New details about an Obama Administration proposal currently on the table as part of deficit reduction talks indicate that Medicaid remains at risk for major cuts. The Obama proposal, initially released to little fanfare in April, would make several momentous changes to Medicaid, including replacing current federal funding formulas with a single “blended” rate for each state. Together, these proposals could cut $100 billion from Medicaid over the next 10 years – far less than the $700 billion Medicaid reduction proposed in the House-passed budget resolution, but nonetheless substantial and potentially devastating.

 

Under current law, the federal government pays a certain proportion of costs for each state’s Medicaid program. This proportion, call the FMAP rate, is different for each state and is calculated based on complex formulas taking into account state economies and program enrollment. Even within states, the FMAP varies based on whether a beneficiary is enrolled in Medicaid, CHIP, or (beginning in 2014) the Medicaid expansion. The blended rate proposal would replace all of these various FMAP rates with a single federal matching rate for each state. 

 

To create the blended rate, the government would first have to calculate the actual combined federal share of costs for both current and future Medicaid/CHIP enrollees (taking into account the 2014 Medicaid expansion). The resulting percentage would be reduced by a certain amount selected to produce the spending-reduction goals that are eventually agreed to in the debt ceiling talks. The final result would be a single FMAP for each state that equates to significantly less than current federal shares of spending. FMAP rates would still vary among states.

 

The blended rate proposal would have major harmful effects on Medicaid enrollees and providers. The proposal would not change current eligibility rules or benefits requirements, it would merely provide less federal money to support them. This means that states would be left responsible for meeting costs formerly paid by the federal government. States are already facing massive budget shortfalls, even without reductions in federal Medicaid spending – and many are turning to provider pay cuts or benefits rollbacks to meet ends meet. (Scroll to page 54 of this National Association of State Budget Officers report to see what steps states are taking to reduce Medicaid spending) If this proposal were to become law, states would likely be forced to further deepen cuts to provider pay and benefits.

 

Moreover, the blended rate proposal would also provide a strong disincentive for states to assertively enroll newly eligible individuals in 2014 and beyond. Under current law, states would receive a 100% federal match for these enrollees – but if the match rate were to drop to a much lower blended rate, states may find that their budgets simply do not have the capacity to support tens of thousands of new Medicaid enrollees. Multiple analyses have shown that assertive outreach will be needed if states are to enroll all eligible individuals in Medicaid – and without this outreach, it can be expected that many eligible people will remain uninsured.

 

The National Council, with other members of the national Partnership for Medicaid coalition, recently sponsored an advertisement in the Capitol Hill publications Roll Call and CQ Today.  The advertisement urges Congress to keep Medicaid strong by preventing drastic cuts that would undermine the program. For  more information on the details of this proposal and how it would hard Medicaid beneficiaries and states, see this policy brief from the Center on Budget and Policy Priorities. 

 

 

 

Senators Tom Coburn (R-OK) and Joe Lieberman (I-CT) this week introduced legislation that would make several significant changes to the Medicare program, including raising the eligibility age from 65 to 67 and instituting higher premiums for wealthier enrollees. The proposal would also impose a single $550 deductible for Parts A and B of Medicare, a major change from current deductibles which vary based on type of facility, length of stay, and frequency of admission.

 

These changes, adapted from the recommendations of President Obama’s bipartisan fiscal commission, would reduce Medicare spending by $600 billion over the next ten years. Senators Lieberman and Coburn acknowledged that the plan could only succeed if the 2010 health reform law stays in effect, so that individuals age 65-66 would be able access health insurance through the state-based insurance exchanges (with premium subsidies from the federal government to help offset the cost of insurance for those from 133-400% of the federal poverty level). Click here to read a full summary of the bill.

 

While it is unlikely that Congress will take action on the Coburn-Lieberman bill, proponents of the plan hope that some of its provisions will be incorporated into the ongoing debt reduction talks being held between President Obama and congressional leaders. Coburn and Lieberman touted their plan as a step towards finding bipartisan agreement on the $2 trillion spending reduction that will be needed to win passage of a debt ceiling increase. Negotiations on the debt ceiling increase are currently stalled as lawmakers seek agreement on the extent to which the package will include spending cuts alone or a combination of cuts and revenue increases.

 

 

On Wednesday, the United States Court of Appeals for the Sixth Circuit ruled that Congress does have the constitutional authority to impose an “individual mandate” on the purchase of health insurance, upholding one of the key provisions of the 2010 health reform law. The ruling was the first of three appellate court cases to be heard on the law in the wake of multiple lower court cases, some of which struck down the mandate and others which upheld it. The question of the constitutionality of the individual mandate is ultimately expected to be decided by the U.S. Supreme Court.

 

In its decision, the 6th Circuit majority wrote that the mandate is constitutional under Congress’ authority to regulate interstate commerce because “the activity of foregoing health insurance and attempting to cover the cost of health care needs by self-insuring is no less economic than the activity of purchasing an insurance plan.” The majority also supported the government’s argument that individual choices not to buy insurance have clear commercial effects because they shift the cost of caring for the uninsured to other payers. For the most up-to-date information on the status of the legal challenges to the health reform law, see Kaiser Health News’ Scoreboard. 

 

 

 

Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development (HUD), last week sent a letter to the nation’s public housing authorities (PHAs) clarifying HUD’s position regarding eligibility for public housing among people with criminal records. In his letter, Secretary Donovan encouraged PHAs “to allow ex-offenders to rejoin their families in the Public Housing or Housing Choice Voucher programs, when appropriate.”

 

Currently, decisions about whether to admit people with criminal records to public housing are made at the discretion of the PHA executive directors. Only people who have been convicted of producing methamphetamines on the premises or people who are lifetime registered sex offenders are banned by law from public housing. Secretary Donovan’s letter is one of several ongoing efforts by the federal government to address prisoner reentry issues. For more information about these initiatives, visit the website of the Federal Interagency Reentry Council. Additional information on the topic of housing and reentry can be found in an issue brief from the Council on State Governments, “Public Housing Authorities and Prisoner Reentry.”  

 

 

 

The Centers for Medicare and Medicaid Services this week announced that nearly 500,000 seniors this year have received 50% discounts on brand name drugs under the portion of the health reform law designed to gradually close the “donut hole” gap in Medicare drug coverage.

 

When Medicare beneficiaries’ prescription drug costs exceed the standard Medicare benefit, they enter the “donut hole” – a gap in coverage before their costs reach the catastrophic level and Medicare kicks in again. The Affordable Care Act included a variety of provisions to close the donut hole over the coming years. In 2010, seniors who reached the donut hole received a $250 rebate to help offset their costs. This year, seniors receive a discount of 50%, with the amount of the discount to be slowly increased (and expanded to generic drugs) until the coverage gap is completely eliminated in 2020. For more information on how health reform will close the donut hole, see the National Council’s fact sheet on this topic.

 

CMS data show that 478,272 Medicare beneficiaries have reached the donut hole this year, triggering the 50% discounts on their brand name drugs. As a result, according to CMS, these beneficiaries saved a total of $260 million, or an average savings of $545 per beneficiary. Most of the discounts went to Americans with serious medical conditions, including $21 million for drugs to help control high blood pressure and cholesterol, and another $20 million for drugs to help individuals with diabetes. 

 

 

 

The Affordable Care Act created the Pre-Existing Condition Insurance Plan (PCIP) – a high risk insurance pool to provide insurance for individuals with pre-existing conditions through 2014, when the Medicaid and private insurance expansions begin. PCIP provides a potential opportunity for individuals with chronic health issues, including mental health and substance use disorders, to access insurance coverage not otherwise available to them due to their pre-existing health issues.  

 

Recently, the U.S Department of Health and Human Services announced (insert link: http://www.pcip.gov) new eligibility standards and lower premiums in some states. These critical changes went into effect as of July 1, 2011. Join this webinar on July 13 from 12:30-2:00 p.m. eastern time to learn more about PCIP and how it could potentially benefit your uninsured clients from a leading expert within the federal government. 

 

About the Speaker: Jay Angoff is Senior Advisor to U.S. Department of Health and Human Services Secretary Kathleen Sebelius.  He also served as the first Director of the Office of Consumer Information and Insurance Oversight, the Office responsible for  implementing the insurance reform provisions of the Affordable Care Act, which is now part of the Centers for Medicare and Medicaid Services (CMS).  Prior to joining HHS, Mr. Angoff held several state-level positions, including Insurance Commissioner of Missouri and chair of Missouri’s Commission on Health Insurance Reform. Mr. Angoff began his career as an antitrust lawyer with the Federal Trade Commission.  He is a graduate of Oberlin College and Vanderbilt Law School.

 

 

 

In preparation for our 2011 Public Policy Institute and Hill Day, the National Council invites you to participate in our “Get Ready for Hill Day” webinar on July 7 at 2:00 p.m. eastern time. In this webinar, we’ll cover essential information to help you get ready for your trip to Washington, including:

 

 

Please visit our website today to register for this webinar. 

 

As you prepare for Hill Day, don’t forget to schedule your appointments with your elected officials. Once you set up your meetings, please enter them on your registration profile – this will help the National Council do any necessary coordination and follow-up! Simply return to the registration tool, log in using your email address, and click “Add New Meeting” in the upper right column.