Bush Proposal Threatens Access to Healthcare

Public Sector Group Comments on the Bush Medicaid Proposal (3/12/03) Bazelon Center Press Statement on the Bush Medicaid Reform Proposal (2/24/03) NHELP analysis of the Bush Medicaid proposal Families USA analysis of the Bush Medicaid proposal* Dept. of Health and Human Services budget Dept. of Health and Human Services press release on the proposal (Jan. 31, 2003) Bazelon Center Medicaid Issues Page * PDF file; You will need the free Acrobat Reader to view Support the Bazelon Center. Your tax-deductible donation helps the Bazelon Center keep you informed on important developments in mental health law and policy. Not a Subscriber? Sign up now to receive action alerts and updates from the Bazelon Center.

(Feb. 20, 2003)—A recent Bush Administration proposal could dramatically reduce access to services for people with mental healthcare needs. On January 31, Secretary of Health and Human Services Tommy Thompson released a plan for drastic changes to Medicaid, the federal program that funds healthcare for low-income individuals.
Medicaid is an important safety net for adults and children with mental disorders, providing the critical health and rehabilitation services they need to live and thrive in the community. In fact, Medicaid now funds about half of all state mental health expenditures on community care.

• Elements of the Proposal
• Proposal Hurts Children and Adults with Mental Illnesses
• Alternatives
• Action Required

Elements of the Proposal

The Bush Administration would effectively eliminate the Medicaid entitlement. Under the proposal, states would receive federal funding for all Medicaid services through a block grant and individuals would lose their present entitlement to receive services in "sufficient amount, duration and scope" to treat their conditions. States would instead have flexibility to cut benefits, alter eligibility criteria and increase co-payments for those they have opted to serve (the Medicaid optional population). Optional services needed by beneficiaries federal law requires states to cover (the Medicaid mandatory population) may also be at risk.

The 10-year proposal would provide to participating states additional federal Medicaid dollars in the short term ($3.25 billion for fiscal year 2004 and $12.7 billion over seven years). However, these funds would have to be repaid in later years. States could elect not to participate in this plan and continue to administer the Medicaid program under current rules, but they would not receive the additional short-term federal funding. These immediate dollars may be a powerful lure, given the budget crisis many states now face.

States that elect to participate in the plan would receive two linked block grants from the federal government: one for acute care (e.g., physician and hospital services) and one for long-term care (nursing home and community-based services). States could shift a small percentage between the two block grants. No additional federal funds would be provided if the costs of maintaining the program exceed the capped amount provided for either grant, and states would be locked into this option for 10 years.

The plan would achieve budget neutrality for the federal government by capping the federal Medicaid contribution, regardless of factors such as increases in service costs or fluctuations in the economy that can affect Medicaid enrollment.
Currently, states must match federal Medicaid funding. States electing the block grant option would no longer be required to pay the state match, but instead would be held to a more complex "maintenance of effort" (MOE) requirement. Since the MOE would be difficult to monitor, states could potentially use the increased flexibility afforded them under the proposal to engage in financial maneuvers that would result in less money for Medicaid.

Proposal Hurts Children and Adults with Mental Illnesses

Medicaid is a vital program that provides health and mental health care to millions of low-income children and adults with mental illnesses. Because Medicaid is a primary source of funding for mental health services, any cuts to services or eligibility that result from this proposal would threaten health outcomes for all who rely on these services.

Medicaid community services are extremely important resources to help states comply with the Supreme Court's Olmstead decision, which affirmed the Americans with Disabilities Act's mandate that services for people with disabilities be provided in the most integrated setting possible.

Most community mental health services for adults are provided under the optional benefits package that could be cut under the proposal. These include psychiatric rehabilitation, clinic services and case management. Mandatory benefits—including hospital and physician services—could be cut for people in the optional eligibility categories. It is unclear whether children covered under Medicaid’s optional eligibility categories would retain their rights under the program’s mandate for Early and Periodic Screening, Diagnosis and Treatment (EPDST) for individuals under 21. Many people with mental illnesses and other disabilities whose income is above the qualification level for federal disability benefits (SSI)—which is very low—are in these optional eligibility groups.

The Administration's plan would encourage states to offer optional populations a private insurance benefit in place of Medicaid. This would be similar to the benefit available now to low-income children under the State Children's Health Insurance Program (S-CHIP). Most S-CHIP plans have extremely limited mental health benefits.

For mandatory Medicaid beneficiaries, states would be required to provide a "comprehensive" benefit package but it is unclear whether this would be the one now available to them through their state's Medicaid plan.

Alternatives

The Medicaid proposal is offered in response to state Medicaid budget concerns, but the plan promises reforms at the expense of low-income people. Members of Congress have offered alternatives to the Bush plan that would provide needed fiscal relief to states without dismantling the Medicaid program. Senators John Rockefeller (D-WV), Susan Collins (R-ME), Ben Nelson (D-NE) and Gordon Smith (R-OR) have introduced S. 138, the "State Budget Relief Act of 2003." The legislation would provide an increase in the federal Medicaid rate. In the House, Representatives Peter King (R-NY) and Sherrod Brown (D-OH) have introduced HR. 816, a slightly different Medicaid fiscal relief bill.

Action Required

Congress Needs to Hear from You
Contact your Representative and two Senators and urge them to oppose the Administration's Medicaid reform proposal. Emphasize to lawmakers:

• the importance of Medicaid services to children and adults with mental health needs in your state.
• the tragic consequences that result when mental health treatment needs are not met, including increased homelessness, institutionalization, crime and suicide.
  

Tell Governors to Reject the Bush Proposal
The White House is seeking support from state governors to help get the proposal enacted. The National Governors Association has not yet taken a position on this plan. Governors meet February 22-25. Now is the time to contact them.

Although all governors need to hear from the public, these governors are likely to be important in this debate: Rod Blagojevich (IL), Frank O'Bannon (ID), Thomas Vilsack (IA), Bob Taft (OH), Paul Patton (KT), John Baldacci (ME), Ronnie Musgrove (MS), Mark Warner (VA), Gary Locke (WA), Bob Wise (WV) and Bill Richardson (NM). To contact your state’s governor, visit http://www.firstgov.gov/Contact/Governors.shtml.