EDITORIAL: New York's Medicaid mess demands reform
For millions of poor New Yorkers, Medicaid is a lifesaver. For state and county budgets, unfortunately, it threatens to become a death sentence.
The problem is twofold. First, health-care costs are rising at unsustainable rates all across America. And second, New York's uniquely broad eligibility, range of covered services and generous reimbursement rates make Medicaid especially expensive here.
The result, at nearly $53 billion a year, is the nation's costliest such program and perhaps the largest single factor in the state's ongoing fiscal crisis. A federal stimulus initiative giving the state extra money toward Medicaid will run out in June, even though high unemployment has driven many more people into the program. By 2013-14 the yearly cost is expected to exceed $63 billion - at which point Medicaid rolls are sure to swell further, as a result of expanded eligibility under this year's federal health-care reform law.
It's easy to deride Medicaid as a waste-ridden form of welfare covering people who, perhaps because of their own bad choices, can't provide for themselves. But the reality is that nearly half of Medicaid spending in New York is for nursing homes and other forms of long-term care. In fact, per beneficiary, the state spends little more than the national average on children covered by Medicaid - but around twice the national average on the elderly or disabled.
Some of these Medicaid nursing-home recipients are middle-class New Yorkers who, with the help of a cottage industry of specialists, have handed off assets to relatives in order to qualify for aid. Is that fair? Or, as this group would pose the question, is it fair to reward a lifetime of thrift with crushing nursing-home bills, while others who may have been profligate get government-paid care? Or should we find a way to cover all, perhaps through some insurance plan? It's time to have this debate out in the open, before Medicaid leads the prudent and the profligate alike to the poorhouse.
Unfortunately, Medicaid is particularly resistant to reform in New York. By covering nearly a quarter of all New Yorkers, the program has an enormous number of constituents with good reason to defend it, and the health-care industry (and its unions) wields considerable clout in Albany, where the legislature has kept for itself rate-setting powers that elsewhere are left to nonpolitical experts. This may be one reason Medi-caid here costs two-thirds more per beneficiary than the national average.
Aside from the very real needs of Medicaid beneficiaries, the program is also hard to cut because most of the time Uncle Sam pays half the state's tab for the program - which means that you have to slice $2 in overall spending to save state and county governments $1.
New York's lieutenant governor, Richard Ravitch, has waded into this vast thicket of politics and entitlement and last week emerged with solid recommendations for reform to launch this important debate. Ravitch sidestepped difficult questions about who should be eligible and what should be covered, but he has at least laid out a sensible plan for rescuing the program, no matter how large we decide it should be.
One important recommendation is for the legislature to loosen its iron grip on reimbursement rates in favor of an expert panel whose recommendations on rate-setting lawmakers can follow. This would help insulate the process from the influence of those who stand to profit from higher rates. Ravitch is also urging that more Medicaid recipients be moved into managed care, where the program would pay per patient rather than per service, removing the incentive to overtreat. The report notes that just 15 percent of beneficiaries - all fee-for-service - account for 40 percent of spending. Moving these people into managed care might save $10.8 billion over a decade, the report says.
The report recommends increasing prevention efforts aimed at substance abuse and childhood obesity. And it suggests reforming the state's medical malpractice system, a notion worth considering but unlikely to get very far, given that New York's powerful Assembly speaker, Sheldon Silver, is a member of a leading personal-injury law firm - and has blocked previous efforts at tort reform. Nonetheless, the Ravitch report says capping noneconomic damages, establishing specialized courts and other such steps could lower malpractice premiums and save hospitals and physicians more than $500 million annually.
Ravitch also wants the state to eradicate unfair and inefficient county-by-county differences in services and eligibility by taking Medicaid administration entirely away from the counties. Finally, the report urges action to win more Medicaid reimbursement from Washington, whose formula gives New York the lowest possible rebate of 50 percent because the state's relatively high average affluence masks a large population in poverty.
The report says little about the asset-shuffling problem, and on the potential of a fledgling program to pay people to care for family members at home. The former will need to be faced, and the latter expanded. But the Ravitch proposals are a great start. Let's hope they can be enacted before the taxpayers bleed to death. hN
