Medicaid Rescissions

Last week the August vacation of Congressional representatives was interrupted and they were called back to Washington. The main reason: to vote on a bill that will prevent the states from cutting off health benefits for millions of people. The issue that dominated the news was saving the jobs of teachers, police officers and other public employees. But most of the money allocated will prevent the states from cutting off health benefits for millions of people. If that doesn’t strike you as strange, perhaps you weren’t paying attention to last year’s health care debate.

During the year leading up to the final passage of the Patient Protection and Affordable Care Act (PPACA), the White House set up a special Web site and invited all Americans to post their own personal stories about insurance company abuses. During the days leading up to the final vote on the bill, the president and congressional supporters used almost every television opportunity to trot out these cases — sometimes in graphic detail.

Yet, in all the episodes of abuse, do you recall even a single instance where an insurer:

  • Arbitrarily dropped coverage for tens of thousands of enrollees with the stroke of a pen — just to save money.
  • Dropped entire categories of care — such as dental care or home health care — because it decided these services were too costly?
  • Arbitrarily reduced the fees it paid to doctors and hospitals, pushing many out of its network, and leaving its enrollees with serious access to care problems?

Probably not. For a private insurer, each of these activities would be a serious violation of contract. There is one insurer that does these things routinely. It’s called Medicaid and about half of all the newly insured people under the PPACA will be enrolling in it.

Here are a few tug-at-the-heartstrings examples I hope we hear more about in future political speeches:

  • A nine-year-old Denver boy died because Medicaid quit paying (in error, it turns out) for his asthma medications.
  • An elderly Michigan woman died of a severe dental infection after Medicaid cut off her dental benefits.
  • A 64-year-old Tennessee man lost his Medicaid coverage right in the middle of his treatment for colon cancer.
  • Maryland Medicaid refused to pay for life-saving liver transplants for two children — arguing that while the procedure was medically necessary, it was not appropriate.

Not only were these abuses not addressed in the PPACA, states across the country are currently considering more Medicaid rescissions — eliminating insurance for tens of thousands of people by redefining eligibility, reverifying eligibility more frequently, eliminating entire categories of care, and making access to care more difficult by reducing payments to providers and delaying payments.

Further, there is a long history of such “abuses”:

  • In 2002, Missouri eliminated Medicaid coverage for about 36,000 low-income parents primarily by lowering the eligibility limit from 100 percent of the poverty line to 77 percent.
  • In 2003, Massachusetts dropped 44,000 long-term unemployed adults.  Michigan cut 52,000 Medicaid patients; Missouri 20,000 and Nebraska 22,000.
  • In 2005, Missouri adopted sweeping Medicaid cutbacks, in which more than 100,000 people lost coverage.
  • Also in 2005, Governor Phil Bredesen of Tennessee instituted the single largest Medicaid cut in history: Approximately 200,000 of the program’s costliest patients lost their coverage over a four-month period.
  • By requiring children to reapply for Medi-Cal every six months rather than annually, California estimated that more than 260,000 children will lose coverage by the end of 2011.

For a summary of some graphic horror stories that resulted — none of which to my knowledge was ever mentioned by the proponents of health reform — see the Families USA Web site. Of course, some of these abuses are the result of more rigorous enforcement of the letter of the law.  But during last year’s health care debate, private insurers were repeatedly chastised for cutting people off on the basis of “technicalities.”

So why have we not heard more about Medicaid rescissions and Medicaid abuses in the debate over health reform? Perhaps the reason is that the health overhaul is designed to enroll 16 million new people in Medicaid and many of them will be giving up their private insurance in the process.  In fact, people who acquire health insurance on their own will be required to enroll in Medicaid and will not be allowed access to the new, state-based health insurance exchanges if their income is below 133% of the poverty level.

When I explained at Kaiser Health News the other day that about half of the 32 million newly insured people are going to be enrolled in the most abusive health plan of all, New Republic Senior Editor Jonathan Cohn took me to task for not seeing Medicaid’s upside. What Cohn and others seem to forget (or downplay) is that Medicaid patients already have trouble seeing physicians. And more than one in five Americans already live in an underdoctored area. As I explained at the Health Affairs Blog and at my blog, access to care is going to be extremely problematic under health reform for anyone in any plan that pays well below market rates.

If Congress ever revisits the new health law — as it surely will — one of the most helpful amendments would be to give people options.  Let those who qualify for Medicaid at least have the option of entering an exchange, paying the (heavily subsidized) premium out-of-pocket, and enrolling in a private health plan instead.

Comments (19)

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  1. Ken says:

    Good point. ObamaCare is going to move people out of plans that are less abusive and into plans that are more abusive.

  2. Bruce says:

    John, in Obama’s world you’re not evil if you are a government insurer. The only evil insurers are private. Don’t try to confuse them with the facts.

  3. Vicki says:

    I have never met any one who wants to be on Medicaid. What is so strange about health care reform is all the hoopla over enrolling so many people in Medicaid. Why would anyone think that is a good idea?

  4. Jennie Fiedler says:

    Just don’t get sick. Ever.

  5. Mike Bond says:

    The only people who like Medicaid are the thieves who loot it and the bureaucrats who run it. The real fun will begin when firm’s drop lower paid employee health insurance under “reform” and they wind up in Medicaid where they can’t get treated.

  6. Nancy says:

    I’m afraid that Mike has this figured out.

  7. Stuart Prescott says:

    Hello John! Here’s the view from the frontline:

    It is completely true that, in my 25 years in the industry, I’ve never once had a carrier drop an insured because they got sick, as has been claimed by those who are pro-Reform. Only as a result of Reform are we now seeing insurance companies drop categories of care. A couple have notified us, with more expected, they will discontinue offering “child only” policies. While they’ve not directly said it, everyone suspects the new pre-existing condition rules for children to be the reason. We’re watching insurance companies increase premiums, assigning values to various parts of the non-grandfathered changes. Many have changed their plan designs or reduced benefits, as well. Consumer oriented plans are especially taking a beating. One insurance company (we don’t have any business placed with them) sent a letter last week advising brokers they were withdrawing from the marketplace nationwide, citing Reform as the reason. Their policy holders will be unceremoniously terminated in February.

  8. artk says:

    The problem with Medicaid is that it’s mean tested. The public looks at every means tested program as welfare to the people who deserve nothing, and the recipients don’t have the political clout of seniors or upper income earners. The expansion of Medicaid to more middle class workers may change that political calculus.

  9. CC says:

    While states are certainly “considering” new recissions, they won’t be enacting any until they kick the Medicaid stimulus habit. Federal strings called “maintenance of effort requirements” are attached to the Medicaid stimulus dollars, and prohibit states from eliminating eligibility groups and services. Taking the federal money to balance their budgets precludes them from limiting their state dollar spending to their reduced state means.

  10. Bob says:

    Having spent my career in health care it is interesting to watch this unfold. I guess one could argue that the poor who are uninsured and get Medicaid will be served better. They will just swamp the hospital E.D. There has not been much talk yet concerning the huge amounts of money the states will have to raise to cover these people. Taxes are coming to the not so rich.
    Yes, some of the insurance changes sound great but was any limit placed on what the insurers can charge. I was just discussing this with a small business employer and his rates have jumped 20% already.
    Way to go Congress

  11. Linda Gorman says:

    The Tennessee Medicaid cuts were the result of the TennCare reform. It almost bankrupted the state. The bad news: TennCare was a development step for ObamaCare. The “lesson learned” from TennCare was that an individual mandate was lacking. Unbowed, the left sought to remedy that with RomneyCare.

    The horrendous budgetary result from RomneyCare suggest that the lack of an individual mandate was not TennCare’s problem.

  12. HD Carroll says:

    Aside from all the other things wrong with Medicaid, two primary issues are (1)contributory cost shifting along the lines of Medicare to the private sector for those providers who still find some way to operate in both Medicaid and private care and (2) for those who don’t do both, the essentially quality tiering that must take place where Medicaid physicians are almost exclusively Medicare/Medicaid providers, and the resulting shrinkage in access and quality that tends to result.

    On the means testing, if we are going to have the program the way it is (which we shouldn’t), then one of the biggest problems is that the means testing is often a “cliff edge,” or quantum steps at best. In this day and age (computers, remember?), there is nothing wrong with a continuously transitioning subsidy to the person that can be used to substitute employer coverage, for example, rather than cutting them off in total from Medicaid the instant their income exceeds a given amount. Need is not discrete.

  13. John Seater says:

    “So why have we not heard more about Medicaid rescissions and Medicaid abuses in the debate over health reform?”

    Because health care is not the real issue with the left. Government control of the economy is. Any convenient half-truth or outright lie is fine with them as long as it furthers their cause.

  14. Chris Ewin, MD says:

    Good conversation….constructive solutions are needed.

    A concierge colleague, John Blanchard M.D.,is working on innovative solutions for Medicaid in Michigan. I am working on that in Texas. We feel that states would decrease Medicaid costs tremendously if patient’s had a patient centered medical home with a direct practice “concierge” physician.
    States could develop a primary care medical stamp much like the food stamp. This would be redeemed only in a primary care practice with basic parameters set for access to quality care at a reasonable cost. Some ideas are to limit practice size, 24/7 access to your physician by cell phone, txt, same day access…etc.) The state would know exactly what they are contributing. Physicians may charge whatever they want as long as the patient pays the difference.
    They have estimated a savings of $680-790 million in Michigan…

    JG…..Solutions for your patients noted:
    1. for asthma medications….call me on my cell..I’ll have it ready in 15 minutes at the closest pharmacy.
    2. severe dental infections: call me on my cell..I’ll have it ready in 15 minutes at the closest pharmacy (generic please)
    3. Colon cancer…..Everyone should get a physical yearly to screen for cancers. My unemployed, uninsured patients get that at the county hospital….. If they need help navigating the system, I call their specialist personally.
    4. Maryland Medicaid refused to pay for life-saving liver transplants for two children — arguing that while the procedure was medically necessary, it was not appropriate…….
    I may not be able to help with this one, but I guarantee you Medicaid will be hearing from me personally.

    Writing a check is the difference between commitment
    and conversation…”Warren Buffett”

    We’ll see if state governments are willing to think out of the box and write some checks for patients in need of primary care….

  15. John Goodman says:

    Interesting concept, Chris. It’s probably way too market oriented for the Medicaid bureaucracy.

  16. Virginia Hoover says:

    My daughter has Medicaid and is mentally disabled. She takes meds for many mental and emotional problems. What will happen to her? Without her meds she is unable to live in the community, will she be instutionalized?

  17. private schools in arkansas says:

    Hello John! Here’s the view from the frontline:

    It is completely true that, in my 25 years in the industry, I’ve never once had a carrier drop an insured because they got sick, as has been claimed by those who are pro-Reform. Only as a result of Reform are we now seeing insurance companies drop categories of care. A couple have notified us, with more expected, they will discontinue offering “child only” policies. While they’ve not directly said it, everyone suspects the new pre-existing condition rules for children to be the reason. We’re watching insurance companies increase premiums, assigning values to various parts of the non-grandfathered changes. Many have changed their plan designs or reduced benefits, as well. Consumer oriented plans are especially taking a beating. One insurance company (we don’t have any business placed with them) sent a letter last week advising brokers they were withdrawing from the marketplace nationwide, citing Reform as the reason. Their policy holders will be unceremoniously terminated in February.

  18. Selina says:

    Abuse? It’s worse than that and should not even be legal. I was on Medicaid after a divorce and before getting into the work force. It was so awful- we were trapped.

    I could not marry to improve our lives, could not own property, could not save money, could not make any real substantial money, and then I had to sign a paper regarding the Medicaid Estate Recovery Act. If that is not a money grab, I do not know what is.

    I did not even want to be on Medicaid! But no insurance co would let me in.

    Are 16 million people ready to deal with all that?! To have states reserve the ability to steal you whole estate instead of leaving it to your heirs? To spend down each month? To NOT save money in this recession?

    After being on Medicaid, I can say putting that many people on a system that is means-tested and requires that you stay poor (even with the new eligibility) is the stupidest, unthinking plan in the world.

    Has no on looked into the unintended consequences? And what of those who DO keep $1 over the amount? Will they be able to buy into exchanges for the month they have $1 over and then have to reaplly when that dollar is gone?

    What about those who are Dual Eligible and lose Medicaid? As is now, they are often banned from Medicare supplements. Will the neediest suddenly be the most under insured?

    Does anyone think in DC anymore or is this all just a runaway train? !

  19. Vanessa Elizebeth says:

    People who acquire health insurance on their own will be required to enroll in Medicaid and will not be allowed access to the new, state-based health insurance exchanges if their income is below 133% of the poverty level.

    http://www.medicarearkansas.com/