Health Secretary Calls for Medicaid Changes
February 2, 2005
Health Secretary Calls for Medicaid Changes
By ROBERT PEAR
ASHINGTON, 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.
http://www.nytimes.com/2005/02/02/national/02health.html?th
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Health Secretary Calls for Medicaid Changes
By ROBERT PEAR
ASHINGTON, 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.
http://www.nytimes.com/2005/02/02/national/02health.html?th
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