Opportunities for State Medicaid Reform

Studies | Health

No. 288
Thursday, September 28, 2006
by John C. Goodman, Michael Bond, Devon M. Herrick, and Pamela Villarreal


Notes

  1. "The Fiscal Survey of States," National Governors Association and National Association of State Budget Officers, June 2005.
  2. Ibid.  Medicaid and other health expenses already account for about 22 percent of state spending.
  3. Vernon Smith et al., "The Continuing Medicaid Budget Challenge: State Medicaid Spending Growth and Cost Containment in Fiscal Years 2004 and 2005, Results from a 50-State Survey," Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, October 2004.
  4. Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, "National Health Expenditures Aggregate and Per Capita Amounts, 1960-2004," U.S. Department of Commerce, Bureau of Economic Analysis and U.S. Bureau of the Census.
  5. Enrollment is expected to grow an average of about 4 percent annually through 2006.  See "The Fiscal Survey of States," National Governors Association and National Association of State Budget Officers, June 2005.
  6. "The Uninsured in America," Blue Cross Blue Shield Association, February 27, 2003.  Estimates of eligibility for public health care programs vary.
  7. Raymond C. Scheppach, Executive Director, National Governors Association, statement before the Medicaid Commission on Short-Term Medicaid Reform, August 17, 2005.
  8. "Changes in Participation in Means-Tested Programs," Congressional Budget Office, Economic and Budget Issue Brief, April 2005.  Available at http://www.cbo.gov/ftpdocs/63xx/doc6302/04-20-Means-Tested.pdf; "Change in Number of AFDC/TANF Recipients - Fiscal Years 1996-2002," Table 1:11:a, U.S. Department of Health and Human Services, Office of Family Assistance, May 13, 2004.  Available at http://www.acf.hhs.gov/programs/ofa/annualreport6/chapter01/0111a.htm.  Access verified May 1, 2006. 
  9. "Medicaid: An Overview of Spending on ‘Mandatory' vs. ‘Optional' Populations and Services," Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, June 2005.  Available at http://www.nfprha.org/uploads/KFFMandatoryvOptionalBrief.pdf. Access verified June 1, 2006.
  10. Based on 2002 estimates from "Medicaid Expenditures for Dual Eligibles (full and partial) by State, 2002," Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation.  Available at http://www.kff.org/medicaid/7024.cfm.  Access verified January 4, 2006.  See also John Holahan and Brian Bruen, "Medicaid Spending: What Factors Contributed to the Growth between 2000 and 2002?" Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, September 2003.
  11. Potential medical providers, including physicians and clinics, were called by surveyors who posed variously as Medicaid, uninsured or insured patients seeking an appointment for a specific condition with a set of symptoms.  The conditions described by the callers are considered medically urgent.  Attempted access was considered successful when the caller was able to schedule an appointment within seven days.  The surveys were conducted in major, geographically-dispersed urban areas.  Brent R. Asplin et al., "Insurance Status and Access to Urgent Ambulatory Care Follow-Up Appointments," Journal of the American Medical Association, Vol. 294, No. 10, September 14, 2005, pages 1,248-54. 
  12. Outside of New York City, Medicaid uses traditional managed care organizations.  See Richard Pérez-Peña, "At Clinic, Hurdles to Clear Before Medicaid Care," New York Times, October 17, 2005.
  13. Richard Pérez-Peña, "Trying to Get, and Keep, Care Under Medicaid," New York Times, October 18, 2005.
  14. Allison Sherrym, "Doctors Say Colorado Hospital Is Refusing Poor Patients," Denver Post, October 22, 2003.
  15. Heath Foster, "Low-Income Patients Left Waiting for Care," Seattle Post-Intelligencer, January 26, 2004.
  16. Presumably, these plans are able to pay more because of other cost-reducing efficiencies.
  17. "2004 Medicaid Managed Care Enrollment Report," Centers for Medicare and Medicaid Services, 2004, page 3, table, "Managed Care Trends."  Available at http://www.cms.hhs.gov/MedicaidDataSourcesGenInfo/downloads/mmcer04.pdf .  Access verified July 11, 2006.
  18. "Medicaid Managed Care Penetration Rates and Expansion Enrollment by State: Penetration Rates as of December 31, 2004," Center for Medicare and Medicaid Services.  Available at http://www.cms.hhs.gov/MedicaidDataSourcesGenInfo/downloads/mmcpr04.pdf.  Access verified July 11, 2006.
  19. Richard Pérez-Peña, "Trying to Get, and Keep, Care Under Medicaid."
  20. However, these plans cannot use the techniques private plans use to control utilization and costs - such as requiring preauthorization of services and having patient copays and deductibles.
  21. "Medicaid: An Overview of Spending on ‘Mandatory' versus ‘Optional' Populations and Services," Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, June 2005.
  22. "HIFA: Will It Solve the Problem of the Uninsured?" National Health Law Program, Health Insurance Flexibility and Accountability (HIFA) Talking Points, February 28, 2002. Available at http://www.healthlaw.org. Access verified August 14, 2006.
  23. Pamela Villarreal, "Federal Medicaid Funding Reform," National Center for Policy Analysis, Brief Analysis No. 566, July 31, 2006.
  24. For a discussion of factors that influence state Medicaid spending see Robert J. Buchanan, Joseph C.  Cappelleri and Robert L. Ohsfeldt, "The Social Environment and Medicaid Expenditures: Factors Influencing the Level of State Medicaid Expenditures," Public Administration Review, Vol. 51, No. 1, January/February 1991, pages 67-73.
  25. See Appendix II and Appendix Table I. Regression analysis by Pamela Villarreal, National Center for Policy Analysis, is based on U.S. Census data and Medicaid data from the Kaiser Family Foundation.
  26. "Medicaid's architects envisioned a program that would provide poor people with mainstream medical care in a fashion similar to that of private insurance.  As the decades have passed, that vision has largely faded...poor people continue to rely on providers that make up the nation's medical safety net: public and some not-for-profit hospitals and clinics [that] by virtue of their location or social calling provide a disproportionate amount of care to the poor." John K. Iglehart, "The American Health System-Medicaid," New England Journal of Medicine, Vol. 340, No. 9, February 4, 1999, pages 403-408.
  27. Medicaid spending per recipient varied from $4,425 to $2,101, a difference of about $2,300Adding spending on free care for the uninsured to Medicaid spending reduced the variation in health care spending to less than $1,200.  See John C. Goodman, "Minority Report of the Texas Blue Ribbon Task Force on the Uninsured," in Sen. Chris Harris (Chairman) and the Members of the Texas Blue Ribbon Task Force on the Uninsured, "Texas Blue Ribbon Task Force on the Uninsured," Report to the 77th Legislature, State of Texas, February 2001, page 42.
  28. The difference among groups receiving "good" care ranged from 56.6 percent of women to 53.1 percent for those with annual incomes of less than $15,000. Researchers examined 439 indicators for quality of care in four areas: screening, diagnosis, treatment and follow-up. Steven M. Asch et al., "Who Is at Greatest Risk for Receiving Poor-Quality Health Care?" New England Journal of Medicine, Vol. 354, No. 11, March 16, 2006, pages 1,147-55. 
  29. For instance, it was widely assumed that the 1996 welfare reforms, which limited the eligibility of immigrants for Medicaid, would increase the uninsured rate of that population.  Instead, the immigrant uninsured rate fell slightly as more immigrants purchased private insurance.  See George Borjas, "Welfare Reform, Labor Supply, and Health Insurance in the Immigrant Population," Journal of Health Economics, Vol. 22, No. 6, November 2003, pages 933-58.
  30. However, the loss of private insurance is likely to cause a small, offsetting increase in government revenues as employers substitute taxable wages for previously untaxed health benefits.
  31. David M. Cutler and Jonathan Gruber, "Does Public Insurance Crowd Out Private Insurance?" Quarterly Journal of Economics, Vol. 111, No. 2, May 1996, pages 391-430.  Also see Tanya T. Alteras, "Understanding the Dynamics of ‘Crowd-Out': Defining Public/Private Coverage Substitution for Policy and Research," Academy for Health Services Research and Health Policy, prepared for the Robert Wood Johnson Foundation's Changes in Health Care Financing and Organization Program, June 2001, pages 14-15; and RAND Health, "State Efforts to Insure the Uninsured: An Unfinished Story," RAND, Research Highlights, 2005.
  32. David M. Cutler and Jonathan Gruber, "Does Public Insurance Crowd Out Private Insurance?" Quarterly Journal of Economics, Vol. 111, No. 2, May 1996, pages 391-430. Cutler and Gruber found that most of the reduction came from workers deciding to drop private coverage (particularly for dependents) rather than because their employers stopped insurance coverage.
  33. Peter J. Cunningham and Michael H. Park, "Recent Trends in Children's Health Insurance: No Gains for Low-Income Children," Center for Studying Health System Change, Issue Brief No. 29, April 2000.
  34. Based on NCPA calculations comparing 1997 to 2003 data. See HSC Community Tracking Surveys, 1997 to 2003, Center for Studying Health System Change.
  35. Bradley C. Strunk and James D. Rescholsky, "Trends in U.S. Health Insurance Coverage, 2001-2003," Center for Studying Health System Change, Tracking Report No. 9, August 2004.
  36. Janet Currie and Jonathan Gruber, "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," Quarterly Journal of Economics, Vol. 111, No. 2, May 1996, pages 431-66.
  37. "Learning from SCHIP and Learning from SCHIP II," Agency for Health Care Policy Research, June 1998.
  38. See Janet Currie and Jonathan Gruber, "Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women," Journal of Political Economy, Vol. 104, No. 6, December 1996, pages 1,263-96.
  39. See Janet Currie and Jonathan Gruber, "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," National Bureau of Economic Research, NBER Working Paper No. 5052, March 1995.
  40. Laura-Mae Baldwin et al., "The Effect of Expanding Medicaid Prenatal Services on Birth Outcomes," American Journal of Public Health, Vol. 88, No. 11, November 1998, pages 1,623-29.
  41. "Increased Access to Medicaid Had Little Effect on Pregnancy Care or Outcome," Project Report, Effect of Expanding Medicaid Coverage on Health Outcomes, Robert Wood Johnson Foundation, January 2001.  Available at http://www.rwjf.org/reports/grr/019672.htm.  Access verified August 26, 2005.
  42. Jonathan Gruber and Aaron Yelowitz, "Public Health Insurance and Private Savings," Journal of Political Economy, Vol. 107, No. 6, part 1, December 1999, page 1,259. 
  43. Michael F. Cannon, "Medicaid's Unseen Costs," Cato Institute, Policy Analysis No. 548, August 18, 2005.
  44. Shawna Orzechowski and Peter Sepielli, "Net Worth and Asset Ownership of Households: 1998 and 2000," U.S. Census Bureau, Current Population Reports, P70-88, May 2003, page 11, Table F.
  45. See the discussion in the section "Paying for Long-Term Care."
  46. "2004 State Expenditure Report," National Association of State Budget Officers, 2005.  Available at http://www.nasbo.org/Publications/PDFs/2004ExpendReport.pdf.  Access verified August 10, 2006.
  47.   NCPA analysis by Pamela Villarreal, based on the American Chamber of Commerce Research Association (ACCRA) cost of living index for the 2nd quarter of 2004 and figures for Medicaid spending.  ACCRA compiles a quarterly cost of living index based on comparative survey data from various metropolitan and micropolitan areas.  The index measures the cost of living based on a basket of goods, such as housing, groceries, health care and utilities, and are weighted according to government survey data on expenditure patterns.
  48. Denise Soffel, "Federal Medicaid Reform: What's at Risk for New York," Community Service Society, Policy Brief No. 11, June 2003.
  49. Data from Centers for Medicare and Medicaid Services; accessed December 2005.  Population figures from the Census Bureau, U.S Department of Commerce.
  50. Tarren Bragdon, "Maine's State-Run Health Plan Faltering," Heartland Institute, January 1, 2006.  Also, see "Maine and the United States," State Medicaid Fact Sheets, Kaiser Family Foundation; available at http://www.kff.org/mfs/medicaid.jsp?r1=ME&r2=US; accessed on May 4, 2006.
  51. Tarren Bragdon, "Maine's State-Run Health Plan Faltering," Heartland Institute, January 1, 2006.
  52. "Confronting the Tradeoffs in Medicaid Cost Containment," Citizens Budget Commission (New York), February 2004.  Available at http://www.cbcny.org/medicaid04.pdf.  Access verified December 22, 2005.
  53. "Distribution of Medicaid Spending by Service FY2004," StateHealthFacts.org, Kaiser Family Foundation, 2004.
  54. Ibid.
  55. "2002 State and National Medicaid Enrollment and Spending Data (MSIS)" Kaiser Commission on Medicaid and the Uninsured, March 24, 2006, table 1a. Available at http://www.kff.org/medicaid/upload/kcmu032106atable1a.pdf; and "Quantitative Analysis of New York State Medicaid Spending," Health Economics and Outcomes Research Institute, Greater New York Hospital Association, October 24, 2003.
  56. Jeff Clabaugh, "D.C. Nursing Homes among Nation's Priciest," Washington Business Journal, August 4, 2003.
  57. Alan Johnson et al., "Nursing-Home Industry Has Clout; Lobby Again Surfs Plans for Cuts in Governor's Budget," Columbus Dispatch, April 17, 2005.
  58. Allen J. LeBlanc, M. Christine Tonner and Charlene Harrington, "State Medicaid Programs Offering Personal Care Services," Health Care Financing Review, Vol. 22, No. 4, Summer 2001, page 157.
  59. Robyn I. Stone, "Long-Term Care for the Elderly with Disabilities: Current Policy, Emerging Trends, and Implications for the Twenty-First Century," Milbank Memorial Fund, August 2000.
  60. Allen J. LeBlanc, M. Christine Tonner and Charlene Harrington, "State Medicaid Programs Offering Personal Care Services," Health Care Financing Review, Vol. 22, No. 4, Summer 2001, page 155.  Also see "Confronting the Tradeoffs in Medicaid Cost Containment," Citizens Budget Commission (New York), February 2004.  Available at http://www.cbcny.org/medicaid04.pdf.
  61. Allen J. LeBlanc, M. Christine Tonner and Charlene Harrington, "State Medicaid Programs Offering Personal Care Services," page 162.
  62. Ibid, page 163.
  63. Federal regulations require that states must provide access to transportation to and from Medicaid-related appointments, although the law gives wide latitude in how they implement transportation services.  See "Medicaid Transportation: Assuring Access to Health Care; A Primer for States, Health Plans, Providers and Advocates," Community Transportation Association of America, January 2001.
  64. Clifford J.  Levy and Michael Luo, "New York Medicaid Fraud May Reach into Billions," New York Times, July 18, 2005.
  65. Ibid.
  66. Direct Research LLC, "Medicare Physician Payment Rates Compared to Rates Paid by the Average Private Insurer, 1999-2001," Medicare Payment Advisory Commission, No. 03-6, August 2003.
  67. "Kansas Medicaid Facts," American Academy of Pediatrics, July 2005.
  68.   See Stephen Zuckerman et al., "Changes in Medicaid Physician Fees, 1998-2003: Implications for Physician Participation," Health Affairs, Web Exclusive, June 23, 2004.
  69. Ibid.
  70. Based on provider fee schedules obtained from New York State Department of Health and Mississippi Envision.
  71. Laurence C. Baker and Anne Beeson Royalty, "Medicaid Policy, Physician Behavior, and Health Care for the Low-Income Population," Journal of Human Resources, Vol. 35, No. 3, Summer 2000, pages 480-502.
  72. "Medicaid Watch ‘05," Public Policy Institute of New York State, Issue No. 4, March 24, 2005.
  73. A panel modeled after the federal military base closure commission has been established to recommend hospitals and nursing homes for closure, consolidation or merger, and is due to report December 1, 2006.  Raymond Hernandez and Al Baker, "Close Hospitals, Pataki Says in Medicaid Cost Proposal," New York Times, March 17, 2005.  See the Commission on Health Care Facilities in the 21st Century.  Available at http://www.gnyha.org/pubinfo/chcf/CHCF_Origin_Mission.pdf.  Access verified March 15, 2006.
  74. Analysis of Medicaid spending on inpatient care.  See Kaiser Family Foundation Web site www.StateHealthFacts.org.
  75. Kathleen M. King, "Medicaid: States' Payments for Outpatient Prescription Drugs," U. S. Government Accountability Office, Report GAO-06-69R, October 31, 2005, page 12.
  76. Clifford J. Levy and Michael Luo, "New York Medicaid Fraud May Reach into Billions," New York Times, July 18, 2005.
  77. Linda Gorman, "Medicaid Drug Formularies: Do They Perform as Advertised?" Health Care Policy Center, Independence Institute, Issue Paper No. 2-2002, April 2002.
  78. Frank Lichtenberg, "Benefits and Costs of Newer Drugs: An Update," National Bureau of Economic Research, NBER Working Paper No. 8996, June 2002.
  79. Linda Gorman, "Medicaid Drug Formularies: Do They Perform as Advertised?" Health Care Policy Center, Independence Institute, Issue Paper No. 2-2002, April 2002.
  80. Ibid.
  81. This excludes Tennessee's program, where 100 percent of enrollees are in TennCare. "Medicaid Managed Care Penetration Rates and Expansion Enrollment by State: Penetration Rates as of December 31, 2004," Center for Medicare and Medicaid Services.  Available at http://www.cms.hhs.gov/MedicaidDataSourcesGenInfo/downloads/mmcpr04.pdf. 
  82. Ibid.
  83. See Robyn Tamblyn et al., "Adverse Events Associated with Prescription Drug Cost-Sharing Among  Poor and Elderly Persons," Journal of the American Medical Association, Vol. 285, No. 4, January 24/31, 2001, pages 421-29.  Tamblyn found that after Quebec implemented a cost-sharing policy in 1996 using co-insurance deductibles of $100 annually and 25 percent prescription copays for beneficiaries who were previously receiving free medication, the use of essential drugs fell 9 percent among the elderly and 14 percent among the poor.  Emergency room visits increased 14 percent among the elderly and 54 percent among the poor.
  84. See "State Law Requiring Medicaid Copays Violates Federal Law, State Court Decides," Health Care Policy, Vol. 13, No. 38, September 26, 2005;  Also, see "Michigan Medicaid Beneficiaries Who Cannot Make Copays Must Receive Drugs, U.S. Judge Rules," Medical News Today, March 22, 2006; Available at www.medicalnewstoday.com.
  85. Betsy McCaughey, "Unnecessary Deaths: The Human and Financial Costs of Hospital Infections," Committee to Reduce Infection Deaths and the National Center for Policy Analysis, December 2005.
  86. A ground-breaking hospital study in the 1960s showed that treatment caused complications in one out of five patients, and about 7 percent of the complications were fatal.  See Elihu Schimmel, "The Hazards of Hospitalization," Annals of Internal Medicine, January 1964, pages 100-110.
  87. "Medical Errors:  The Scope of the Problem," Agency for Healthcare Research and Quality, U. S. Department of Health and Human Services, Fact Sheet, Publication No. AHRQ 00-P037, February 2000. Available at http://www.ahrq.gov/qual/errback.htm.
  88. Kohn, Corrigan and Donaldson, eds., To Err is Human: Building a Safer Health System, page 52.
  89. Marlene R. Miller and Chunliu Zhan, "Pediatric Patient Safety in Hospitals: A National Picture in 2000," Pediatrics, Vol. 113, No. 6, June 2004, pages 1741-46.
  90. Ibid.
  91. J.H. Gurwitz et al., "Incidence and Preventability of Adverse Drug Events in Nursing Homes," American Journal of Medicine, Vol. 109, No. 2, August 1, 2000, pages 166-68.
  92. Betsy McCaughey, "Unnecessary Deaths: The Human and Financial Costs of Hospital Infections," Committee to Reduce Infection Deaths and the National Center for Policy Analysis, December 2005. Available at http://www.ncpa.org/pub/special/pdf/RIDBooklet_120605.pdf.
  93. See Thomas T. Yoshikawa, "Editorial Viewpoint: Antibiotic-Resistant Pathogens in Geriatric Care," Annals of Long-Term Care, Vol. 6, No. 3, March 1998; and Lynn L. Chilton, "Infections and Antimicrobial Resistance in the Elderly Living in Long-term Care Settings," MedScape Today, September 29, 2004; Available at http://www.medscape.com/viewarticle/493678. Access verified July 11, 2006.
  94. Leslie G. Aronovitz, "Medicaid Fraud and Abuse: Stronger Action Needed to Remove Excluded Providers from Federal Health Programs," U.S.  Government Accountability Office, GAO/HEHS-97-63, March 1997.
  95. Maurice Passley, Bonita Brodt and Tim Jones, "Medicaid: System in Chaos," a series in nine parts, Chicago Tribune, October 31-November 9, 1993.
  96. Patrick D. Hansen, "Medicaid Transportation Provider Sentenced for Fraud," Roger A. Heaton, U.S. Attorney, Central District of Illinois, United States Attorney's Office, December 16, 2005.
  97. Paul Loriquet, "Essex County Owner of Invalid Transportation Company Sentenced to Jail for Medicaid Fraud," Office of the Attorney General, New Jersey Department of Law and Public Safety, November 1, 2002.
  98. Clifford J. Levy and Michael Luo, "New York Medicaid Fraud May Reach into Billions," New York Times, July 18, 2005.
  99. "Supplemental Security Income: Action Needed on Long-Standing Problems Affecting Program Integrity," Report to the Commissioner of Social Security, U.S. Government Accountability Office, GAO Report HEHS-98-158, September 1998.
  100. Victoria Craig Bunce, J.P. Wieske and Vlasta Prikazsky, "Health Insurance Mandates in the States, 2006," Council for Affordable Health Insurance, March 2006.
  101. Gail A. Jensen and Michael Morrisey, "Mandated Benefit Laws and Employer-Sponsored Health Insurance," Health Insurance Association of America, January 25, 1999.
  102. In August 2001, under authority granted by Congress, the Centers for Medicare and Medicaid Services (CMS), formerly known as the Health Care Financing Administration (HCFA), announced the Health Insurance Flexibility and Accountability (HIFA) Demonstration Initiative. 
  103. Clarke Cagey, "Health Reform, Year Seven: Observations about Medicaid Managed Care," Centers for Medicare and Medicaid Services, Health Care Financing Review, Vol. 22, No. 1, Fall 2000, page 127.  Available at http://www.hcfa.gov/Med-icaid/obs7.htm.
  104. John C. Fortney, "VA Community-Based Outpatient Clinics: Access and Utilization Performance Measures," Medical Care, Vol. 40, No. 7, July 2002, pages 561-69.
  105. "Avoidable Hospitalizations in Pennsylvania," Pennsylvania Health Care Cost Containment Council, Research Brief, Issue No. 3, November 2004.
  106. "West Virginia and Kentucky Alter Medicaid," Associated Press, May 23, 2006.
  107. "Analysis and Description of the Governor's 2005-2006 State Budget and Health Care Reform Act Proposals," Healthcare Association of New York State, January 21, 2005.  Available at http://cumc.columbia.edu/dept/gc/issues/docs/01-20-05budgetattachmenttoElertFINAL.doc.  Access verified July 11, 2006. Gov. Pataki's proposal to selectively contract for certain services has not been implemented.  The most recent regulations still use the old system of DRGs, SIWs and Trimpoints. 
  108. See, for example, Edwin Rubenstein, "Emergency Surgery for Medicaid," Manhattan Institute, City Journal, Spring 1991.
  109. Texas Comptroller of Public Accounts, "Chapter 6: Health and Human Services," in Challenging the Status Quo toward Smaller, Smarter Government, Texas Performance Review, Vol. 2, March 1999.
  110. James C. Robinson and C. S. Phibbs, "An Evaluation of Medicaid Selective Contracting in California," Journal of Health Economics, Vol. 8, No. 4, 1989, pages 437-55.
  111. Jack Zwanziger, Glenn A. Melnick and Anil Bamezai, "The Effect of Selective Contracting on Hospital Costs and Revenues," Health Services Research, October 2000.
  112. Kala Ladenheim et al., "Chapter 10: Selective Contracting," in "Medicaid Cost Containment:  A Legislator's Tool Kit," National Conference of State Legislatures. Available at http://www.ncsl.org/programs/health/forum/cost/strat10.htm; Access verified August 9, 2006.
  113. "The Value of Pharmacy Benefit Management and the National Cost Impact of Proposed PBM Legislation," Pharmaceutical Care Management Association, July 2004.  Available at http://www.pcmanet.org/research/istudies/PricewaterhouseCoopers_Report_V.pdf. Access verified July 7, 2006.
  114. Assembly Bill 2766, Senate Bill 2894 and Assembly Bill 6934 are similar in that they would prevent insurers from requiring prescription drugs be purchased through a mail-order pharmacy.  This is referred to as the "employee's mail order pharmacy bill of rights."
  115. Testimony to the House Energy and Commerce Committee by Craig L. Fuller, President & CEO, National Association of Chain Drug Stores, June 22, 2005.
  116.   Michael A. Fischer and Jerry Avorn, "Potential Savings from Increased Use of Generic Drugs in the Elderly: What the Experience of Medicaid and Other Insurance Programs Means for a Medicare Drug Benefit," Pharmaceoepidemiology and Drug Safety, Vol. 13, 2004, pages 207-14. The data examined included 358,965 brand-name prescriptions (for which FDA-approved generic substitutes were available) among 80,000 patients.  The study only examined A-rated generic drugs, which are defined as both biologically and pharmaceutically equivalent by the U.S. Food and Drug Administration.
  117. Some scientists would say it is pharmacologically the same.  See Sylvester J. Schieber, "Why Coordination of Health Care Spending and Savings Accounts Is Important," Watson Wyatt Worldwide, July 2004.
  118. The price for Clarinex is for 90 doses from Wal-Mart accessed online at destinationrx.com, and the price for Claritin is for 60 doses from Costco.com.  The price for the generic version of Claritin (Loratadine) is from Sam's Club.  All prices surveyed May 24, 2006.
  119. If approved, the OTC dose of Orlistat will be half that of the prescription version.  A 60mg dose has about 85 percent of the effectiveness of the 120mg prescription dose, however.  Many private insurers do not cover the cost of Orlistat.  Many state Medicaid programs may not cover it as well.  See Christopher Snowbeck, "Glaxo Seeks Approval to Sell Obesity Drug Over the Counter," Pittsburgh Post-Gazette, January 23, 2006.
  120. Linda Gorman, "Medicaid Drug Formularies," Independence Institute, Issue Paper 2-2002, April 2002.
  121. Brian Abery, Rhonda Cady and Erin Simunds, "Health Care Coordination for Persons with Disabilities: Its Meaning and Importance," Institute on Community Integration, University of Minnesota, Impact, Vol.  18, No. 1, 2005.  Available at http://ici.umn.edu/products/impact/181/over5.html.  Access verified August 15, 2006.
  122. Salynn Boyles, "Too Many Elderly Are Taking Dangerous Drugs," WebMD Medical News, August 9, 2004; Lesley H. Curtis et al., "Inappropriate Prescribing for Elderly Americans in a Large Outpatient Population," Archives of Internal Medicine, Vol. 164, No. 15, August 9/23, 2004.
  123. Christopher Tedeschi, "Pill Overkill," USC Health & Medicine, Summer 1996.
  124. Description of MainNET, Muskie School of Public Service, University of Southern Maine.  Available online at http://muskie.usm.maine.edu/projectbriefs/MaineNET.jsp.
  125. According to the Disease Management Association of America, "disease management is a system of coordinated healthcare interventions and communications for populations with conditions in which patient self-care efforts are significant." Disease Management Association of America.  Available at http://www.dmaa.org/definition.html.  Access verified January 20, 2006.
  126. For instance, an asthma self-management plan could stipulate that if a patient's "peak airflow" falls to 80 percent of their personal best peak airflow, they should increase medications at a pre-established rate and schedule a physician appointment.  Patients should go to the emergency room if their peak airflow falls below 50 percent. See "Take Control - Q&A to Having a Self Management Plan," AsthmaAssistant.com.
  127. Claudia Williams, "Medicaid Disease Management: Issues and Promises," Kaiser Commission on Medicaid and the Uninsured, September 2004.
  128. Susan Konig, "Medicaid Reform: Florida, South Carolina Lead the Way," Heartland Institute, August 1, 2005.
  129. "2005 Performance Report for Utah Commercial HMOs and Medicaid and SCHIP Health Plans," Utah Department of Health, November 2005.
  130. Susan L. Norris, Michael M. Engelgau and K. M. Venkat Narayan, "Effectiveness of Self-Management Training in Type 2 Diabetes," Diabetes Care, March 2001.
  131. Ibid.
  132. "Economic and Health Costs of Diabetes," Agency for Healthcare Research and Quality, U.S. Department of Health and Human Services, Healthcare Cost and Utilization Project Highlights, No. 1, AHRQ Pub. No. 05-0034, January 2005.
  133. Teresa Pearson, "Getting the Most from Health-Care Visits," Diabetes Self-Management, March/April 2001.
  134. Patti Bazel Beil and Laura Hieronymus, "Money-Saving Tips: Supplies, Nutrition, and Exercise," Diabetes Self-Management, March/April 1999.
  135. Tjard R. Schermer et al., "Randomized Controlled Economic Evaluation of Asthma Self-Management in Primary Health Care," American Journal of Respiratory and Critical Care Medicine, Vol. 166, No. 8, August 2002, pages 1062-72. For an evaluation of direct medical treatment costs for asthma, see Michael T. Halpern et al., "Asthma: Resource Use and Costs for Inhaled Corticosteroid vs. Leukotriene Modifier Treatment - A Meta-Analysis," Journal of Family Practice, Vol. 54, No. 5, May 23, 2005.
  136. "Asthma Overview," Web site document, Asthma and Allergy Foundations of America. Available at http://www.aafa.org/display.cfm?id=8&cont=5.  Access verified August 10, 2006.
  137. Li Yan Wang, Yuna Zhong and Lani Wheeler, "Direct and Indirect Costs of Asthma in School-Age Children," Preventing Chronic Disease, Vol. 2, No. 1, January 2005.
  138. Ibid.  Implementation costs were mostly incurred in year one and amounted to about $200.
  139. Susan Konig, "Florida Medicaid Plan Receives Federal Approval," Heartland Institute, Health Care News, January 1, 2006.
  140. See "Medicaid Managed Care: Four States' Experiences with Mental Health Carve-Out Programs," U.S.  Government Accountability Office, GAO/HEHS-00-118, September 1999.
  141. Jeffrey S. Crowley, "An Overview of the Independence Plus Initiative to Promote Consumer-Direction of Services in Medicaid," Kaiser Commission on Medicaid and the Uninsured, Henry J.  Kaiser Family Foundation, Issue Paper 4151, November 2003.
  142. Ibid.  While "cash and counseling" is the term commonly used, states may have slightly different programs with different names.
  143. Leslie Foster et al., "Does Consumer Direction Affect the Quality of Medicaid Personal Assistance in Arkansas?" Mathematica Policy Research, Inc., March 2003.
  144. James Frogue, "The Future of Medicaid: Consumer-Directed Care," Heritage Foundation, Backgrounder No. 1618, January 10, 2003.  Available at http://www.heritage.org/research/healthcare/BG1618.cfm. Access verified August 10, 2006.
  145. The National Academy of Sciences recommends that all federal health programs begin paying for quality care rather than for services rendered.  See Janet M. Corrigan, Jill Eden and Barbara M. Smith, eds., Leadership by Example: Coordinating Government Roles in Improving Health Care Quality (Washington, D.C.: National Academies Press, 2002). 
  146. Eric Henley, "Pay-for-Performance: What Can You Expect?" Journal of Family Practice, Vol. 54, No. 7, July 2005.
  147. John W. Rodat, "Pay for Performance - What's Going On?" Signal Health, December 15, 2005.  Available at http://www.signalhealth.com/node/512.  Access verified January 17, 2006.
  148. Michael L. Millenson, Demanding Medical Excellence: Doctors and Accountability in the Information Age (Chicago: University of Chicago Press, 1997).  An example of the possible magnitude of savings is shown by a study reported in Employee Benefit News, which estimates that the cost of poor-quality health care services is $1,350 per employee.  If even a fraction of that amount can be saved per Medicaid recipient, hundreds of millions or even billions of dollars in taxes can be saved.  See Craig Gunsauley, "Estimate: 30 percent of Health Spending Is Wasted," Employee Benefit News, August 1, 2002.
  149. Joel B. Finkelstein, "Patient Safety Laboratories: States Pave the Way for a National Effort," AMNews, January 3/10, 2005; Available at http://www.ama-assn.org/amednews/2005/01/03/gvsa0103.htm.  Access verified on July 11, 2005.
  150. David M. Cutler, Robert Huckman and Mary Beth Landrum, "The Role of Information in Medical Markets:  An Analysis of Publicly Report Outcomes in Cardiac Surgery," National Bureau of Economic Research, NBER Working Paper w10489, May 2004.
  151. "H.R. 2334, 21st Century Health Information Act of 2005," Thomas, Library of Congress.  Available online at http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.2234: Accessed on May 31, 2006.
  152. This database is referred to as a Medicaid provider information exchange.  See Sarah F. Jaggar, "Medicare and Medicaid: Opportunities to Save Program Dollars by Reducing Fraud and Abuse," U.S. Government Accountability Office, GAO/T-HEHS-95-110, March 22, 1995.
  153. Communication from Jim McDermott of Salient Corporation.  To learn more about their software, see http://www.salient.com/Medicaid.pdf.  Access verified January 12, 2006.
  154. Steven Malanga, "How to Stop Medicaid Fraud," Manhattan Institute, City Journal, Spring 2006.
  155. Office of the Governor (State of Kansas), "Sebelius says new law will crack down on Medicaid fraud," press release, May 16, 2006; available at http://www.governor.ks.gov/news/NewsRelease/nr-06-0516b.htm.  Two states, New York and North Carolina, mandate that counties pay a significant share of Medicaid funds from their budgets.  Hence, counties should have the power to investigate Medicaid billings of all providers and utilization of enrollees within their boundaries.  They should, at the very least, have the authority to suspend providers and suppliers suspected of fraud.  In cases where there is substantial evidence, counties should also have the authority to prosecute Medicaid fraud within their county.  Since New York's local governments pay one-fourth of the cost of Medicaid, the benefit to them of discovering and eliminating fraud is 25 cents on the dollar.  If they were allowed to keep half of any funds recovered, they would have an incentive to double their efforts.
  156. John R. La Plante, "Are Medicaid Benefits Too Healthy?" Oklahoma Council of Public Affairs, June 1, 2003.
  157. Robert Pear, "U.S. Gives Florida a Sweeping Right to Curb Medicaid," New York Times, October 20, 2005.
  158. Michael Bond, "Medicaid Pilot Takes Flight," Journal of the James Madison Institute, Summer 2005, pages 8-10.
  159. Information obtained from "Governor Bush Signs Landmark Medicaid Reform Legislation," EmpoweredCare.com, June 3, 2005.  Accessed August 10, 2005.
  160. Michael Bond, "Reforming Medicaid in Kansas: A Market-Based Approach," Flint Hills Center Public Policy, Policy Paper, Vol. 3, No. 3, February 2, 2006.
  161. For information about this program, see Gregory C. Pope et al., "Risk Adjustment of Medicare Capitation Payments Using the CMS-HCC Model," Health Care Financing Review, Vol 25, No. 4, Summer 2004, pages 119-41.
  162. This is discussed in detail in John C. Goodman, "Characteristics of an Ideal Health Care System," National Center for Policy Analysis, Policy Report No. 242, April 2001.
  163. Michael Bond, "Reforming Medicaid in Kansas: A Market-Based Approach."
  164. "Reverse" health savings accounts differ from regular HSAs in that money or credit for services is deposited to the account as a reward after, not before, healthy behaviors occur.
  165. "Risk Pools: State Health Insurance High-Risk Pools," Communicating for Agriculture and the Self-EmployedAvailable at http://www.selfemployedcountry.org/riskpools.html.  Access verified February 2, 2006.
  166. A recent Milliman employer survey found that almost all (98 percent) employers are considering offering high-deductible health plans, whereas in 2003 less than half (48 percent) considered offering them.  See "Healthcare Coverage: Insurance Company Launches New Health Plans and Health Savings Accounts," Managed Care Weekly Digest, February 28, 2005.
  167. Emmett B. Keeler, "Effects of Cost Sharing on Use of Medical Services and Health." RAND Corporation, 1992.  Available at http://www.rand.org/pubs/reprints/RP1114/index.html.  Access verified August 10, 2006.  The study was based on 5,809 participants divided into four insurance plans:  no cost-sharing, 25 percent, 50 percent and 95 percent coinsurance rates with an annual household maximum deductible of $1,000.  Free care individuals tended to self-report more illness and worried more about illness than cost-sharing individuals. 
  168. States contribute toward a deductible that is a 100% to 110% of the annual contribution to the health opportunity account (HOA). The maximum average annual contribution to an HOA is $2,500 for adults and $1,000 for children (indexed in future years). States may provide preventive care coverage without a deductible. Individuals may purchase services from Medicaid participating providers at the Medicaid rate, and from nonparticipating providers at 125% of the Medicaid rate. Three-fourths of the amount left in the HOA is available to the individual for 3 years. It may be used to purchase health insurance or (after participating one year) for additional expenditures (such as job training and tuition expenses) specified by the state and approved by the secretary of Health and Human Services. For a critical review, see Edwin Park and Judith Solomon, "Health Opportunity Accounts for Low-Income Medicaid Beneficiaries: A Risky Approach," Center for Budget and Policy Priorities, November 1, 2005.
  169. Rep. Mike Rogers, "The Truth About Medicaid Reform: Puts America's Most Vulnerable Families on Road to Self-Sufficiency," letter, U.S.  House of Representatives, November 7, 2005.  Bill text available at: http://thomas.loc.gov.
  170. One limitation is that participants lose access to the funds once their income surpasses 200 percent of the federal poverty level.
  171. For a discussion on giving Medicaid enrollees choice, see Irene Fraser, Elizabeth Chait and Cindy Brach, "Promoting Choice: Lessons from Managed Medicaid," Health Affairs, Vol. 17, No. 5, September/October 1998.
  172. A. E. Benjamin and Rani E. Snyder, "Consumer Choice in Long-Term Care," in To Improve Health and Health Care, Volume V: The Robert Wood Johnson Anthology (Hoboken, New Jersey: Jossey-Bass, 2003) Chapter 5.
  173. The recently-passed Deficit Reduction Act of 2005 extends the "look back" period from three to five years.  The waiting period to sign up for Medicaid after an asset transfer would be the amount of the money transferred divided by the annual cost of nursing home care in the state multiplied by 12 months.  For example, under the previous law, if $20,000 was transferred less than three years prior in a state where a year of nursing home care costs $60,000, the waiting period before eligibility for coverage would be four months ($20,000/$60,000 = .333 years).  However, the waiting period would officially begin not when the senior applied for Medicaid, but much earlier - four months after the actual date the funds were transferred.  As a result, the four months waiting period might have lapsed a year or two earlier.  Under the previous law, seniors could conceivably give away sufficient funds to cover up to two years or more worth of care without having to wait for Medicaid eligibility.  Suppose a senior gave $20,000 to a granddaughter for college tuition four years prior to needing long-term care.  Under the previous law, the $20,000 would not be included in assets when qualifying for Medicaid.  However, the transfer would fall within the five year period resulting in a waiting period of four months.  Under the DRA the waiting period begins not at date of transfer four years prior, but on the date of an individual starting institutional care.
  174. Kathryn G. Allen, "Medicaid: Transfers of Assets by Elderly Individuals to Obtain Long-Term Care Coverage," U. S. Govern-ment Accountability Office, GAO-05-968, September 2005. 
  175. See Ronald Lipman, "Trust Helps Person Qualify for Medicaid Nursing Care," Houston Chronicle, August 11, 2002. 
  176. Enid Kassner, "Medicaid and Long-Term Services and Supports for Older People Fact Sheet," AARP Public Policy Institute, February 2005.
  177. For a pamphlet comparing the annual cost of home care and nursing home care across the country, see "Can You Afford the Cost of Long-Term Care?" U.S.  Office of Personnel Management.  Available at http://arc.publicdebt.treas.gov/files/pdf/fscombined.pdf.  Access verified June 19, 2006.
  178. Ibid.
  179. See "Medicaid Long-Term Care: Successful State Efforts to Expand Home Services While Limiting Costs," U.S. Government Accountability Office, Report No. 152298, August 1994.
  180. Ohio Commission to Reform Medicaid, "Transforming Ohio Medicaid: Improving Health Quality and Value," State of Ohio, January 2005.
  181. "Summary of the Deficit Reduction Act of 2005 (Pl 109-171) Excerpt from the Jan-Feb. Issue of The ARC/UCP Disability Collaboration Washington Watch," Association of University Centers on Disabilities, February 17, 2006.  Available online at http://www.aucd.org/Medicaid/DRA_Summary.htm.  Access verified June 8, 2006.
  182. For more information about reverse mortgages see the National Center for Home Equity Conversion at http://www.reverse.org.  Access verified July 10, 2006.
  183. "Use Your Home to Stay at Home: Program Study Shows That Reverse Mortgages Can Help Many with Long-Term Care Expenses," National Council on the Aging, Press Release and Fact Sheet, April 15, 2004.
  184. Stephen A. Moses, "How to Save Medicaid $20 Billion Per Year and Improve the Program in the Process," Center for Long-Term Care Financing, 2005.
  185. A life settlement is similar to a viatical settlement but does not require terminal illness to qualify.  Policy owners can sell a life insurance policy for an amount much higher than the cash surrender value.  See "Viatical Settlements," Centers for Medicare and Medicaid Services, March 31, 2005.  Available at http://www.medicare.gov/LongTermCare/Static/ViaticalSettlements.asp?dest=NAV%7CPaying%7CPrivateInsurance%7CViaticalSettlements.  Access verified January 25, 2006.
  186. "Viatical Settlements: A Guide for People with Terminal Illness," U.S. Federal Trade Commission, May 1998.  Available at http://library.findlaw.com/1998/May/1/126790.html.  Access verified January 6, 2006.
  187. "Deficit Reduction Act of 2005: Implications for Medicaid," Kaiser Commission on Medicaid and the Uninsured, February 2006. Available at http://www.kff.org/medicaid/upload/7465.pdf.  Access verified June 19, 2006. The Act allows the states to raise the exemption to $750,000.
  188. John C. Goodman and Devon M. Herrick, "Reforming Medicaid: More Flexibility for the States," National Center for Policy Analysis, Brief Analysis No. 515, May 13, 2005.
  189. This section is based on Matthew Pakula, "The Legal Responsibility of Adult Children to Care for Indigent Parents," National Center for Policy Analysis, Brief Analysis No. 521, July 12, 2005.
  190. Jeanne M.  Lambrew, "Making Medicaid a Block Grant Program: An Analysis of the Implications of Past Proposals," Milbank Quarterly, Vol.  83, No. 1, January 26, 2005.
  191. Vernon K. Smith and Greg Moody, "Medicaid 2005: Principles and Proposals for Reform," National Governors Association, February 2005.
  192. President Bush proposed a block grant that was budget-neutral for 2004.  This would essentially lock into place each state's 2004 payment for acute care.
  193. Jeanne M. Lambrew, "Making Medicaid a Block Grant Program: An Analysis of the Implications of Past Proposals."
  194. "Budget Options 2005," Congressional Budget Office, Section 550 Health, 550-08--Mandatory Convert Medicaid Disproportionate Share Hospital Payments into a Block Grant (Section 13 of 22), February 15, 2005.
  195. James C. Robinson, "Renewed Emphasis on Consumer Cost Sharing in Health Insurance Benefit Design," Health Affairs, Web Exclusive, March 20, 2002.  Available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.139v1. See also Jason S.  Lee and Laura Tollen, "How Low Can You Go? The Impact of Reduced Benefits and Increased Cost Sharing," Health Affairs, Web Exclusive, June 19, 2002.  Available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.229v1.  Access verified August 15, 2006.
  196. Utah received a waiver in 2002 that allowed it to increase cost-sharing through enrollment fees and copayments.  Oregon received a waiver to impose nominal premiums of $6 to $20 per month.  For a discussion see Marilyn Werber Serafini, "Balancing Act," National Journal, August 13, 2005.
  197. "Deficit Reduction Act of 2005: Implications for Medicaid," Kaiser Commission on Medicaid and the Uninsured, February 2006. Available http://www.aucd.org/medicaid/docs/kaiser_medicaid_uninsured.pdf; Access verified August 10, 2006.
  198. For a discussion on a health plan where cost-sharing varies by type of condition, see Shaun Matisonn, "Medical Savings Accounts and Prescription Drugs: Evidence from South Africa," National Center for Policy Analysis, Policy Report No. 254, August 2002.
  199. A portion of this savings will also come from limiting prescription drug coverage and limiting physical therapy and speech therapy visits to 15 per year. "Kentucky, West Virginia First States to Revise Medicaid Programs Under New Federal Law," Medical News Today, May 25, 2006.
  200. Devon M. Herrick, "How to Create a Competitive Insurance Market," National Center for Policy Analysis, Brief Analysis No. 558, Thursday, June 15, 2006.
  201. "Medical and Dental Expenses," IRS Publication 502, 2004.  Available online at http://www.irs.gov/publications/p502/.

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