More on Dual Eligibles: A Rebuttal

by Adrianna McIntyre

Given the tumult of Romney and Ryan’s budgetary stance(s) in the last few days, we can quibble about how relevant Tuesday’s piece on Ryan’s 2013 proposal is—I snuck it onto the interwebs about 12 hours before Romney asserted that he doesn’t support the ACA’s $712B Medicare cut, preserved by Ryan’s budget. However, I think it’s fair to assume that premium support for Medicare and block-granting Medicaid will be central to Romney’s budget, whenever firmer details are released—these reform measures are generally popular with the GOP. My wonky worries hinge broadly on the co-implementation of those two reforms–especially Medicaid. Ezra Klein’s interview with Senator Wyden corroborates that dual-eligibility could become a problem under that scenario.

My post actually evolved out of a question I tweeted and the conversation that ensued between myself, Austin Frakt, and Loren Adler (Twitter is seriously the best sometimes). On Tuesday afternoon, I received a full response to that tweet via this blog’s Contact page. I’ve pasted the message below (at time of posting, the author had not indicated whether he was comfortable being identified, so I am leaving the message unattributed).

The Ryan proposal would not increase the number of dual eligibles (on Medicare and Medicaid).  The criteria becoming eligible for Medicaid is not set to change .  The proposal intends to reduce Federal funding for Medicaid, and allowing states more freedom to create plans that work best in their region.  When state budgets begin incurring shortages in funding, they would have the freedom to individually change criteria for qualifications in their state. If anything, that would most like lead to a decrease in the number of dual eligibles.

Ryan would attempt to lower health care costs by capping non-economic damages (pain and suffering) awards in medical malpractice law suits.  The proposal also would repeal the Independent Payment Advisory Board that the health law created to hold Medicare spending to GDP plus 1 percent. Ryan calls it “the unaccountable panel of 15 unelected bureaucrats empowered by the President’s health care law to cut Medicare in ways that would lead to denied care for seniors.”

Over time, Ryan’s new budget would phase in a voucher system to provide a set amount of money for future Medicare beneficiaries , those currently under the age of 55,  to purchase either a private health plan or the traditional government-administered program through a newly created Medicare exchange, starting in 2023.  In addition to reigning in cost, this program would also allow beneficiaries more choice in their care.

Good resources –

I’m going to address these points as best I can. All emphasis in quoted information is my own.

I don’t dispute that Romney and Ryan both endorse block-granting as a method of delegating more Medicaid control and responsibility back to the states. If you swing by, you can check out a bullet-by-bullet list of aims, including “returning states to their proper place in charge of regulating local insurance markets and caring for the poor, uninsured, and chronically ill.” But there is a rationale behind the federal government involving itself in the funding of care for vulnerable populations. States already struggle to finance Medicaid in the current system, and flexibility in theory is not the same as flexibility in practice:

The federal government is in a better position than states are to respond to increases in health care costs and fluctuations associated with economic cycles … [A] shift in the cost burden from the states to the federal government does not eliminate the problem of Medicaid’s consuming an increasing share of public resources. However, compared with the states, the federal government has a broader tax base, one that is not eroding because of shifts in consumption patterns, and is not constrained by balanced budget rules that assure that Medicaid spending spikes will coincide with tight fiscal conditions. (source)

Click for larger versionMoreover, states already have considerable flexibility on controlling the criteria for dual-eligibility. See that chart to the right? It lays out the “mandatory” stuff—states have discretion over the rest (including medical eligbility). You can click to see the full-size version; it’s borrowed from here. So, for a single person to be a “full” dual-eligible (with complete Medicaid benefits) they must have an annual income under $8,200 (<73% FPL) and assets* valuing under $2000 (*fine print: this amount does not include the value of a home and one car used by or for the beneficiary). You are quite welcome to disagree, but that doesn’t sound like someone who is in a position to finance growing out-of-pocket premiums to me. When it’s said that current proposals  may “shift the cost of care to Americans with the lowest incomes and greatest health care needs, and to their families,” this is what we mean.

Two quick notes on malpractice reform and the IPAB: Defensive medicine may well be a contributing factor to medical costs,  but the data doesn’t suggest that damage caps effectively cut costs. See here, here and here. And while Romney, Ryan, and many others may disdain the IPAB on grounds of principle, feelings don’t change economic realities. The board has been scored as cost-saving, so repealing it means that those savings must be found elsewhere.

It’s important to remember that demographics are shifting. Even without reforming Medicare into a voucher system, Boomers retiring in record numbers would (and will) still put a strain on Medicaid. According to Pew research, 10,000 Baby Boomers are retiring every day. Eventually, many of them are going to require long-term care (like nursing homes), which Medicare does not cover. Medicaid does. One resource provided in the message (the CBPP link) actually speaks directly to the problem block-granting Medicaid and dual-eligibles:

Because the block-grant funding levels would not keep pace with health care costs or the expected increase in the number of Medicaid beneficiaries — especially the growth in the number of elderly beneficiaries, who cost more to serve — the block-grant funding levels would fall further behind need with each passing year … The reductions in federal funding would likely cause many states to scale back coverage for low-income seniors and people with disabilities, especially coverage for long-term care.

So, is it possible to ensure that a premium-support Medicare + block-grant Medicaid plan doesn’t increase the number of dual eligibles by redefining dual-eligibility—and reducing access in the process? Of course it is! Do I think that’s an acceptable solution to the problem? Uh, not so much.

Did I miss anything?

Adrianna works in clinical research and will begin graduate studies at the University of Michigan this fall.
Follow her on Twitter @onceuponA.


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