PI Original Matthew Blake Friday September 23rd, 2011, 1:06pm

Medicaid After the Great Debt Reduction of 2011

Barack Obama outlined his big 10-year deficit reduction plan this week and in so doing assured progressives, “That everyone – including millionaires and billionaires – must pay their fair share.”

The plan does close certain tax loopholes and deductions for the rich. But Obama’s $1.2 trillion in cuts also targets a more familiar victim – recipients of Medicaid.

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Barack Obama outlined his big 10-year deficit reduction plan this week and in so doing assured progressives, “That everyone – including millionaires and billionaires – must pay their fair share.” The plan does close certain tax loopholes and deductions for the rich.

But Obama’s $1.2 trillion in cuts also targets a more familiar victim – recipients of Medicaid, the federal-state program that funds health care for the poor and disabled. Obama’s plan cuts $72 billion from Medicaid, which provides health care for roughly one-fifth of all Illinois residents.

Overall, Obama has taken steps to exempt Medicaid from Washington’s deficit mania. But these proposed cuts add further anxiety for Illinois Medicaid patients.

“It shifts more responsibility to states,” says Tony Kopera, president of Community Counseling Centers in Chicago, which uses Medicaid dollars to provide mental health and related counseling services to Medicaid patients. “And Illinois doesn’t have money so they cannot make up for payment reductions.”

“So it’s really simply,” Kopera says. “The payment reductions mean reduced care.”

Medicaid providers and advocates share a few particular worries.

For one, Obama has been the principal defender of Medicaid (and Medicare) in Washington’s fixation this year with the national deficit, telling Republicans that health care cuts must be accompanied by tax increases. 

So the final deficit reduction plan passed by Congress – which must agree by December to a deficit reduction plan, as outlined in the debt ceiling compromise – could include more cuts. Congressional Republicans want to cut Medicaid by $770 billion.

Whatever cuts Congress agrees upon will be on top of the expired stimulus bill, which, until June 2011, greatly increased federal money toward Medicaid. Plus, cash-strapped states like Illinois have made their own Medicaid cuts.

Also, as Progress Illinois has reported, there is really very little, “waste, fraud, and abuse” in Medicaid spending that’s ripe for cutting. States give money to hospitals and doctors or providers like Community Counseling; the federal government then reimburses about 60 percent of the state government’s payments. These counselors, doctors, and nurses then administer basic health care as best these resources allow. 

“It’s an incredibly lean program,” say Dean Mahan, director of Medicaid Advocacy at Washington, D.C.’s Families USA. “There’s not a lot more efficiencies that can be squeezed out.”

Finally, it’s not entirely clear what these cuts will specifically do. For example, the White House proposes a “blended rate” for recipients of Medicaid, federally-funded children’s health insurance (i.e. CHIP), and those who newly qualify for Medicaid under the Affordable Care Act, which will be implemented in 2014. 

The idea of the blended rate, or single-matching rate, is that all these recipients would receive the same level of reimbursement from the federal government, i.e. $1.50 for every $1 spent. Advocates have sounded alarm bells that the rate might be set low enough as to significantly curb federal Medicaid contributions. 

But according to the White House, the blended rate implementation, starting in 2017, cuts costs nationally by the relatively small sum of $14.9 billion. This could suggest that the Obama administration is doing what they can to preserve Medicaid funding or doesn’t quite know how to effectively implement the blended rate – or both.

“There’s a lot of conjecture now about how this would work,” Mahan says. “We’re afraid cuts will fall on the shoulder of patients and their families.”

Image: samuelatgilgal

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