Subj: HHS Secretary Pursues Medicaid Reform
Date: 2/6/05 10:25:59 PM Central Standard Time
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HHS Secretary Pursues Medicaid Reform
Last week, the new HHS Secretary delivered an important
speech about ways to save federal money in the Medicaid
program. Secretary Leavitts remarks provide conflicting
signals for people with disabilities. On one hand, Leavitt
expressly states that Medicaid success means keeping the
nations commitment to people with disabilities. He also
highlights the need for more community based services and
supports. On the other hand, Leavitt suggests saving money
by cutting back on optional program elements, which could
have a dramatic effect on people with disabilities.
News accounts from the Washington Post, New York Times, and
Wall Street Journal follow. Secretary Leavitts remarks are
posted in a separate JFA article.
Jonathan Young
JFA Moderator, AAPD
========================
Leavitt Sees $60 Billion in Medicaid Savings
By Ceci Connolly
Washington Post Staff Writer
Wednesday, February 2, 2005; Page A09
New Health and Human Services Secretary Mike Leavitt said
yesterday that $60 billion can be saved over the next
decade in the Medicaid health program for the poor by
closing loopholes, prohibiting "accounting gimmicks" by
states and eliminating wasteful spending on items such as
overpriced prescription drugs.
In his first address as secretary, Leavitt sought to dispel
fears that President Bush is poised to cap federal spending
on Medicaid. Leavitt said the administration will not limit
spending on "mandatory" beneficiaries -- the recipients who
are guaranteed coverage under federal law.
But left unsaid was what the administration intends for
Medicaid's optional patients and services, about two-thirds
of all Medicaid spending.
Diane Rowland, executive vice president of the nonpartisan
Henry J. Kaiser Family Foundation, said that because
children are the largest group of mandatory beneficiaries,
Leavitt's comments seemed to indicate "the potential goal
here is to reduce spending on the aged and people with
disabilities, who tend to be classified as optional and are
the most expensive."
In a speech to the World Health Care Congress here, Leavitt
said he will advocate home- and community-based health care
for the elderly and disabled rather than the more expensive
nursing home care. Cracking down on middle-class senior
citizens who transfer assets to their children to qualify
for Medicaid's long-term care would save $4.5 billion over
a decade, he said.
Bush and the state governors are focused on Medicaid
because it has grown rapidly at a time when the federal
government faces record deficits and states are having
trouble balancing their budgets.
"There is a time in the life of every problem when it is
big enough to see but small enough to solve," Leavitt said.
"For Medicaid, that window of opportunity is upon us. The
time to act is now."
The federal-state health program gives states wide latitude
in determining income eligibility levels and types of care
to be covered by Medicaid. Under federal law, for example,
prescription drugs are optional services, although
virtually every state provides free or discounted
medications to Medicaid beneficiaries.
Covering more people and more services costs a state more
money, but also earns it more federal matching funds. The
Medicaid rolls have swelled to 46 million people, and the
program is projected to cost $324 billion this year.
"Medicaid is not meeting its potential," Leavitt said. "It
is rigidly inflexible and inefficient. And, worst of all,
it is not financially sustainable."
In Leavitt's confirmation hearing, however, Sen. Max Baucus
(D-Mont.) noted that Medicaid costs have grown "mostly from
an increase in enrollment," not waste, fraud and abuse.
Though he expressed sympathy with governors struggling to
balance their budgets, Leavitt repeatedly pointed the
finger at state leaders who he said have "resorted to a
variety of loopholes and in some cases accounting gimmicks"
to siphon off an extra $40 billion in federal money over 10
years.
Asked to name those states, Leavitt demurred, saying those
types of "awkward conversations are best conducted one-on-
one."
He promised aides would provide details on the $60 billion
in savings. But a staff e-mail later said only: "The
estimated savings numbers used in the speech are formal HHS
estimates and can be attributed as such."
(c) 2005 The Washington Post Company
=====================
February 2, 2005
Health Secretary Calls for Medicaid Changes
By ROBERT PEAR
WASHINGTON, Feb. 1 - Michael O. Leavitt, the secretary of
health and human services, called Tuesday for sweeping
changes in Medicaid that would cut payments for
prescription drugs and give states new power to reduce or
reconfigure benefits for millions of low-income people.
In his first speech as secretary, Mr. Leavitt also said it
should be more difficult for elderly people to qualify for
Medicaid by transferring assets to their children.
"Medicaid must not become an inheritance protection plan,"
Mr. Leavitt said at a convention of health care executives
here. "Right now, many older Americans take advantage of
Medicaid loopholes to become eligible for Medicaid by
giving away assets to their children. There is a whole
industry that actually helps people shift costs to the
taxpayer."
Medicaid helps pay the bills for two-thirds of the 1.6
million people in nursing homes in the United States.
Mr. Leavitt said President Bush wanted to join Congress in
an effort to rein in the cost of Medicaid, the nation's
largest health insurance program. Medicaid spending has
shot up 63 percent in the last five years. Federal and
state outlays now total more than $300 billion a year.
Anticipating the proposals by the Bush administration, many
governors have banded together in a bipartisan effort to
stave off restrictions on federal Medicaid spending. In a
letter to Congress in December, the National Governors
Association said it was unacceptable to shift federal costs
to the states as part of a deficit-reduction strategy.
Meanwhile, some governors, including George E. Pataki of
New York, have turned to Medicaid in trying to address
their own budget pressures. Some states have dropped
recipients, set strict limits on spending and reduced
benefits.
One of the biggest changes Mr. Leavitt suggested Tuesday
was to provide a more "flexible package of benefits" to
women and children in many low-income families.
States already have a large degree of discretion, but the
basic package of benefits required under Medicaid is more
comprehensive than that of most private plans. The Medicaid
package is also more extensive than the benefits required
under the Children's Health Insurance Program, which is
less likely to cover mental health services, vision care
and dental treatments.
"Medicaid is not meeting its potential," Mr. Leavitt said.
"It is rigidly inflexible and inefficient. And, worst of
all, it is not financially sustainable."
Mr. Leavitt, a former three-term governor of Utah, laid out
several options that he said could save Medicaid more than
$50 billion in the coming decade. Even with these changes,
he said, Medicaid spending will probably grow more than 7
percent a year.
The Congressional Budget Office said last week that under
current law, with no changes, Medicaid would grow an
average 7.8 percent a year in the coming decade, compared
with an average 7.9 percent a year in the prior decade.
Mr. Leavitt said the federal government could save $15
billion in the next 10 years if it stopped "overpaying for
prescription drugs."
George M. Reeb, assistant inspector general at the
Department of Health and Human Services, told Congress in
December that most states paid for drugs based on the
"average wholesale price," a list price that bears little
resemblance to the prices actually paid by retail
pharmacies serving Medicaid recipients.
Patrick J. O'Connell, an assistant attorney general of
Texas, testified at the same hearing that some pharmacies
had received "windfall profits" and that some manufacturers
had "purposely reported false and inflated prices to Texas
Medicaid."
Mr. Leavitt said Tuesday that Medicaid could save $4.5
billion over the next 10 years if it restricted the ability
of elderly people to gain Medicaid coverage of long-term
care by transferring assets to their children.
Finally, he said, the federal government could save $40
billion in the next decade if it cracked down on
"accounting gimmicks" that he said were used by states to
shift costs to the federal treasury.
The Government Accountability Office, an investigative arm
of Congress, said last week that such moves by the states
"generate excessive federal matching payments" and "cost
the federal government several billions of dollars each
year."
In 2003, Mr. Bush proposed giving states a fixed amount of
federal money for people the states had voluntarily decided
to cover under Medicaid. Democrats and advocates for the
poor denounced this as a block grant. Under such an
arrangement, they said, Medicaid would be less responsive
to changes in the economy and to increases in poverty and
medical costs.
Copyright 2005 The New York Times Company
============================
White House Sets Medicaid Plan
By SARAH LUECK
Staff Reporter of THE WALL STREET JOURNAL
February 2, 2005; Page B8
WASHINGTON -- The Bush administration began a push to
overhaul Medicaid, with the nation's top health official
promising a plan to make the program "financially
sustainable" and to give states greater leeway both to cut
and expand coverage.
Health and Human Services Secretary Michael Leavitt
predicted a "very uncomfortable" conversation with the
states about slowing the growth of Medicaid, which provides
health care for the poor, and ending what he called
"accounting gimmicks" that he said many states use to draw
more federal dollars. Medicaid is partly funded by the
states, which administer the program. The federal
government pays almost 60% of the overall cost.
Mr. Leavitt, speaking at a conference, declined to say how
much money might be saved under the administration's
Medicaid plan, which is expected to be included in the
budget proposal President Bush is scheduled to release
Monday. He suggested that closing "loopholes" used by
states could save the federal government as much as $40
billion over the next decade, and that Medicaid could save
an additional $25 billion in state and federal money if
states "stop overpaying" for prescription drugs.
Mr. Leavitt, who was confirmed last week, said the
administration doesn't intend to propose a block grant for
Medicaid or to "cut available resources." But when asked by
reporters whether the administration would propose limiting
the federal government's contribution, he declined to
comment and said details would be unveiled in the budget
proposal. Advocates for the poor and the elderly have said
they would oppose a federal cap.
Medicaid covers about 53 million people, including low-
income elderly, children and people with disabilities.
Federal rules require states to cover certain populations
and services; those items are known as "mandatory." But
states, with federal approval, can add other populations
and services that qualify for federal funds. Prescription
drugs, for example, fit into the "optional" category.
Optional recipients and services account for most Medicaid
spending.
Mr. Leavitt said coverage for "mandatory" recipients --
such as pregnant women with incomes below a given amount --
would be protected under the plan. However, he signaled big
changes for the way the program treats "optional"
recipients.
When asked about legalizing broader importation of
prescription drugs, he said he has concerns about safety
but is "open" to considering the idea.
Write to Sarah Lueck at [EMAIL PROTECTED]
Copyright 2005 The Wall Street Journal
