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Looking for a prescription to fix Medicaid
Scripps Howard News Service


July 04, 2005

WASHINGTON - Tennessee Gov. Phil Bredesen says the Volunteer State offers its citizens the nation's most generous Medicaid program, offering medical coverage to a higher percentage of poor people and dedicating a larger proportion of its budget to the program than any other.

There's only one catch, he readily acknowledges - the system known as Tenncare is bankrupting the state treasury and leading Tennessee down the path of financial ruin.

A Democrat said to have his eye on the White House in 2008, Bredesen has moved to place Tenncare on more secure footing. But it comes at a cost. More than 300,000 Tennesseans could lose benefits, resulting in what one critic termed "the most drastic public health cutback in the history of the nation."

But the governor is unapologetic.

"If we want to fix the problem that the states are facing today, and even more importantly if we want to start planning for tomorrow ... we have to start by getting the economic fundamentals straightened out by making the money we have go farther," Bredesen said during a recent address at the National Press Club in Washington.

Tennessee is far from alone in claiming that it is overburdened by Medicaid, the $330 billion-a-year program that serves 53 million nationwide:

- Kentucky state Health and Family Services Secretary James W. Holsinger declared that "we are now facing a true Medicaid crisis" after it was revealed the state faces a $675 million shortfall next year. The situation, Holsinger said, "requires us to look at every option available to us to preserve Medicaid for the neediest, most vulnerable people we serve."

- Missouri announced in May that it was cutting more than 20,000 from its Medicaid rolls as a result of budget cuts. The plan drops those whose incomes exceed 23 percent of the poverty level - about $292 a month for a family of three. Only three states have a lower cutoff level.

- Mississippi implemented several changes to save money, including an increase in co-pays and limiting reimbursement for prescription drugs to five - only two of which can carry a brand name.

- Democratic Pennsylvania Gov. Ed Rendell, looking to cut the Medicaid budget by $380 million, entered the last day of the state's fiscal year on Thursday pushing a plan to limit patient visits to hospitals and doctors, reduce the number of Medicaid-covered prescriptions and a requirement that patients purchase generic drugs.

To many states, Medicaid is an overwhelming problem.

"It is difficult to overstate the impact of Medicaid on state budgets," said Virginia Gov. Mark Warner, a Democrat and chairman of the National Governors Association. "It now represents about 22 percent of the average state budget and is a larger percentage than all elementary and secondary education. If you add health-care spending for state employee and other programs, state health-care spending totals about one-third of all spending and is equal to spending on all education - elementary, secondary and higher."

Medicaid was created in the 1960s as a state-federal partnership to provide health coverage for low-income Americans. According to the Kaiser Commission on Medicaid and the Uninsured, Medicaid accounts for 17 percent of all personal health-care spending in the country. The program is administered by the individual states within broad federal guidelines, resulting in wide state-to-state variations in coverage.

The federal government picks up about 57 percent of the tab, dispatching matching funds to states based on per-capita income.

Costs, which have been a nagging concern to states, have grown significantly in recent years. Warner noted that the program is serving populations with increasingly costly needs, such as those with HIV/AIDS. Those with serious mental and physical disabilities represent 25 percent of the Medicaid population, but account for 70 percent of the program's budget.

The caseload also has increased 40 percent over the past five years, adding 15 million to the rolls. Some recipients are victims of what has been a roller-coaster economy - the first four years of the Bush administration created few net jobs - but it's also true that the unemployed are being forced to accept positions that don't provide health insurance, often pushing them into Medicaid.

Exacerbating the situation are expenses related to health care, which are running two to three times ahead of the consumer price index. Medicaid acute-care spending increased at an average annual rate of 13.4 percent from 2000 to 2003, while spending on long-term care hiked 8.4 percent.

In all, Medicaid costs have risen 63 percent over the past five years. These factors have gone into creating a perfect fiscal storm.

"Medicaid, like all insurers, has been faced with these rising costs," Warner said. "It is the combination of these problems - caseload growth and health inflation - that makes Medicaid unsustainable in the short run let alone the long run."

Congress is considering a plan that would actually cut the federal contribution by $10 billion over five years - a move that could put an even greater financial strain on state governments in the absence of drastic action.

"It is disgraceful that Congress is poised to adopt a federal budget that cuts $70 billion in estate and capital-gains taxes for the richest people while, at the same time, it slashes funding for seniors and children who count on Medicaid for their very survival," said Ron Pollack, executive director of Families USA, a group dedicated to creating a system of affordable health care.

Groups like Families USA and AARP have objected to cuts on both the state and federal level, asserting they would place an onerous financial burden on those least able to afford it. And there is some evidence the public favors continued healthy funding for the program.

"Medicaid today is the safety net for people most affected by America's health-care problems,'' Pollack said. "It provides health coverage for 53 million people, most of whom would otherwise be uninsured. It rescues families whose breadwinner has lost employer-provided health coverage. It provides nursing-home and long-term-care protection for the elderly and people with disabilities. And it provides these services far more cost-effectively than the private sector."

Some enrollees already are feeling an impact. Stan Rentfro, 34, of Gadsen, Tenn., received a letter from the state on June 22 informing him that he would be struck from Medicaid rolls within 20 days.

Rentfro, who has been on TennCare since 1994, suffers from cystic fibrosis and will need a lung transplant if he has any chance of survival. He has permanent pneumonia and requires drugs that cost between $750 and $1,000 month. He can't digest food without medication.

Rentfro said he is being removed from the rolls because he has an income - he works in the office of a trucking firm. But he is being forced to leave that job and apply for disability because he can no longer rely on Medicaid.

"It worked as good as it possibly could do," he said. "I have a terminal disease and they have pretty well taken care of me. As good as could be asked."

His lung functions have now gotten to a critical level, Rentfro said. The state is offering an insurance program, "but with our health the way it is, premiums will cost way over $1,000 a month and there's no way I can possibly pay it."

"I think I'm going to die," Rentfro said. "I get sick an average of once a year, normally at the beginning of winter. My coverage will be cut off by then and it will be up to me, if a hospital admits me, to come up with the money. I have a terminal disease. I have no income."

A poll commissioned by the nonpartisan Henry J. Kaiser Family Foundation, released Wednesday, showed that while two-thirds of respondents acknowledged their state suffers from major budget problems, 52 percent said they strongly oppose making cuts in Medicare program.

"This poll shows that Americans across the political spectrum value the role Medicaid plays in our health-care system," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.

Results like the Kaiser poll haven't stopped governments on the state and federal level from tinkering with Medicaid. President Bush has announced plans to appoint a commission to determine the best way to implement the proposed $10 billion in federal cuts.


E-mail Bill Straub at StraubB(at)

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