Medicaid and Issues for Health Care Reform

Public Welfare, Spring 1995 | Go to article overview

Medicaid and Issues for Health Care Reform


Reformers could take a lesson from Medicaid.

The sweeping and historic changes that came with last November's U.S. congressional elections seem to have quelled calls for reform of the nation's health care system.

Or have they?

To paraphrase Mark Twain, rumors of the death of health care reform may have been greatly exaggerated. For, although the extensive reforms proposed by the Clinton Administration may have been shelved, health care itself is still very much an issue of debate--on Capitol Hill and in statehouses across the country--even if it is not an agenda item in the Contract with America.

For now, at least, the first battleground for this new focus on health reform is likely to be the Medicaid program. At a federal cost of $82 billion in fiscal year 1994, it is certainly one of the largest items in the federal budget, although it is dwarfed by the four largest programs: Social Security, at $321 billion; defense, $277 billion; interest on the federal debt, $212 billion; and Medicare, $147 billion. Nevertheless, with an annual rate of growth pegged at 10 percent, Medicaid has become a plum target for the new congressional leadership in trying to bring federal spending under control.

As of this writing, the most talked-about means of reforming Medicaid is eliminating most of its federal bureaucracy and channeling federal Medicaid funds to the states in the form of block grants. Such an approach may appear to be the ideal response to the states, which have been seeking more flexibility in administering entitlements such as Aid to Families with Dependent Children and Medicaid. But some Democratic and Republican governors and state legislatures, conscious of Republican congressional promises to curtail unfunded federal mandates to the states, are wondering whether federal block grants will have the ultimate effect of pushing ever-increasing Medicaid costs off onto the states. What is more certain is that block-granting Medicaid will place the responsibility for actual program and policy changes squarely at the feet of state policymakers.

Even if Congress does not eventually block-grant Medicaid, federal lawmakers will be looking for innovative ways to regain control over spiraling health care costs and to improve access to services and consumer choice and satisfaction. One way in which many states have been trying to reduce their own costs is through shifting from traditional fee-for-service programs to managed-care programs--better known to consumers as health maintenance organizations (HMOs).

To improve access and consumer choice and to control costs, some states are beginning to rethink how their Medicaid programs deliver one of the most costly forms of care--long-term care for elderly and disabled patients. Other states are broadening their approaches and undertaking service integration efforts in their health care delivery systems. And all of these approaches raise questions of how to ensure and improve quality of care.

In this issue, Public Welfare explores several state and local Medicaid innovations that are controlling costs, improving access, broadening choices, and maintaining quality assurance. Massachusetts Medicaid Commissioner Bruce M. Bullen begins by describing his state's Medicaid waiver and efforts to move the Medicaid population from fee-for-service to managed care.

Former Oregon Human Resources Director Kevin W. Concannon, who recently became the commissioner of human services for the state of Maine, looks back at Oregon's success in shifting the focus of long-term care away from institutionalization and to less-expensive, more effective home- and community-based options. Kevin B. Piper, director of Wisconsin's Bureau of Health Care Financing, and Peggy Bartels, who manages that state's Medicaid managed-care program, use Wisconsin's experiences to compare HMOs and fee-for-service plans in Medicaid primary care. Jack A. …

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