 40 percent Medicare. Medicare pays for the first 100 days, and this rest is private pay. So Medicaid's a big payer. I don't have any idea how many members of Congress have relatives who spend down.

ROBERTS

10:41:22
And quickly, I want to...

WEIL

10:41:24
I do just want to remind folks that 42 percent of Medicaid spending is for people with disability. So we have this image of elders in nursing homes, but people with traumatic brain injury, degenerative diseases, Down syndrome, severe autism, severe and persistent mental illness, HIV/AIDS. There's a whole safety net for middle class people, not just about getting old and not just being duly eligible with Medicare but actually providing the full spectrum of health care needs. And that's much -- that's actually a larger share of Medicaid spending then for elders.

ROBERTS

10:41:54
And while I don't want to get into the -- too much into the politics of this, we can't avoid the fact, Ron, that we're in a political season where this issue is being spoken about and including the argument about whether the 47 percent of Americans who don't pay taxes and benefit from government programs, and this is simply part of the picture here that it's actually a much more diverse group than perhaps that some people understand.

POLLACK

10:42:18
Well, and, of course, Congressman Ryan wants to convert the Medicaid program to a block grant, and it would cut approximately $810 billion out of the program over the next 10 years. And that 47 percent then will diminish significantly 'cause you can't cut $810 billion out of the Medicaid program and keep these people with coverage.

ROBERTS

10:42:41
Let me read a couple of more emails here. John writes to us, "I am a doctor in an emergency room in D.C. that has many patients covered by Medicaid. Personally, I support Medicaid. However, Medicaid costs beneficiaries nothing, and I see people abuse it every day. Data show that many, many people use the emergency room for non-emergent reasons: mild colds, bumps, scratches, blisters, even though they have primary care doctors. Emergency room care is very expensive, so this misuse is a large waste of money and results in rising health care costs." Alan.

WEIL

10:43:14
This is a real challenge, and we have a struggle about how to balance accountability for people who benefit from the program with the fact that when you're trying to meet the needs of very, very low-income people, even very small amount of cost sharing can be a barrier to them getting necessary care. And I would just note that around the country -- and D.C. has a very unique delivery system -- but around the country, the access to primary care is actually often very limited.

WEIL

10:43:42
And it is easy to say to folks they shouldn't be here in the emergency room, but it is also often the case that there is nowhere else that they can get care or at least nowhere they can get it today or nowhere they can get it when they're not supposed to be at work or taking care of their children. And until we address the issues we were talking about earlier in the hour about reorienting the health care system to giving people access to the services they need, people are going to end up getting care where they can get it even if it's not the most efficient.

ROBERTS

10:44:10
Gail, it seems to me a critical question that our friend in Arkansas raised directly that one of their strategies in terms of containing cost is in the front end. Keep people -- keeping people well, providing them the access to lower caste primary care that's not in an emergency room. I noticed in South Carolina recently at opening of clinics at CVSs where they're staffed by physician assistant, presumably a walk-in clinic of the kind that's accessible but a much lower cost than a hospital ER. Is this part of the picture that everybody has to look at and trying to -- getting a handle on?

WILENSKY

10:44:45
It's a much smarter way to provide care. I agree with Alan's comment that we have to make sure that there's care available outside of the emergency room. I will say that there have been attempts to enroll Medicaid people in programs like Kaiser, and they have had struggles of getting people out of the habit of going to emergency rooms 'cause that's where they've always gone -- or some of the programs that have been tried in Baltimore to do the same.

WILENSKY

10:45:12
We need to find ways, and we're going to have a special (word?) if we had 30 million more people through the insurance expansion of Medicaid and privately subsidized insurance. To make sure that we do it smarter, I find the urgent care centers and these mini clinics a very interesting idea.

WILENSKY

10:45:30
We need to make sure they are integrated into the rest of care that people can receive, but they need a place where when they have problem or their kid has a problem, they can show up, not have a big wait, but not have to pay the kind of money that they would pay if they went to an emergency room. For some Medicaids, you don't, and that's why you get an encouragement towards bad behavior.

ROBERTS

10:45:52
This is an email from Todd, who writes to us, "My mother will be 100 years old on Oct. 8." Congratulations. "She's in a nursing home in Illinois. She's suffering from mild dementia. She and my father never made a lot of money, but we're very, very frugal. She has enough money left for about three or four quarters in the nursing home. The nursing home says that they will take Medicaid and Social Security if she -- her money runs out. What will happen if the Republicans slash Medicaid funding?" Ron.

POLLACK

10:46:18
Well, if the Republicans cut the Medicaid program and provide considerably lesser dollars to the states, then the states are going to have to cope with this huge reduction in financial support that they're getting from the federal government. And each state is going to like to do it differently, and they -- some are going to cut eligibility. Some are going to cut benefits. Some are going to require cost sharing. But there is no way that the people who depend on this program are unscathed at the end of the...

ROBERTS

10:46:49
But isn't there an argument that if you limit the payments through block grants, you provide an incentive for the kind of efficiencies we've just been talking about? Wouldn't that be a good thing in some level?

POLLACK

10:47:01
Well, you can't cut 33 percent, which is ultimately after 10 years, what Ryan proposal does, and not cost a lot of people to lose coverage. It does provide what the states like, is some flexibility, but, you know, the payment levels to physicians and to other providers is not exactly very large. And one of the elephants in the room about making sure people get preventive care and primary care and not use an emergency room is that there are a lot of physicians who will not treat a Medicaid patient because they feel they're getting paid too little.

POLLACK

10:47:38
Now, there are some improvements with respect to that in the Affordable Care Act, but they're temporary. And that's one of the key things for those of us who want to make sure Medicaid really is a robust safety net that's going to continue to be improved -- have to be improved.

ROBERTS

10:47:53
Let me read this from Denise, who lives in Illinois -- Rockford, Ill., and she says, "I'm an RN working in home care, looking after children with tracheostomies and ventilators." And she said, "Recently, the state has cut it's reimburse rate to Medicaid providers. This cut means my wages are reduced on caring for these children, and nursing coverage is also reduced, meaning the already overburdened families are going to have to spend more hours tending to their medically compromised child. Too bad that law was passed not making increases mandatory." Gail.

WILENSKY

10:48:26
Well, there are two things. You said, does the use of a block grant provide incentives to do the kind of experimentation? The answer is, yes, it does. The question of, can we spend smarter, can we have a slower spending growth rate, I think the answer is yes. Can we get as much money out as Congressman Ryan has suggested? I think that is quite questionable myself, but we can certainly do it better.

WILENSKY

10:48:51
We hear how poorly Medicaid pays for some things, like physicians for primary care, and that's true. But it's because so much money is spent badly by keeping people in the hospital longer than they need to, by having too many tests, by having too many antibiotics. We just learned to -- we need to learn how to spend a whole lot smarter. That will allow us, not require us, but allow us to do better for the primary care and prevention.

ROBERTS

10:49:16
Let's go to some of our callers, and let's start with Karen in Munster, Ind. Welcome. You're on "The Diane Rehm Show," Karen.

KAREN

10:49:23
Hi there. I'm sorry. I have a comment and a question. Being a Hoosier, I have some acquaintance with the Healthy Indiana Plan. And, on paper, it is absolutely magnificent. It's better than, in my opinion, than the Affordable Care Act because it reinforces good health practices for the individual enrolled. Unfortunately, there are a large number of people -- how large, I don't think is public knowledge -- who are not allowed under the plan because it's capped.

KAREN

10:49:57
And having a great plan that -- for which you are not admitted is a dollar. OK. That's my comment. I don't think Healthy Indiana is as great as it is published to be.

ROBERTS

10:50:10
OK.

KAREN

10:50:12
Secondly, I would really like to know if your speakers can estimate the cost of not insuring a large number of people under the AD -- ACA provisions, both costs in terms of money and cost in terms of increased mortality.

ROBERTS

10:50:31
Thank you, Karen. Ron, this was very much of an argument during the passage of the Affordable Care Act, that, at the same time, this would cost money to cover people. The supporters of the act keep arguing there's a cost for not covering people. So answer Karen.

POLLACK

10:50:48
Well, absolutely. If you take a look at the average cost for family premiums to pay for the so-called uncompensated care of the uninsured, a few years ago, it already averaged over a $1,000. And so those of us who have insurance actually wind up paying for the cost of the uninsured when they can't pay for it. Now, one of the things Karen was saying -- she was talking about the limitations of what Indiana does, and it's very important to understand, Indiana is not a whole lot different than the other 49 states.

POLLACK

10:51:25
Eligibility in the Medicaid program right now, before the Affordable Care Act, is very limited. So in Indiana, for example, for the overwhelming majority of parents, the eligibility standard in Indiana is 25 percent of the federal poverty level. So for a family of three, that's between six and $7,000 in annual income. In most states, if you're an adult and you don't have dependent children living in your family -- in 42 states, you can literally -- not rhetorically -- literally be penniless, and you're ineligible for Medicaid.

POLLACK

10:52:02
So while Medicaid is very important for the people who are getting coverage through it, the safety net is a whole lot more hole than webbing for a lot of the population.

ROBERTS

10:52:11
I'm Steve Roberts, and you're listening to "The Diane Rehm Show." Let's try to get to a couple more callers here. And let's turn to Nancy in Mountain City, Tenn. Welcome. You're on "The Diane Rehm Show."

NANCY

10:52:21
Thank you very much. I have a comment and then a question. And my comment is that in all the conversations about medical care and the health care system, one of the things I rarely hear talked about is the difference between extreme rural health and city or even metropolitan area health. I live in a very poor county in the Appalachian Mountains in Tennessee, and our access to health care is better than some.

NANCY

10:52:49
But if a patient needs a specialist, oftentimes, the travel is 3 1/2 hours to Knoxville or an additional 3 1/2 hours to Nashville. And as was an earlier comment, many physicians do not take Medicaid, so you -- we have a situation in our county where we have no access to pediatric care. Most of the pediatricians who are in the larger city of Johnson City will not take Medicaid. So all of the more chronic and difficult pediatric issues are dealt with by great nurse practitioners. We have a few MDs. But the rural health care is an entirely different situation.

ROBERTS

10:53:33
Nancy, thank you very much for your comment. Alan.

WEIL

10:53:35
Well, since I grew up in Tennessee, I guess, I'm qualified to respond to Nancy. I would just note two thoughts in reaction to her comments. I mean, the first again is the importance and value of state-level administration, given the high variability in the circumstances people confront, and the need for state-level creativity and local creativity in overcoming barriers to access, which I think we do see a lot of creativity in rural America about overcoming that.

ROBERTS

10:54:01
And those nurse practitioners and physician assistants are absolutely critical in these rural areas.

WEIL

10:54:05
Which gets to the second issue, which is that, on the one hand, we have this imbalance of very highly paid and very underpaid. But within Medicaid, the general levels of payment are lower, and we are asking the health care system, writ large, to reinvent itself and redesign and invest in quality and technology in improvements. And we have to acknowledge that that's a heavier lift for the underpaid sector of the health care system that dominates Medicaid service delivery than it is for the commercial and better compensated sectors of the health care system.

WEIL

10:54:39
So as we go to this transformation, we can't treat every provider, every doctor, every patient the same. Those who are in the Medicaid system, whether they're patients or providers of care are generally, not always, but generally working in more under-resourced environments, whether it's rural, whether it's urban with limited resources, whether it's safety need providers. And we need to address those differences as we think about (unintelligible).

ROBERTS

10:55:01
And what about the particular problem that our caller mentioned about doctors not taking Medicaid? Obviously they have that right, but that seems to be an important part of this puzzle here.

WILENSKY

10:55:11
Telemedicine can make a huge difference for people like that. I spent a little bit of time at Good Samaritan Hospital in Kearney, Neb., last month -- and it was there in the 1990s -- and they have been very active in -- although the town itself is only about 30,000, there are rural referral center for some of the outlying areas, very strong use of telemedicine to link rural communities that don't have access to specialists to areas that do.

WILENSKY

10:55:43
And because of the improvement in technology in the last two decades, it's really quite extraordinary, the kind of care that can be provided if you've got a good, strong nurse practitioners at -- on the receiving end and some primary care physicians as well. But it can help make up -- but you have to have the infrastructure that allows that at both ends in order to make it work.

ROBERTS

10:56:05
I've seen that in rural North Carolina, too, where you have these clinics, walk-in clinics. Often, the nurse practitioners are people rooted in the community. They know the families. They're linked by technology to docs at bigger medical centers. They can send the records, they can send the X-rays, and they have ways of communicating.

POLLACK

10:56:23
You know, we're seeing this in particular for kids who need dental care. There are very few dentists who are willing to serve Medicaid patients. There was a study in Cook County. Only 14 percent of the dental practices would take Medicaid patients. And then when mothers said -- would say they were Medicaid parents, they would deny coverage, even though that practice serve Medicaid patients generally.

ROBERTS

10:56:51
That's going to have to be the last word. What an interesting discussion. Thanks all of you for being here. That was Ron Pollack of Families USA. Also with me: Gail Wilensky, she's an economist, senior fellow at Project HOPE and former administrator of Medicare and Medicaid health policy under George H.W. Bush, and Alan Weil, a Tennessee native, we learned, who's also executive director of the National Academy for State Health Policy.

ROBERTS

10:57:13
And thanks to John Selig of the Department of Human Services in the state of Arkansas. I'm Steve Roberts, sitting in today for Diane. Thanks for spending part of your morning with us.
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