Wednesday, February 23, 2011

Alternatives For Medicaid Reform in Texas

Medicaid is a federal-state partnership to provide health care to two distinct populations: low-income individuals who are predominantly women and children; and aged, blind, and disabled individuals who require long-term care. While the federal government provides a majority of the funding for Medicaid in Texas, federal program rules are co-opting a growing share of Texas’ general revenue funds and crowding out other state functions such as education and public safety. That basic definition of the dilemma facing the state as Texas struggles to met budgetary short falls may have a common sense solution. A recently released report from Texas Public Policy Foundation (TPPF) offers such a solution.

This is the report.

Instead of opting for the last resort - the public option system for those in need of Medicaid benefits - the Foundation's TexHealth proposal brings forth the utilization of a premium subsidy. Using a sliding scale to calculate an individual contribution to health insurance based on income and assets, an estimated four million additional people could be served with better health care for less money than are currently served. The state would shift roles from benefit provider to subsidizing the premium in the private market, allowing the individual to purchase that insurance.

As TPPF Executive Director Arlene Wohlgemuth explains:

For long-term care benefits, all current recipients of long-term services and support would be grandfathered at the current eligibility level. However, the TexHealth model would apply a more stringent income and assets test to subsequent enrollees, as well as close a legal loophole that allows wealthier individuals to shift assets in order to be eligible for the low-income safety net.

“We want to make sure that our aged or disabled Texans know that the services they currently receive will continue uninterrupted.”

So, how does the Foundation propose to get there? There are three options offered:

* An interstate compact. The ideal method of financing available to Texas involves entering into an interstate compact stipulating receipt of the aggregated amount of funding that Texas received in 2010 from the federal government with allowance in the formula for inflation and population changes. Because the outlined plan would spend money more efficiently and provide better service to low-income people, Texas could go a step further and take only 95 percent of the aggregated amount of funding. The proposed plan will be budget-neutral but more likely budget-positive for both Texas and the federal government.

Placement of Texas’ Medicaid population into a health insurance exchange. If Texas no longer operates a Medicaid program, the federal government has obligated itself to fully fund insurance for those whose incomes are below the federal poverty limit. Texas would then use the general revenue funds it had previously used for Medicaid to provide wrap-around benefits for long-term care to the aged and disabled. While this is the most easily achieved option in the short term, the long term financing of health care through this model may provide cause for concern.

* Section 1115 waiver. This waiver – named after a provision of the Social Security Act – would allow Texas to test policy innovations for five years, so long as the proposed reforms demonstrate no additional cost to the federal government and are approved by the Centers for Medicare and Medicaid, the Office of Management and Budget, and the U.S. Secretary of Health and Human Services. Texas used an 1115 waiver in the mid-1990s to implement welfare reform, which inspired the federal government to incorporate Texas’ successful principles on a national basis.

The report goes into specific details and charts the needs of Texans. Take the time and go to the link above. It's worth the read.

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