Gubernatorial Candidates Discuss Medicaid Reform Options
Carter, Ray, THE JOURNAL RECORD
Although Oklahoma's Medicaid program hasn't received much attention from candidates so far this election season, it remains "the 800-pound gorilla" of state politics, according to gubernatorial candidate Steve Largent, R-Tulsa.
The program, which provides health care coverage to the poor and is funded through state-federal matching funds, has seen enrollment surge and expenses balloon, with that trend expected to continue or even accelerate in the next decade.
As a result, the next governor may face some tough choices when it comes to financing the program.
In the last year alone, Oklahoma's Medicaid enrollment grew 6.1 percent, rising from 443,926 in July 2001 to 471,110 in July 2002. That means 13.7 percent of Oklahoma's total population is now covered through the program.
The growth has been even more dramatic since 1997, when lawmakers changed eligibility standards for portions of Medicaid to allow Oklahomans earning up to 185 percent of the poverty level ($33,485 annually for a family of four) to receive Medicaid coverage. In July 1997, an estimated 282,000 people were enrolled in the program, compared to 471,110 today - an increase of 67.1 percent in a five- year period.
State spending has surged along with enrollment. In fiscal year 1997, state dollars appropriated to Medicaid totaled $338.3 million (or 8.2 percent of total state spending). By fiscal year 2002, the total state appropriation hit $576.5 million (a 70 percent increase in five years and 10.7 percent of total state spending in the fiscal year ended June 30).
In spite of increased appropriations, the Medicaid program experiences a shortfall almost every year and lawmakers normally bail it out with supplemental appropriations. However, that solution may not be available next year due to lower-than-expected tax collections.
The Legislature was able to increase state spending last year and maintain Medicaid funding, but only because lawmakers were able to drain the "rainy day" fund, tapping all but $70 million of the $340 million in the fund.
Lawmakers may not have that luxury next year, and could be forced to consider major reform of government services. Altering Oklahoma's approach to the Medicaid program may be part of that effort, with policy-makers seeking to control costs while still providing coverage to the most needy.
The reforms suggested by the gubernatorial candidates interviewed by The Journal Record cover everything from shifting power and responsibility to patients, to simply increasing state spending.
Perhaps the most dramatic reforms discussed were those proposed by former Congressman Steve Largent.
The Republican front-runner said he is concerned that the current system is actually limiting the medical options available to the poor in spite of increased eligibility.
"We're a mile wide and an inch deep," he said.
The state has expanded eligibility for some portions of the Medicaid program from 133 percent of the federal poverty level to 185 percent. But as eligibility expands and enrollment grows, the state finds it more difficult to actually provide promised benefits, Largent said.
"We've tried to stretch essentially the same dollar over a broader group of people, and so as a result of that we end up cutting the reimbursement rate to doctors and hospitals," he said.
Largent said Oklahoma's Medicaid enrollment growth, in percentage terms, was the largest in the United States from 1997 to 1999.
As Medicaid reimbursement rates have fallen so has the participation of doctors, and Largent said Oklahoma has one of the worst doctor participation rates in the nation, ranking in the bottom three states.
"In what was a good-intentioned effort of allowing more access to health care, we've actually created a system where we've decreased access because of the low reimbursement rate and doctors dropping out of the plan," he said.
Largent said the state needs to "inject some free-market principles, principally competition" into the Medicaid system to improve efficiency and provide services to the needy.
Those "tools" include medical savings accounts, vouchers and "even having some elements of co-payments that are made so the consumer actually has a financial interest in their health care," Largent said.
"As long as people feel like that everything's free, that somebody else is paying for it, then they don't care how much it costs," he said.
Even among the poor, Largent said a minimum co-payment should be part of the system.
"If you go in for emergency care, have a $5 co-pay so you don't have people running to the emergency room because they have a cold," Largent said. "There has to be some element (of co-payment). It would be hard for me to believe that anybody in this country can't find $5 if they've got to go to the emergency room or if they have to go to the doctor for whatever reason. And I think that having some reasonable, justifiable co-payment is one way that we can begin down the road of having more accountability and more consumer participation in their health care delivery."
Largent said the use of tax-free medical savings accounts to cover medical expenses of less than $10,000 would be a good option for individuals with income between 133 percent and 185 percent of the federal poverty level. He said a portion of that savings account could be used to purchase a policy covering catastrophic events costing more than $10,000 "so if you have brain surgery or a car wreck or whatever it might be, you're covered." The rest would go to pay for routine health care.
Largent said Oklahoma would have to get a waiver from the federal government to implement medical savings accounts, but said Congress is looking for states willing to try new approaches in the Medicaid system.
Largent also said there is a "lack of accountability and transparency" in most state agencies, but especially at the Oklahoma Health Care Authority, which administers most of the Medicaid program. If elected governor, Largent said he would fight for clear accounting standards that the public can both access and understand.
"As governor of the state of Oklahoma, I'm going to demand that I understand why our administrative costs in Medicaid are nearly twice as high as any state in the surrounding area," he said.
Largent also suggested that consolidation of all state divisions that currently administer the Medicaid program might reduce overhead.
"They all used to be one unit, many years ago, but they've been segmented out," he noted.
Largent called Medicaid "the 800-pound gorilla" of state politics that no one wants to touch, and warned that Oklahoma could face serious financial problems if no reforms are implemented.
"The gorilla's getting bigger," he noted. "A small percentage of the population under Medicaid is our elderly, long-term care. It's like 5 or 6 percent, and yet they account for about 20 percent of the total cost. And that population in the state of Oklahoma is growing and will continue to grow for the next 10 or 15 years. So the problem's going to get exacerbated."
Democratic candidate Vince Orza, an Edmond restaurateur, supports an equally ambitious reform of the Medicaid system, saying the state should actually increase eligibility while implementing free-market reforms to control costs.
"Anything that you get for free, you don't appreciate," said Orza, chairman and CEO of Eateries Inc. "So I want a reasonable level of responsibility for the person who is utilizing the system."
Orza said "simple ground rules" similar to those seen in private insurance are needed in the Medicaid program and said Medicaid should operate much like private insurance and provide tiered coverage.
"In my company, we have a tiered program," he noted. "We have health insurance for the young, single person who thinks they're bulletproof and will never get sick. They buy simple insurance."
The company also provides a tier for married couples without children and a tier for families with children.
Orza said the tiered levels in Medicaid should pay a larger percentage for basic health services and lower amounts for services that are considered elective.
Orza also suggested placing stricter limits on doctor visits and providing "free" coverage for only the most basic health care needs, which he said would free up money to boost doctor and hospital reimbursement.
"Wasting a doctor's time just because it's available and it's free doesn't make any sense," Orza said.
Eateries, which operates Garfield's Restaurants, also provides tiered coverage for prescription drugs. Orza said that approach could work for the government. His employees willing to take generic drugs have a lower co-payment than those wanting brand-name drugs do.
At the same time, Orza said an actual expansion of Medicaid eligibility may be justified. Instead of placing the eligibility cap at 185 percent of the federal poverty limit ($33,485 annually for a family of four), he said a 200 percent cap ($36,200) should be used, with families earning up to 300 percent of the federal poverty rate ($54,300) allowed to participate based on a sliding scale that requires those families to provide co-payments.
The 2000 Census showed that 61.2 percent of Oklahoma families earn less than $50,000 per year and 42.1 percent earn less than $35,000. (The census definition of family includes all people living together related by marriage, birth or adoption.)
Orza also said programs in Missouri and Vermont, which provide total health care coverage to children in families earning up to 300 percent of the federal poverty level, might be worth duplicating in Oklahoma.
"The governors of Vermont and Missouri, who I met with personally, said the same thing: This is cheaper for us in the long run than letting kids grow up without health care, without inoculations, starting them off on the right foot," Orza said. "Because if they become unhealthy as adults, it costs a fortune in terms of Medicaid costs for the rest of their lives."
About 33 percent of Oklahoma's 900,000 children under the age of 18 are already covered through the state Medicaid program.
Orza said the increase in eligibility is justified because Oklahomans are already paying for that coverage indirectly.
"We're financing it anyway," he said. "When they run to the emergency room, we're paying through the nose for emergency room care."
Democratic candidate Brad Henry, a state senator from Shawnee, believes only minor reforms are needed.
"In Oklahoma, we have done a much better job than most states nationally have in terms of holding down the rising cost of the Medicaid program," Henry said. "The cost in Oklahoma has increased at a rate of about 3.3 percent annually whereas nationally the cost has increased at about 6.6 percent."
Henry said the recent surge in Medicaid enrollment in Oklahoma is driven by recent increases in the unemployment rate.
"When times are tough and there's an economic slowdown, we're going to see more people enrolled in the Medicaid program," he said. "These are cycles that we go through."
However, he said the state needs to develop better cost controls in some areas.
"We need to study what some other states have done, particularly in the area of holding down the cost of prescription medications, because we know that is the single largest driver in the skyrocketing cost of health care," he said.
Henry noted that other states have banded together in purchasing pools to negotiate lower prescription drug prices from pharmaceutical companies.
"I think that's something we really should take a hard look at," he said.
Henry noted that Oklahoma is currently a "donor state" that sends more tax money to the federal government than it receives back in federal funding, and said the state should seek to "procure more federal dollars" for the Medicaid program through higher state spending.
Henry said he's willing to consider introducing a co-payment provision to the Medicaid program, but noted that many senior citizens on Medicaid have very little money.
"I see how they struggle with difficult choices of whether they put food on the table or buy prescription medication, and I do not want to exacerbate that problem, so I doubt that I would propose any kind of a co-payment for seniors who are dually enrolled in Medicaid and Medicare," he said.
Henry said the lawmakers may need to develop "appropriate utilization control protocols" that keep people from abusing the Medicaid system by going to the doctor any time they have a runny nose.
"We want people to get the appropriate quantity and quality of treatment, but we don't want people to overutilize the system just because they can," he said.
Democratic candidate Kelly Haney, a state senator from Seminole, said he doesn't favor reducing existing eligibility standards.
"I don't support changes in SoonerCare eligibility standards, because our program is designed to address a specific problem -- the large number of children, disabled citizens, and persons over 65 without medical insurance. SoonerCare participation is limited to these three groups (plus pregnant women).
"When the Legislature decided to set our state's relatively generous eligibility standards in 1997, there were 200,000 Oklahomans under the age of 18 with no form of health insurance. Today, all these children are covered. Our emphasis is on primary care and disease prevention for young people - more than 65 percent of those covered by Medicaid are children."
He also said the state could reap more federal money to provide medical coverage to the poor, and that simple reforms could reduce overhead.
"In order to boost provider payments and expand prescription drug coverage, we need to take advantage of future opportunities," Haney said. "Two years ago, lawmakers wisely funneled $38.9 million in tobacco settlement money into our Medicaid programs, which was matched by almost $100 million in federal money. Recent federal legislation will also help states boost the percentage of generic drugs used by Medicaid patients. Other states have saved millions of dollars annually by simply encouraging physicians to prescribe generic drugs when appropriate."
Democratic candidate James Dunegan, a state representative from Calera, also said Oklahoma could capture more federal dollars "if we invest more directly into the indigent care Medicaid program," which would "lesson the hardship on hospitals" treating those patients.
"On that program, they (hospitals) are losing money," Dunegan said. "And what happens when they're losing money on one program, they have to offset it with another program. I think if we make an investment in it and properly pay for that Medicaid program, then I think that we would see ourselves spending less on other programs."
Dunegan said lawmakers need to "take a real serious look" at the Medicaid program so it will be properly funded "upfront." He said a legislative study should be conducted so that when the state again experiences revenue growth changes can be implemented.
Dunegan said the portion of the Medicaid program needing the greatest boost in funding is the portion serving the elderly, who currently make up about 33 percent of Oklahoma's Medicaid enrollees. Dunegan said prescription drug coverage for the poor elderly is the biggest need.
Candidate Gary Richardson, a Tulsa attorney and former Republican now running as an independent, said Medicaid's financial woes could be best addressed by selling many state-owned entities including state lodges, the former State Insurance Fund (now known as CompSource) and the Grand River Dam Authority. Richardson said the sale of those properties could free up another $200 million per year for the state general fund, which could be used to provide health care to the poor.
Richardson also believes another $7.5 million can be raised through federal matching funds by increasing the state's contribution. The extra state money could be realized by reducing the government's administrative overhead.
"We can save money through administrative cost reduction at the Health Care Authority and also at the Department of Human Services," Richardson said.
He said a study of Medicaid eligibility should be conducted by "experts" to determine if changes need to be made.
"I'm not saying that everyone on the program is not eligible," he said, "but I think that's something that always has to be done."
Richardson said he would also consolidate government services across the board, freeing up more money for health care concerns.
"We've been told for years by studies that we have way too many agencies in this state," he said. "For too many years, every time there's a challenge that comes up, our solution has been to create a new agency, which is quite expensive."…
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Publication information: Article title: Gubernatorial Candidates Discuss Medicaid Reform Options. Contributors: Carter, Ray - Author. Newspaper title: THE JOURNAL RECORD. Publication date: August 21, 2002. Page number: Not available. © 2009 THE JOURNAL RECORD. Provided by ProQuest LLC. All Rights Reserved.
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