On September 8, the House Energy and Commerce Committee held a hearing entitled, “Medicaid: Empowering Beneficiaries on the Road to Reform.”
In his opening remarks, Chair Joe Barton (R-TX) stated, “Medicaid was originally established to provide a safety net for the poorest of the poor and most vulnerable members of society. It has since grown into one of the largest providers of health care services in the nation, covering a growing percentage of working Americans. These expansions are placing enormous financial pressure on the states, and are causing the Medicaid safety net to begin to fray and unravel. This endangers the very people that Medicaid was originally intended to protect, and highlights why we need to reform Medicaid.”
Expressing his concern that the FY2006 budget resolution (H. Con. Res. 95) requires Congress to cut $10 billion from Medicaid over the next five years (see The Source, 4/29/05), Ranking Member John Dingell (D-MI) stated that these cuts “are unwise to say the least.” He argued that current reform proposals would place a cost-sharing burden on “the poorest of the poor,” adding that instead Congress should “shore up” Medicaid and provide states with the funding they need.
Merrill Mathews, director of the Council for Affordable Health Insurance, encouraged the committee to model a Medicaid reform proposal after the 1996 welfare reform law, which he called “one of the most successful legislative efforts undertaken by Congress and state governments.” He explained that Democratic and Republican governors worked together to lead the reform effort, adding, “Ideology wasn’t driving their efforts; pragmatism was. They wanted a well-functioning welfare system that provided help to those who needed it most, but also helped the able-bodied find a job. Welfare needed to be a safety net, not a hammock.” Dr. Mathews argued that states should be given more flexibility in determining benefits and out-of-pocket expenses, explaining that higher co-payments would prepare Medicaid beneficiaries for the costs of private health insurance and make more funding available for the poorest recipients.
Testifying on behalf of the AARP, Thomas Thames expressed his concern with increased state flexibility, explaining that “some proposals labeled as ‘flexibility’ are clearly harmful because they would inevitably lead to cost shifting and denial of necessary care. These include any proposals that would place caps on federal funding to states through block grants, per capita caps, or some other type of allotment.” He agreed that states should have the flexibility to tailor benefits for their special needs populations, stating, “AARP therefore believes any proposals for increased flexibility need to be carefully, individually, and openly evaluated to determine whether they are likely to lead to true increased efficiency, or merely result in cost shifts and denial of care. Thus, any proposals for increased flexibility need to include meaningful opportunity for public review and input at both the federal and state level.”
David Alexander, president of DeVos Children’s Hospital in Grand Rapids, Michigan, said that 50.5 percent of Medicaid’s beneficiaries are children, adding, “At any point in time, Medicaid pays for the health care of one in four children, nearly one in three children with special health care needs, and one in three infants in the U.S. In some of the nation’s poorer states, Medicaid pays for the health care of nearly one in three children and one in two infants.” Explaining that many states have cut funding for Medicaid and children’s hospitals are reimbursed for only 73 percent of patient care costs, he stated, “Taken together, these facts mean that Medicaid plays such a large role in the financing of children’s hospitals that any changes in Medicaid potentially could affect the financial ability of the hospitals to serve all children, because we cannot reduce services for only poor children in order to absorb Medicaid losses.” Pointing out that two-thirds of the nation’s uninsured children are eligible for Medicaid or the State Children’s Health Insurance Program, Dr. Alexander encouraged Congress to improve enrollment in the programs. He also recommended a federal investment in high-quality health care for children and disease management programs within Medicaid.
President and CEO of the American Council of Life Insurers Frank Keating addressed the importance of Medicaid for seniors, explaining that “one of the greatest risks to asset loss in retirement is unanticipated long-term care expenses. The risks of needing nursing home care also are substantial. Over half of women and nearly one-third of men 65 and older will stay in a nursing home sometime during their lifetime. According to the 2005 Genworth Financial 2005 Cost of Care Study, the annual cost of a nursing home stay currently is almost $70,000.” Highlighting growth in the private insurance market, Mr. Keating stated, “Long-term care insurance products continue to adapt to give policyholders more choices and flexibility at the time of the claim…Plans today are guaranteed renewable, have a 30-day ‘free look’ period, offer inflation protection, cover Alzheimer’s disease, have a waiver of premium provision, and offer unlimited benefit periods.” He urged Congress to provide tax deductions for long-term care insurance and allow policies to be offered under employer-sponsored cafeteria plans and flexible spending accounts. Mr. Keating also encouraged the committee to expand the Partnerships for Long-Term Care, which allow consumers to purchase long-term care insurance and then qualify for Medicaid once the benefits in the policy have been fully exhausted. Explaining that the program currently operates in California, Connecticut, Indiana, and New York, he said that “more than 225,000 long-term care insurance Partnership policies have been purchased in those states, and fewer than 100 policyholders have exhausted their policies and accessed Medicaid.”
