Subject: Medicaid Is Beginning to Look More Like Part Of the Problem With the Health Care System Date: Published: 8/8/91 (152 lines) Source: Wall Street Journal. Copyright Dow Jones & Co. Inc. Politics & Policy: Medicaid Is Beginning to Look More Like Part Of the Problem With the Health Care System ---- By David Wessel Staff Reporter of The Wall Street Journal WASHINGTON -- Not long ago, Medicaid, the joint federal-state health insurance program for the poor, was seen as part of the solution to shortcomings of the U. S. health care system. In fact, about the only suggestion that George Bush made about health in his 1988 campaign was to expand Medicaid. Lately, though, Medicaid has been looking more like part of the problem. Medicaid costs are rising even faster than forecast, far faster than enrollment. Cash-strapped states are desperately trying to shift costs to Washington through a loophole that the White House budget office is just as desperately trying to close. At the same time, some doctors refuse Medicaid patients because they say the program doesn't pay enough. And judges are ruling that some states are too stingy with Medicaid fees. No wonder Drew Altman, former New Jersey commissioner of human services, has called Medicaid "the health care program everyone loves to hate." "Medicaid is bursting at the seams," says Deborah Steelman, a lobbyist and former Bush campaign aide who chairs a government advisory panel on health. Despite the complaints, and an occasional suggestion that the program be torn apart, no big changes are likely soon. Rather, the exploding cost of Medicaid is becoming another source of pressure on Washington to do something fundamental about health care costs and related issues of the uninsured. Medicaid most recently came to the fore when the White House budget office said that without any change in law, Medicaid is expected to cost the federal government $64 billion more over the next six years than estimates made just six months earlier. Much of that 22% increase reflects complex state maneuvers to get the federal government to pay a bigger share of the bills. Essentially, states pay health care providers more, but then get some of the money back through special hospital taxes or "donations." The federal share is based on the original payments, though, not on the net cost to the state. The Office of Management and Budget says it is a scam; states say they are just getting all the federal money to which they're entitled. But that isn't the whole story. "Unfortunately, the Medicaid cost explosion is ...a symptom of a very much larger problem: that is, how to address the inequities of the current health system, while also keeping total health expenditures from becoming an impossibly large percentage of either the federal budget or the nation's gross national product," White House Budget Director Richard Darman told the Senate Budget Committee recently. Created in 1965 primarily to pay for health care for welfare mothers and their children, Medicaid has grown to cover more than 28 million people, more than one in 10 Americans. In one sense, it is a success: Most of those Americans wouldn't have health insurance otherwise. But it is costly: $90.3 billion this year, 31% more than last year. It varies widely from state to state and isn't available to large numbers of the poor -- many adult males, for instance. And all too often, it provides shoddy care. California Democratic Rep. Henry Waxman, who has successfully led the efforts to expand Medicaid, nonetheless calls it "a second-class health care system -- better than nothing, but not what we should want in a public program." Ms. Steelman says only 35% of the four-year-olds in California enrolled in the program since birth have ever had a physical exam. One reason for the cost explosion is that Medicaid, as the health insurance program of last resort, is forced to absorb the expensive problems that no one else wants. It foots the hospital bill for crack-addicted babies in intensive care units. It steps in when a disabled man with AIDS loses his insurance. It pays nursing-home bills when an elderly woman exhausts her savings. The elderly account for $1 in every $3 spent on Medicaid even though they represent one in every eight beneficiaries -- and get their basic medical coverage from the all-federal Medicare program. Increasingly, Medicaid is paying bills for home health care for elderly people who aren't sick enough to get Medicare benefits. And as a cottage industry springs up to teach middle-income Americans how to hide assets -- legally -- so that the government will pay their nursing-home bills, Medicaid spending on the aged is sure to climb. Medicaid has been a particularly attractive vehicle for federal policy makers in an era of deficits and spending restraints because for every dollar in added Medicaid benefits, states pick up 45 cents on average. Indeed, the biggest obstacle to extending Medicaid to more people is growing state resistance to the program, which now consumes about 14% of state budgets, roughly the same as state colleges. "In New Jersey, in any given year, the increase in Medicaid necessary just to maintain current services consumed about one-half of all the new funds available for our department," according to Mr. Altman. "This left the homeless, the mentally ill, the elderly, the disabled, veterans, welfare recipients and other needy groups to fight for the leftovers." The paradox of Medicaid is that, in many states, it doesn't seem to spend enough. "To physicians, hospitals, nursing homes and other health care providers, Medicaid is the program that pays far too little," says Gary Clarke, who oversees Medicaid in Florida. "Yet for state and federal legislators, executive officers and the public, Medicaid is the program that costs far too much." Medicaid usually pays less than Medicare and private insurers. The American Academy of Pediatrics says Medicaid pays about half of what others pay pediatricians. In Vermont, Medicaid paid $374 for a hysterectomy in 1989; Medicare paid $896, according to a recent report by the federal Physician Payment Review Commission. In Michigan, Medicaid paid an obstetrician $373.32 for a vaginal delivery; private insurers paid $902. As a result, some doctors turn away Medicaid patients. Nearly one-quarter of all pediatricians won't see Medicaid patients under any circumstances, and many others limit the number they will see, according to an American Academy survey. The patients often end up at more expensive hospital emergency rooms or at Medicaid mills that exist more to collect government money than to provide good care. A 1980 federal law requires states to pay rates that are "reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities." The Supreme Court said last year that health care providers may ask courts to decide if state payments are "reasonable and adequate." They are suing -- and sometimes winning. Last month, a federal judge ruled that Washington state isn't paying hospitals enough. For all these reasons, Medicaid, as currently structured, has lost some of its allure as a vehicle for providing health care to the uninsured. Still, if political gridlock stalls a broader restructuring of the U. S. health care system, Congress may resume the steady expansion of the program. "The longer it takes to do major health care reform," says Marilyn Moon, a health care analyst at the Urban Institute think tank here, "the more people like Henry Waxman will continue to tinker with Medicaid." [This article is made available here by Dow Jones Co. for the personal and non-commercial use of callers to this bbs, in the hope that it will be of some help to those who are suffering from the disease and others who are seeking to help them.]