April 15, 2005
Federal HHS Secretary Outlines Plan To Begin Medicaid Reform
State legislators support proposal, which includes more state flexibility
WASHINGTON, D.C. - U.S. Secretary of Health and Human Services Mike Leavitt outlined five steps to begin the process of reforming Medicaid in his address to state legislators during the National Conference of State Legislatures' Spring Forum on Friday.
"There is a point in the life of every problem when it's big enough that you can see it, but it's small enough that you can solve it," Leavitt said. "I'd like to suggest that's where we are with Medicaid."
When Leavitt began his first term of three terms as governor of Utah, Medicaid was a single digit percentage of the state's budget, he said. Now, it consumes 22 percent. Its cost has nearly doubled in the past five years. And Leavitt predicts the upward trend to continue as the nation's 77 million Baby Boomers age.
"We have to modernize," Leavitt said. "We have to think about this in the context of what's coming. I believe there is an emerging consensus on at least five areas that should begin to lay out the way we begin modernizing Medicaid."
Leavitt's suggestions are:
- Renegotiate the program's prescription drug benefit, since Medicaid currently pays more for its beneficiaries' medicine than many other health insurance providers do.
- Stop Americans from shifting their assets so they can qualify for Medicaid.
- Give states the option to charge co-pays of beneficiaries who are members of optional populations. "Medicaid recipients need to be cost-conscious consumers," he said.
- Allow states flexibility to tailor their basic benefit packages. Leavitt sees a flaw in the way the current system gives the same benefits to the populations that states are required to carry, and those populations states have the option to carry. The mandatory populations, which include the disabled, the aged and disabled, the extremely poor and children in foster care, are those the government has a responsibility to protect, Leavitt said. The optional populations include a lot of people who just need help getting insurance, he added. "Do the optional populations require this same package of services?" Leavitt asked.
- Change the basic construct of Medicaid's long-term care arm to allow for community- and home-based services.
Leavitt urged state legislators to contact Congress and express their support for these reforms, which he feels are just the beginning of the solution. In the longer term, he said the country must find new long-term care solutions as well as alternatives for working people without health insurance.
State legislators on both sides of the aisle applaud Leavitt's plan.
"I think his five points make a lot of sense, because they're all a very integral part of reforming Medicaid," said New Hampshire Representative Peter Batula, who is a co-chair of NCSL's Task Force on Medicaid Reform. "If you leave out any part of it, it destroys the entire reform process."
NCSL President John Hurson, who is a Maryland Delegate, said he wants state legislators to get behind Leavitt's plan. "Secretary Leavitt is absolutely right," Hurson said. "We're seeing 7 and 8 percent increases in Medicaid costs every year. We're bound by too many regulations that force us to do certain things. When we get flexibility, we can do more with less money."
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