Medicaid tab is draining state funds

January 12, 1992|By Tom Bowman | Tom Bowman,Washington Bureau of The Sun

Three times a week the minivan pulls alongside the lonely trailer in the hills of Garrett County to pick up Helen, a blind woman in her 50s, and transport her 33 miles to Cumberland for a kidney dialysis treatment.

In South Baltimore, Howard, an industrial worker with a wife and three children was laid off 13 months ago. His union benefits, savings and health insurance quickly evaporated.

They may be scores of miles apart, with vastly different lives, but Helen and Howard -- state officials didn't want to disclose their full names -- share a common link. They are both part of Medicaid, the medical assistance program for the poor and the disabled created three decades ago during the heady days of what President Lyndon B. Johnson called his Great Society.

Today, the Financially Strained Society is finding it hard to pay the bill.

The recession that claimed Howard's job, the growing federal rules that include Helen's $65 round-trip hospital ride, and the rise in health care costs -- mostly through better technology -- have transformed a noble venture into a financial catastrophe.

Those triple realities have sapped precious tax dollars from the federal and state governments that run the program, funds that could have been used for other pressing needs, such as housing, the environment or education.

In 1980, Medicaid cost the federal taxpayer $14 billion. The figure rose to $52.5 billion in 1991. By 1996 it could soar to $105 billion, the Congressional Budget Office has determined.

Meanwhile, 38 states, including Maryland, witnessed double-digit increases in Medicaid spending during the past year alone. Medicaid spending surpassed higher education as the second largest state spending category -- second only to elementary and secondary education, according to the National Association of State Budget Officers.

What cost Maryland about $800 million during the current fiscal year will rise to about $1.05 billion in the coming year.

Nationally, nearly half of the Medicaid costs are for long-term care, mostly nursing home costs.

And the state deficit from Medicaid spending alone has snowballed in the past two years to $219 million -- part of the projected $1.2 billion state budget deficit that Gov. William Donald Schaefer said will require additional budget cuts and tax increases to close.

"You have [Medicaid] programs that are literally driving states into bankruptcy," lamented Maryland Health Secretary Nelson J. Sabatini.

It's agreed: It's a mess

Despite its high cost, Medicaid covers less than half the poor: The aged, blind and disabled and poor families with children add up to 25.5 million people. Families near the poverty line and low-income, childless couples find themselves ineligible for help. They are among the 34 million Americans with no health coverage.

From the committee rooms of Congress to the statehouses, nearly everyone agrees that Medicaid is a mess.

"Medicaid has gone from a middle-burner issue to a front-burner issue," said Diane Rowland, executive director of the Kaiser Commission on the Future of Medicaid, a five-year effort centered at the Johns Hopkins University. "I think we need to look a lot at how we buy health care in this country."

"It's the problem of the early '90s. . . . We're looking for some national kind of relief," said Del. Charles J. Ryan, D-Prince George's, chairman of the Special Joint Committee on the Medical Assistance Program. "The states are going to get together and say, 'Something's got to be done.' "

But there is no consensus on the "something" that has to be done.

There are those in Congress who want the federal government to assume most of the Medicaid costs. Others want the states to be able to select from a "menu" of medical services. Still others would like to retire Medicaid and replace it with a new federal-state insurance program.

As a presidential candidate, George Bush said he wanted to have people buy into Medicaid. But as president, Mr. Bush has had little to say on the matter, although he is expected to raise the issue of tax credits for health care coverage during his State of the Union address Jan. 28.

Meanwhile, the nation's governors, complaining of burdensome federal requirements under Medicaid, would like more flexibility to experiment with less costly forms of health care.

"There are limits on what states can do," said a staffer with the National Governors' Association, pointing to the Medicaid rules. "They can't require people to be in HMOs [health maintenance organizations]."

States can, however, apply for waivers to release them from some of these federal regulations. Executive Director Raymond C. Scheppach of the governors association would like to see a half-dozen states released in order to devise systems of managed care such as HMOs.

"Why not let us go forward and demonstrate what can be done?" he asked.

Mandating more recipients

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