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* Every time there’s a recession in this country, Medicaid spending becomes a major issue for the states. Back in the early 1990s, it was said that Medicaid was eating states’ budgets alive. Now, the Associated Press refers to the program as a budgetary “monster”….
In Illinois, Medicaid sucks up more money than elementary, secondary and higher education combined.
“Medicaid is such a large, complicated part of our budget problem, that to get our hands around it is very difficult. It’s that big. It’s that bad,” said Illinois Sen. Dale Righter, a Republican and co-chairman of a bipartisan panel to reform Medicaid in Illinois, where nearly 30 percent of total spending goes to the program.
* Some stats…
During the Great Recession, millions of people relied on the Medicaid safety net. Between 2007 and 2009, the number of uninsured Americans grew by more than 5 million as workers lost jobs with employer-based insurance. Another 7 million signed up for Medicaid.
Just when caseloads hit their highest point, the nation’s new health care law required states not to change the rules on who’s eligible for Medicaid. That means states can’t roll up the welcome mat by tightening Medicaid’s income requirements.
* And a bit of perspective…
Contrary to stereotype, it’s the elderly and disabled who cost nearly 70 cents of every Medicaid dollar, not the single mother and her children.
That’s a very good point. While over half of the recipients are children, it’s the elderly and the disabled who cost the most, even though they represent only 20 percent of the recipient population.
* There are a handful of ways to cut medical costs. Cut payments to providers, like doctors and hospitals, cut benefit levels to recipients, kick people off the programs, reform the way payments are made.
Providers in Illinois are already receiving fairly low levels of disbursement and Illinois has one of the lowest costs per patient ratios of any Medicaid program in the nation. So, moving on those two items just isn’t very realistic, although some tweaks can be made.
That leaves things like managed care, which the Republicans have been pushing and the state is already doing to some extent, and kicking people off Medicaid. They aint’ gonna kick old people off because they vote, so that leaves everyone else. One area being looked at hard is undocumented immigrant children…
One area some committee members were concerned about was the practice of the state paying for health insurance for more than 50,000 undocumented immigrant children. Unlike other sections of the state-funded children’s health care program, the care for undocumented children doesn’t receive any federal match. All of the funds must come from the state’s general revenue fund, according to Julie Hamos, director of the Department of Healthcare and Family Services and a former Democratic state legislator.
“We see the issue of serving undocumented (immigrant) children as a policy issue, one that we’re proud of and one this governor supports, so we are not proposing changes in reducing eligibility for undocumented children,” Hamos said.
However, advocates have noted that health care for children is relatively inexpensive when compared to adult needs.
* Another thing being looked at is requiring recipients to more regularly prove their income levels qualify them for benefits…
One pay stub annually is all a family needs to provide right now to show annual income.
State Rep. Patti Bellock, R-Westmont, who co-chairs the committee, has introduced legislation that would change that requirement to proof of a month’s worth of income. This provides a better sense of what a family makes over the course of a year, proponents claim.
But…
Not everyone wants to see these changes, however. State Rep. Mary Flowers, D-Chicago, said that it’s a waste of state resources to chase after people whose income is likely constantly in flux.
“Income varies from week to week, or it could be from day to day … you’re really complicating the situation, making it a lot worse, and you’re clogging up the system chasing after the cheats as opposed to providing the services which you are suppose to be providing,” Flowers said.
Making any changes that might bump people out of Medicaid could be tricky. A clause in the federal health care overhaul act says that states can’t make “eligibility standards, methodologies, or procedures” more restrictive than what was in place as of March 23, 2010, without federal approval.
Both the House and the Senate have bipartisan committees set up to look at all these issues and more. The Senate’s committee is meeting this morning.
Thoughts?
posted by Rich Miller
Tuesday, Dec 14, 10 @ 11:12 am
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Not a clue. No answers at all on how to reduce costs.
Science keeps devising ways to live longer. Who’s not going to want it? What politician is going to say “no” to seniors who want to live longer?
I’ve been at a time in my life the last 10 years or so where my and my friends elderly loved ones have been moving on.
The costs of the end-years can be simply astounding. Half a million, a million dollars for the last 48 months doesn’t raise an eyebrow when there are multiple procedures, conditions and hospital stays piling up.
Comment by wordslinger Tuesday, Dec 14, 10 @ 11:26 am
It is well known that many of the elderly who spend time, often end-of-life time, in nursing homes are middle class or better but have transferred assets to their heirs so as to be eligible for Medicaid.It’s not necessarily illegal and lots of lawyers make a living advising affluent clients how to die on Medicaid and leave the kids a bundle. For ex, the NYT recently had an article on “spousal refusal in that state.
I’m not sure how to fix this–possibly, more in-home care for the seriously ill and disabled and a better, even mandatory system of long term care insurance plus a tightening of the rules governing disposal of assets. If we could solve this problem, Medicaid’s finances would probably look a lot better, managed care or no. Unlike this crew of Democratic legislators and a less-than-innovative governor will want to make any tough decisions in this arena though.
Comment by cassandra Tuesday, Dec 14, 10 @ 11:30 am
==That’s a very good point. While over half of the recipients are children, it’s the elderly and the disabled who cost the most, even though they represent only 20 percent of the recipient population.==
The implication here, and one felt by many older people, is that they are expendable and a drain on the vital younger people, whose contributions to society are yet to come. When you hit 65 or 70, it feels like being told Here’s your hat, what’s your hurry? Maybe those on this blog who have not reached that point in their lives will find the sentiment pathetic. But just wait.
Comment by Anonymous Tuesday, Dec 14, 10 @ 11:30 am
The biggest potential savings to the Medicaid system is moving people out of nursing homes who don’t need to be there into assisted living facilities and home-based care.
Nursing homes cost ten times more than the alternatives.
As for “managed care,” its a red herring. HMO’s shave dollars in three ways: reducing payments to providers, denying services, and increasing administrative efficiency.
Our payments are already low, and Illinois already has the lowest administrative costs for Medicaid in the country (thanks Barry). So unless Republicans are going to create HMO “Death Panels” to determine who gets treatment and who doesn’t, “Managed Care” is a dead end.
If, on the otherhand, the idea is to privatize Medicaid not in order to save money, but so that Tom Cross’s friends in the insurance industry can pad their bottom line, then by all means: full speed ahead.
Comment by Yellow Dog Democrat Tuesday, Dec 14, 10 @ 11:31 am
@Anonymous:
I don’t think that’s the message at all. This is not ageism.
When Republicans attack Medicaid, they portray it as Welfare for people who ought to be paying their own health care. Most people don’t realize that while seniors and the disabled make up only 1/3 of Medicaid patients, they account for 2/3 of spending.
Its easier for Republicans to demonize the unemployed mother of two than the 75 year-old grandma in a wheelchair.
Comment by Yellow Dog Democrat Tuesday, Dec 14, 10 @ 11:36 am
*It is well known that many of the elderly who spend time, often end-of-life time, in nursing homes are middle class or better but have transferred assets to their heirs so as to be eligible for Medicaid.*
I would love to see some hard numbers to back up this statement.
Comment by Montrose Tuesday, Dec 14, 10 @ 11:36 am
The best way to reduce (or at last control) Medicaid spending is to reduce institutional spending. Keep people out of institutions and in their homes and communities, and the states will save millions of dollars.
The ways to do this are not always easy and simple, but there are huge savings there.
Comment by dave Tuesday, Dec 14, 10 @ 11:37 am
@Cassandra - Not as much of an issue anymore, and really only an issue for elderly persons who were married and left with three choices:
1) Divorce your wife of 50 years;
2) Drag her into poverty;
3) Transfer your assets.
Comment by Yellow Dog Democrat Tuesday, Dec 14, 10 @ 11:39 am
Montrose, ask Carol Moseley Braun.
Comment by Rich Miller Tuesday, Dec 14, 10 @ 11:40 am
–Keep people out of institutions and in their homes and communities, and the states will save millions of dollars.–
The in-home care providers — nurses, meal deliverers, cleaning people — are angels.
And as someone whose mother spent her last five years with full-blown Alzheimer’s in a county institution, I can tell you the folks who work there are beautiful to the core, too.
Comment by wordslinger Tuesday, Dec 14, 10 @ 11:43 am
Dave makes an excellent point. The statement about the elderly and the disabled accounting for 70% of costs almost never given proper context:
Those costs are consistent across states with similar populations and across all states.
Disabled individuals require long-term services, because they are disabled. If you want to save $$ provide more preventative dental and psychiatric care and prevent more costly hospitalizations and ER visits.
Comment by Leroy Tuesday, Dec 14, 10 @ 11:43 am
These hearings are killing me. So much time and effort goes into preparing testimony, and its likely that nothing earth shattering will result. Tiring.
Comment by anon Tuesday, Dec 14, 10 @ 11:44 am
“a tightening of the rules governing disposal of assets”
HFS has proposed just that. Check their website. They want to make these rules retroactive to the enactment of the federal Deficit Reduction Act in 2006. Illinois will be either the last or the next to last state to implement this federal law.
Comment by Secret Square Tuesday, Dec 14, 10 @ 11:53 am
Montrose and Rich
The transfer of assets happened several years ago with my grandmother. I was in high school at the time, but remember well how much hinky stuff went on in the family when money was involved. Not the most pleasent of memories.
I’m sure my family and Carol Moseley Braun’s aren’t the only ones to have done this
train111
Comment by train111 Tuesday, Dec 14, 10 @ 11:54 am
–I’m sure my family and Carol Moseley Braun’s aren’t the only ones to have done this–
It’s a dangerous game to play. I believe the “look-back” after death is now four or five years.
When we placed my mother in the county home, we signed all sorts of papers that outlined criminal penalties for any hinky stuff. She ended up burning through her lifetime of assets (house, basically) in about 24 months.
Comment by wordslinger Tuesday, Dec 14, 10 @ 11:58 am
I don’t doubt the asset transfer happens, but is it a prevalent enough of a problem that spending time, energy, and money on some type of fix will be worth the effort in terms of cost savings? This is where some stats would be useful.
Comment by Montrose Tuesday, Dec 14, 10 @ 12:02 pm
“It’s a dangerous game to play”
Not just for people who are intentionally trying to game the system either… there is also the potential for people to be severely penalized for good-faith gifts they might have made to help out a relative in need, if they don’t document those gifts carefully.
“the look back after death is now four or five years”
Actually, under federal law the look back is 5 years prior to the date you apply for Medicaid. Any penalty period you recieve begins on the date you would have otherwise qualified for Medicaid — meaning, you or your family has to come up with the money to pay for your care until the penalty period runs out. This is one of the provisions HFS is preparing to implement in IL, but has not yet done so.
Comment by Secret Square Tuesday, Dec 14, 10 @ 12:05 pm
It’s important to remember that in cases where one spouse has to go into a nursing home and the other remains in the family home that said home is not considered an asset for determining eligibility for IDPA benefits (spousal impoverishment rules apply). The spouse who remains in the home also retains any income of the nursing home resident as well.
In my capacity as a state employee I am familiar with the type and nature of nursing home residents. Those on IDPA rarely have any living relatives who would benefit from the scheme Cassandra relates. I know it does occur but not as often as is being suggested. I have no hard facts to back it up - hard to find out.
It is known that nursing homes have seen their population dwindle what with other, lesser restrictive (and less costly), alternatives such as assisted living facilities make inroads into the nursing home population. In some cases this has resulted in some facilities seeking to house the chronically mentally ill in the same facility as the elderly, sometimes with disturbing results.
Many more folk are being cared for in their family home by other family members and paid caregivers as long as the level of care doesn’t overwhelm the resources. So many of those in nursing homes have either lost contact with family, become estranged for one reason or another, or have outlived immediate family. Couple that with limited resources, and you see alot of folk on IDPA. Remember, nursing home costs can easily be over 5K per month. A small estate like 60K would be gone in 12 months. Not hard to see why so many people end up on IDPA. Hard to see how that program could be trimmed given what Rich said at the top and what other folk have said. And, as has been said, seniors vote.
Comment by dupage dan Tuesday, Dec 14, 10 @ 12:13 pm
This is a surprise? It seems to be a four way tie of the unintended consequence race.
1. People are living longer through better medical care,
2. that medical care costs more (technology, research, lawsuits, insurance, pick your favorite), and
3. an increased volume of people who meet the basic qualifications; others who meet new expanded criteria that felt good/right at the time it changes; others who simply have no where else to go and cannot afford/get insurance; and the gamers.
4. an economy where investment outcomes (1.65% CDs?)are struggling.
Overlay that with the shocking realization that costs never really go down and people seem to think there is an endless pile of money that comes from someone else to pay for it all.
Comment by zatoichi Tuesday, Dec 14, 10 @ 12:15 pm
What’s disgusting is when a person in a nice nursing home has blown through all their assets and then the nursing home wants to dump them instead of accepting the medicaid rate.
But, I digress.
The whole business with Death Panels got started with people reading something into a Medicare reimbursement for a doctor spending time with a patient on end of life decisions. This really deserves further exploration. Every individual should have a conversation with his health care provider to define when it is time to stop extreme measures and looking for a cure. How many people avoid this and end up with other people making those decisions for them, unwilling to let Grandpa go when Grandpa would rather be gone?
Comment by Aldyth Tuesday, Dec 14, 10 @ 12:17 pm
The big problem is that the real way to save money -wellness and prevention, i.e. keep people healthier longer - is not a quick fix. It certainly is not going to help the FY12 budget. It will actually cost more upfront, but it can have tremendous cost and quality of life benefits over time. Unfortunately, that message does not work well in a campaign ad.
Comment by Montrose Tuesday, Dec 14, 10 @ 12:18 pm
–The whole business with Death Panels got started with people reading something into a Medicare reimbursement for a doctor spending time with a patient on end of life decisions. –
Let’s be honest. It started with a Big Lie from an unscrupulous reality-TV figure with delusions of grandeur as part of a brand-building, money-making strategy.
Comment by wordslinger Tuesday, Dec 14, 10 @ 12:26 pm
Well, if Secret Square is correct, it’s enough of a problem for the feds and HFS to be trying to address it. And with an aging population and a larger population of savvy baby boomer elderly, the problem could grow.
My solution would be take nursing home care reimbursement out of Medicaid and require long term care insurance for all-maybe a separate federal agency. But that’s far in the future if ever. First, health care reform has to survive various legal challenges and get implemented.
Comment by cassandra Tuesday, Dec 14, 10 @ 12:27 pm
The federal DRA also strongly encourages the purchase of long-term care insurance. If you have a “qualified” LTC Partnership Plan policy, exhaust its benefits and then have to go on Medicaid, any assets you have, or gifts you have made, up to the total amount the LTC policy paid out will be exempt and cannot be claimed by the state after your death (the details of how this works may vary by state). So if you want to insure that your family gets something after you die and that it doesn’t all get spent on a nursing home, buying LTC insurance is the way to do it.
The problem is that buying LTC insurance is a move you have to make well in advance of when you need it — when you are still in your 40s or 50s and healthy — otherwise the premiums get too high for most people to afford. Also, IL hasn’t yet gotten around to designating any “qualified” LTC Partnership policies.
Comment by Secret Square Tuesday, Dec 14, 10 @ 12:39 pm
Just echoing that all this bit about managed care, multiple pay stubs, and dumping kids off doesn’t begin to address the real issue, which is long term care costs. Remember that Medicaid dollars don’t go to poor people. They go to doctors, hospitals, and nursing homes, all of which have strong voices in Springfield. As someone who worked with nursing home residents for years, I agree that most of them were poor or middle class to begin with, and the number who may be playing around with assets to qualify for Medicaid isn’t even a drop in the bucket. A very high percentage (50-60%) have no family around, never get a single visitor. And although spouses of nursing home residents are no longer required to divest themselves of everything, the income they can keep (both theirs and the nursing home spouse combined) maxes out at about $32,000.
The population is getting older and families are getting smaller. We’re living longer and with more disabilities as we age. There’s no magic bucket of money that’s going to pay for this and no silver bullet to fix it. It’s going to be hard.
Comment by Ann Tuesday, Dec 14, 10 @ 12:39 pm
Of all the issues that Rich has posted for comment, I believe the responses to this one have been the most astute and in depth in their intelligence and scope.
Comment by gathersno Tuesday, Dec 14, 10 @ 2:09 pm
I read recently that the biggest cost of medical care that an individual spends is often in the last 6 months of life. The desire to rein in medical costs will, of necessity, focus on that at some point. People will sometimes undergo painful, costly, treatments in an ultimately futile attempt to extend their life beyond what is practical. Since we can’t know what might work we try everything since life is precious. Actuaries who look at that see good money going after bad. This is where the discussion of the so called death panels come in. It will be inevitable that as costs spiral upwards (regardless of how the program works, private insurance or gov’t run) that those costs will be scrutinized. We see articles everyday about how some insurance company declined to pay for a particular treatment as it is declared experimental. I also read about how countries like England and Canada sometimes decline to fund certain treatments for certain folk when the condition is considered futile. Who makes those decisions in those cases? What would you call those people who make that hard decision? For effect, some call them death panels.
I would like to think I would realize and accept when it is my time and not get so frantic about such painful treatments that may extend my life for a few months. I ain’t there yet so I can’t know.
Death is described as
1)imminent (by the Scots)
2)inevitable (by the Canadians)
3)optional (by Californians)
Comment by dupage dan Tuesday, Dec 14, 10 @ 2:27 pm
As far as illegal immigrants go ask any emergency room staff and they will tell you a lot of Illegals and poor use emergency rooms as primary care thus increasing the cost and overburdening the emergency care system. So it very well may save money if we continue to give options beside going to an expensive overworked overcrowded emergency room. because no matter what anyone says its not like these people can be refused treatment to save money.
Comment by Fed up Tuesday, Dec 14, 10 @ 2:38 pm
“it’s enough of a problem for the feds and HFS to be trying to address it.”
I don’t think the problem is really that great numbers of wealthy people are intentionally trying to game the system at taxpayer expense — unless you define ANY attempt to preserve the family home or some of your assets for posterity rather than spend it all on nursing home care, as “gaming the system.”
The problem is, I think, simply that the feds and states want people in general to move away from relying on Medicaid as their default long-term care insurer, and start relying on privately purchased LTC insurance instead. They have done this by including both a big “carrot” (asset protection provisions if you purchase LTC) and a big “stick” (5-year look back with asset transfer penalty periods kicking in right when they hurt most) in the DRA.
Comment by Secret Square Tuesday, Dec 14, 10 @ 2:51 pm
Fed-up hit the nail on the head.
There ARE budgetary costs to providing health care to illegal immigrants.
But there are social and moral costs to denying health care to them as well, especially for those who enjoy the fruits of their labor — literally.
Comment by Yellow Dog Democrat Tuesday, Dec 14, 10 @ 2:57 pm
One last thing. A very common mistake made by senior citizens who are aware (perhaps only vaguely) of the asset transfer restrictions and their effect on Medicaid is to assume that the IRS federal gift tax threshhold ($12,000 per year) is also an amount they can give away without incurring Medicaid penalties. Big mistake. Under the DRA there really is NO “safe” amount you can give away and not risk being hit with a Medicaid penalty if you apply within the subsequent 5 years — unless you can prove the gift was for a reason other than “Medicaid planning”. Hence the importance of documenting the amount, date and reason/occasion of ALL gifts no matter how small.
Comment by Secret Square Tuesday, Dec 14, 10 @ 3:55 pm
My State Rep. Mike Tryon has a comprehensive list of reforms that he outlined during the fall campaign.
Why not ask him for the specifics?
Comment by Cal Skinner Tuesday, Dec 14, 10 @ 4:20 pm
All of these saftey-net programs have become unsustainable. In time of financial trouble it is difficult to ascertain who is most needy and most deserving because someone or some group will get the short end of the stick and be left out.
I’m not so sure that I entirely believe that there is not enough private charity to take up the slack in administering most, if not all of these programs, thereby absolving government of a great deal of the burden.
Oh well there’s an old saying about good intentions.
Comment by BF Tuesday, Dec 14, 10 @ 4:21 pm
- BF - Tuesday, Dec 14, 10 @ 4:21 pm:
“Oh well there’s an old saying about good intentions.”
No good intention goes unfunded?
Comment by Cincinnatus Tuesday, Dec 14, 10 @ 4:57 pm
I wouldn’t count on LTC insurance as a solution. A lot of the reputable companies are getting out of the the LTC business. My own LTC company, MetLife, recently announced they will no longer write LTC policies … they will honor existing ones, but no new ones. Same for several other companies.
Comment by Retired Non-Union Guy Tuesday, Dec 14, 10 @ 5:00 pm
Rich Miller: “In Illinois, Medicaid sucks up more money than elementary, secondary and higher education combined. ‘Medicaid is such a large, complicated part of our budget problem, that to get our hands around it is very difficult. It’s that big. It’s that bad,’ said Illinois Sen. Dale Righter, a Republican and co-chairman of a bipartisan panel to reform Medicaid in Illinois, where nearly 30 percent of total spending goes to the program.”
This is misleading Republican propaganda, whose chief spokesman, Dale Righter, loves to bash Medicaid by making misleading remarks like the one above. Only one-third of the state’s spending on Medicaid actually comes from the state’s treasury. Matching grants from the Federal government, local government, and health care providers provide the remaining funding for the state’s spending on Medicaid. For this reason, Medicaid is NOT eating up a disproportionate share of the state’s budget.
Let’s consider what happened during state fiscal year 2008. Total spending by the state government of Illinois during that year was 48.6 billion dollars. For the Medicaid program, the state spent 13.9 billion dollars. Of this, only 4.4 billion dollars actually came out of the state’s treasury (its own sources of revenue, like sales tax, income tax, etc.). The remaining amount of the Medicaid spending (9.5 billion dollars) came from the Federal government (about 6.5 billion dollars in matching grants) and from local sources (about 3.0 billion dollars), where “local sources” refers to local government, hospitals, nursing homes, and public health clinics within the state. Thus, out of a total state budget of 48.6 billion dollars, the state government spent only 4.4 billion dollars of its own money on Medicaid. This is only 9 percent of the state’s budget, and not the ridiculous 30 percent, that Sen. Dale Righter and others like him are so fond of claiming.
More information about this can be found at the website of the Center for Tax and Budget Accountability (www.ctbaonline.org) and the website of the Kaiser Family Foundation (kff.org).
Comment by ultragreen Tuesday, Dec 14, 10 @ 5:35 pm
===Rich Miller: ===
No. It was a quote from the AP. Learn to read, please.
Comment by Rich Miller Tuesday, Dec 14, 10 @ 5:36 pm
=== I’m not so sure that I entirely believe that there is not enough private charity to take up the slack in administering most, if not all of these programs, thereby absolving government of a great deal of the burden. ===
LOL. The United Way and all the other charitable organizations are sure. They say there’s no freakin’ way that the human services functions of state government could be replaced by the non-profit sector.
Keep in mind, that most non-profit human service agencies get the bulk of their funding from state government.
Comment by Yellow Dog Democrat Tuesday, Dec 14, 10 @ 5:45 pm
It’s gonna have to be cut….cut big time to balance the budget. There’s all sorts of abuses covered by all sorts of ‘don’t be heartless’ arguments. Quinn will be the worst problem.
Start with getting 40 something malingerers out of nursing homes. I don’t think Quinn’s got the spine, so someone else will have to.
Then demand that patients with obesity-derived ailments take affirmative action or cut them off. Again, someone else will have to do it. Quinn can’t do anything.
The risk is having the entire program, including absolutely vital services, go down in flames.
Comment by Park Tuesday, Dec 14, 10 @ 7:16 pm
Ultragreen,
You attempted to distill the costs for Medicaid down just the state’s share, but then you divided your $4.4 billion number to an “all sources” budget figure of $48.6 billion to get to 9%. That kinda ruins your budget credibility when you mix net state costs with gross state costs. Who’s misleading?
Comment by Budget Watcher Tuesday, Dec 14, 10 @ 11:03 pm