Can Medicaid Be Managed Better For Seniors?
The federal Medicaid program is well known as the national government’s approach to providing safety net health coverage for those living below the recognized poverty line. Thousands of those receiving welfare benefits from the federal government also receive Medicaid coverage as well.
The program regularly pumps hundreds of billions into all 50 states as part of a match program along with state governments, usually on a 50/50 funding basis. Where states increase their spending, the federal government provides a commensurate amount in federal funding. As of 2012, the program costs $438 billion, with the same aggregate cost rising an average 10 percent a year.
Given the current presidential election, Medicaid along with other federal assistance programs is gaining a lot of publicity and scrutiny for how much money is spent annually through assistance. Along the same lines, questions are again being raised with regards to how these programs can meet their goals with less cost overall.
Despite the overall description of Medicaid being a medical safety net for the poor, one third of the coverage program is spent regularly on providing long-term basic care for seniors, equating to $120 billion a year in taxpayer dollars, according to Bloomberg. Much of the reason has to do with the fact that many of the enrolled elderly recipients have spent down all their personal assets, making them financially eligible to get into the coverage program. Since these enrollees likely won’t be working again anytime soon before death, they end up staying on the Medicaid program long term until finally passing away. Add to the picture that the Baby Boomer generation is aging and represents the largest generational population to hit the program since its inception, the national cost is expected to jump by the billions of dollars.
Much has been thrown around about the idea of replacing Medicaid and other similar programs with a voucher program or a private-side insurance model program. However, the line is drawn on the political parties with the Democrats firmly entrenched on maintaining Medicaid’s spending as-is in its current entitlement benefit form. The Republicans argue on the other end of the spectrum for more aggressive care management to reduce the government’s costs, proposing to instead give state governments control of the federal funds to set up state programs as the better suit an individual state. This would reduce the federal government’s administration cost and involvement. An estimated $1.26 trillion in aggregate savings by 2022 would occur after the change.
As a result, if Medicaid stays as-is, current enrollees will continue to receive their benefits with a large wave of Baby Boomers coming in right behind within a decade or two. Additionally, the current Obama Administration wants to expand program eligibility, adding another 11 million new enrollees to the program by raising the recognized poverty level applied to entering applicants. That said, an existing limit already sets 2020 as the year the government will stop funding Medicaid growth entirely, shifting some expense back over to new members in the form of copayments.
The problem with both political approaches, however, is that they don’t get out of the mindset that Medicaid should be a type of welfare benefit. Both strategies would still treat seniors enrolled in Medicaid as welfare recipients. The alternative of the pseudo-private model would instead take what already exists in Medicare with the Medicare Advantage HMO-style service and the Medicare Part D copayment and premium drug plan and apply it to the Medicaid program.
An early attempt of changing Medicaid to an HMO model was tried in 2010 with the Community Living Assistance Services and Supports (CLASS) Act, but it didn’t work well. The bottom line failure was that people didn’t sign up for since they were given a choice to participate. As a result, the program couldn’t pay for itself with the insufficient premiums collected.
Further, a new program under this approach assumes affected seniors will have some kind of financial resources to pay premiums and copayments. This in effect would mean a bite into their one common source of money, Social Security benefits. Where many are on fixed benefits, there would be significant challenge in Congress to decrease that income base further with a new medical plan cost. However, it is doable; Medicare was eventually changed with the same approach.
A new approach to low-income senior medical care can be technically applied, but politically it has mountains to climb to even see any kind of test implementation. Until some sense of cost shift becomes acceptable for the affected senior population, those committed to a safety net idea will continue to resist changing the original Medicaid program.
Image Credit: kate.gardiner
Derek is an active blogger. This article is for a new jersey insurance agency.