Public Hospital Official Warns Expansion of Medicaid at Risk Due to Budget Pressures

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

A “pretty severe political backlash” has dimmed the health reform law's promise of expanded Medicaid coverage, and budget concerns now threaten whether that expansion will take place, a top official with the National Association of Public Hospitals and Health Systems said June 15.

Describing the current political environment for Medicaid as a “time of promise and peril,” Bruce Siegel, the group's CEO, said, “Our discussion seems to have suddenly lurched from how we plan for this expansion to how quickly we can undermine the foundations which the expansion would be based upon.”

Siegel, whose association represents many of the nation's largest Medicaid providers, spoke on the final day of a three-day National Medicaid Congress, sponsored by health policy organizations and private health care groups.

Budget Pressures Threaten Expansion

By 2019, expanded eligibility guidelines mandated by the Patient Protection and Affordable Care Act (PPACA) would add an estimated 16 million currently uninsured individuals to the Medicaid program, which is funded jointly by states and the federal government.

But a new Republican majority in the House and strained state budgets have placed Medicaid in the crosshairs of public officials looking for ways to cut costs, Siegel noted.

“Our first impulse is to be apologetic” about Medicaid, Siegel said, “to say, ‘sorry it's gotten so big.' ”

Describing that as the wrong response, Siegel countered: “Medicaid has done exactly what we have asked it to do. Medicaid rolls did not expand for some mysterious reason in the last few years. They expanded because millions of Americans lost their jobs, and they turned to a health care safety net to keep that between themselves and bankruptcy, disease, or disability.”

In other words, “Medicaid growth is not due to some inherent flaw in the program,” he said. “It's a commentary on the state of our economy.”

A combination of state and federal pressures to trim benefits has placed the Medicaid program in an “untenable situation,” according to Siegel. California, Florida, Indiana, Texas, and New Jersey have recently sought approval from the Department of Health and Human Services for major cutbacks in their state Medicaid programs, Siegel noted.

Moreover, at the federal level, several proposals—including one to cap the growth rate of Medicaid expenditures—threaten the long-term viability of the program, Siegel warned.

MOE Repeal Efforts Cited

In addition, legislation is circulating on Capitol Hill to repeal the “maintenance-of-effort” requirements in PPACA, Siegel said. The MOE requirements—in effect until 2014 when state health insurance exchanges are supposed to be established—would penalize states that reduce their Medicaid funding levels by rescinding their federal matching funds.

“It's unclear to me how we can be talking about coverage expansion in 2014 when, at the same time, we're talking about removing one of the main legs of the stool to promote this expansion,” Siegel said, referring to the MOE requirement.

Because of lingering weakness in the economy, budgetary pressures are likely to continue to threaten the Medicaid program for the foreseeable future, in Siegel's view.

“I hope we can change the debate, and change the trajectory to begin discussing what are we going to do to bend the cost curve and provide better care,” he said. “But it's hard to do with all this smoke and fire about deficit reduction.”

Medicaid Shows Gains in Public Familiarity

The outlook for Medicaid is not entirely bleak, Siegel said, pointing to “some good news” that the program “has entered public consciousness in ways we haven't seen before.”

For example, a recent poll conducted by the Kaiser Family Foundation found that more than half of all Americans are opposed to cuts in Medicaid.

“I was floored by those results,” Siegel said. “Medicaid now touches more and more Americans in important ways,” he said, adding, “Medicaid is now a core issue in terms of how Americans perceive their well-being.”

By Ralph Lindeman

Request Health Care on Bloomberg Law