April 7, 2006
Health Secretary Invites States to Innovate on Medicaid
WASHINGTON, D.C. - U.S. Secretary of Health and Human Services Mike Leavitt on Friday called on states to work within the new federal framework to devise creative solutions to the nation's Medicaid problems.
Medicaid eats up close to 20 percent of states' budgets, and is the fastest growing component. And healthcare in general as a percentage of the nation's gross domestic product has increased from 5 percent in the 1960s to 16 percent today, Leavitt said at the National Conference of State Legislatures' Spring Forum. Healthcare costs are expected to rise to 20 percent of GDP by 2015.
"There is no place on the economic leader board for a nation that spends 20 percent of its economic product on one sector," Leavitt said. "We have to find a way to do this better or we're going to get beat economically."
He outlined recent federal changes to the program, which provides medical services the nation's poor and disabled. Leavitt said Medicaid now allows states to:
- Tailor their programs to specific populations so that the poorest beneficiaries and those that simply need help paying for health insurance are not under the same umbrella;
- Use "health opportunity accounts" and more patient co-pays so that beneficiaries have a better understanding of how much their care really costs;
- Keep elderly recipients in their homes or communities to receive care; and
- Come up with other ways to improve the program.
"I still have substantial authority to create waivers," Leavitt said. "If you bring me an idea that covers more people more efficiently, you'll have a ready partner here."
The secretary commended several states for recent innovations. He applauded Massachusetts for its recent passage of a bill to require health insurance of its residents, and cover those who cannot afford it. He also praised new solutions in Iowa and Florida.
Leavitt encouraged states and citizens to change the way they think about healthcare. He advocates moving from a reactive approach to a preventative one and increasing transparency so it's easier for Americans to understand the true costs of care.
"We are all trying to reconcile the things that are priceless, but that are not price-free. And that's the dilemma with Medicaid," he said. … "We've got a partnership. We've got a problem, but we can solve it."
Illinois Senator Steve Rauschenberger, NCSL's president, said the state-federal partnership on Medicaid is getting stronger. "Leavitt is clearly committed to giving states the opportunity to innovate," he said. "That's a good sign from the administration."
Legislators agree that rising health care costs are a concern for the nation. But some of them disagree with the administration's approach.
Wisconsin Senator Bob Jauch pointed out that the federal budget cut Medicaid by at least 5 percent.
"He told us we're going to have to find creative ways to deal with less money," Jauch said.
NCSL is the bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.
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