Medicaid and Seniors: What's at Stake

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This summer, Congress is under enormous pressure to find a way to reduce the federal deficit, and Medicaid has become a prime target for cuts.

The Leadership Council of Aging Organizations hosted a Senate briefing on June 10, 2011, where Howard Bedlin, Vice President for Public Policy and Advocacy at NCOA, talked about what’s at stake for Medicaid and seniors in the current budget debate.

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Medicaid and Seniors: What's at Stake

  1. 1. Improving the lives of older Americans Medicaid and Seniors: What’s at Stake Howard Bedlin Vice President, Public Policy and Advocacy howard.bedlin@ncoa.org Leadership Council of Aging Organizations Senate Briefing June 10, 2011 1
  2. 2. Medicaid OverviewMedicaid - the health care safety net for low-income seniors, children, and people with disabilities. Medicaid is funded jointly by the federal and state governments, with the federal share varying from about 50% to 80%, depending on state per capita income. Medicaid covers a broad range of services, with eligibility tied to income and assets. Over 15% of seniors rely on Medicaid for health services – more than those that fall into the Medicare donut hole. While seniors and people with disabilities comprise one- quarter of Medicaid recipients, they account for two-thirds of its costs. 2 A non-profit service and advocacy organization © 2009. National Council on Aging
  3. 3. Medicaid and Seniors – Long-Term Care Medicaid is the primary payer for long-term care (LTC), paying 61.5% of total LTC costs. LTC comprises about one-third of total Medicaid spending. About 2.8 million people received Medicaid home and community-based services in 2007, and 1.7 million received Medicaid nursing home care. With nursing home costs averaging about $75,000 per year, it does not take long for middle class seniors to spend-down their life savings on to Medicaid. Roughly 7 in 10 people turning age 65 will need LTC at some point, and about 10,000 baby boomers are turning 65 every day. 3 A non-profit service and advocacy organization © 2009. National Council on Aging
  4. 4. Medicaid and Seniors – Other Coverage Medicaid also pays Medicare premiums for almost 5 million low-income beneficiaries, who otherwise would not be able to afford Medicare, through two programs: • The Qualified Medicare Beneficiary (QMB) program, which pays Medicare’s high premiums, deductibles, and copayments for beneficiaries with incomes below 100% of poverty (about $11,000) and very low non-housing assets. • The Specified Low-Income Medicare Beneficiary (SLMB) program, which pays premiums for those with incomes from 100% to 120% of poverty and low assets. In many states, Medicaid also pays for services that Medicare does not cover, such as dental care, hearing aids and eyeglasses. 4 A non-profit service and advocacy organization © 2009. National Council on Aging
  5. 5. Medicaid Consumer Protections for SeniorsMedicaid also includes critical consumer protections. For example, in order to receive federal Medicaid matching payments, states must: Implement nursing home quality standards. Not require recipients to pay unaffordable cost-sharing. Protect against spousal impoverishment, so that husbands and wives of those needing LTC are not forced into poverty. Not require children of nursing home residents to pay for their parents’ care. 5 A non-profit service and advocacy organization © 2009. National Council on Aging
  6. 6. Medicaid per person spending growthOver the past decade, costs per beneficiary grew much more slowly for Medicaid than for employer-sponsored insurance 6 A non-profit service and advocacy organization © 2009. National Council on Aging
  7. 7. House Medicaid Budget Proposal Cuts federal Medicaid spending by $771 billion over 10 years. • According to the non-partisan Congressional Budget Office (CBO), this translates into cutting Medicaid by 35 percent in 2022 and 49 percent in 2030. Turns Medicaid into a block grant program. Repeals significant ACA Medicaid improvements for seniors in home care, nursing home quality, chronic care and prevention. 16 million uninsured younger Americans who will have health insurance coverage lose it. 7 A non-profit service and advocacy organization © 2009. National Council on Aging
  8. 8. CBO on House Medicaid Budget Proposal 8 A non-profit service and advocacy organization © 2009. National Council on Aging
  9. 9. House Medicaid Block Grant Proposal A Medicaid block grant would provide a fixed federal contribution that does not account for changing needs, including the rapidly growing senior population. According to CBO, a block grant would “lead to greater uncertainty for states as to whether federal contributions would be sufficient during periods of economic weakness.” States would have more flexibility, but already have a great deal now. Two-thirds of spending on aged and disabled populations represents optional benefits or optional groups. A block grant would place current consumer protections in jeopardy. 9 A non-profit service and advocacy organization © 2009. National Council on Aging
  10. 10. Provider Reaction to House Medicaid Proposal The AHA is extremely concerned about further reductions to Medicaid, a program vital to the health of children, the disabled and the elderly. Across the country, Medicaid has already been dramatically cut as states struggle to balance their budgets. Further cuts of $771 billion over the next ten years would threaten this program, which is a lifeline to so many Americans.-- American Hospital Association Public health insurance programs such as Medicaid are the foundation of our nations safety net and provide necessary health care services to working families, children, the elderly and the disabled. We simply cannot support efforts to slash funding for them, which will hamper the provision of health care to people of all age groups and diverse economic situations and drastically reduce their ability to be healthy and active participants in our society.-- Catholic Health Association of the United States 10 A non-profit service and advocacy organization © 2009. National Council on Aging
  11. 11. Provider Reaction to House Medicaid Proposal The Medicaid spending reduction envisioned in the proposed house Budget Resolution raises serious concerns because it would result in the loss of health coverage for millions of low income Americans, reduce critical benefits for others, and make it more difficult for hospitals, clinicians, and other health care providers to deliver the care so many need.-- Federation of American Hospitals Allowing state governments to implement Medicaid block grants and eliminate requirements for specific types of care or eligibility could jeopardize the care of many frail seniors and individuals with disabilities. These proposals fail to think of the long-term costs. Cutting Medicaid services, including long term care, translates into higher hospitalization rates and other costs on the health care system. Meanwhile, providing states with a fixed dollar without accounting for the growing number of seniors that will require long term care services will prove to be non- sustainable and fail to solve our budget crisis.-- American Health Care Association and National Center for Assisted Living 11 A non-profit service and advocacy organization © 2009. National Council on Aging
  12. 12. Medicaid and Spending Caps Spending caps limit total federal spending (including interest payments) to a percentage of the economy (GDP). Exceeding the limit triggers automatic cuts to federal spending (sequestration). Means all deficit reduction comes from spending, no revenues. Also, unpaid-for tax cuts that add to deficit and increase interest costs would lead to larger spending cuts. Has the political advantage of not spelling out what program spending will be cut. 12 A non-profit service and advocacy organization © 2009. National Council on Aging
  13. 13. Medicaid and Spending Caps A spending cap would result in the same magnitude of deep Medicaid cuts included in the House budget plan. It is effectively the “backdoor” way to achieve dramatic cuts to Medicaid (and Medicare). According to the Center on Budget and Policy Priorities, a proposal to limit total federal spending to no more than 20.6% of the Gross Domestic Product (GDP), would result in a $547 billion cut in Medicaid from 2013 through 2021 ($856 billion in Medicare). Medicaid cuts of this magnitude would force legislators to impose a block grant to achieve this level of reductions. 13 A non-profit service and advocacy organization © 2009. National Council on Aging
  14. 14. Medicaid Budget History A key guiding principle of the Bowles-Simpson fiscal commission was to “Protect the truly disadvantaged” and ensure that the nation has a robust, sustainable safety net. There is a strong, historic precedent for exempting low- income assistance programs from across-the-board cuts triggered automatically under a debt or spending cap, or similar mechanism. Every automatic budget cutting mechanism in the past 25 years has exempted Medicaid from cuts: • The 1985 and 1987 Gramm-Rudman-Hollings laws • The 1990 Budget Enforcement Act • The 1993 deficit reduction package • The 1997 Balanced Budget Act • The 2010 pay-as-you-go law 14 A non-profit service and advocacy organization © 2009. National Council on Aging
  15. 15. Medicaid and Public OpinionAccording to a May Kaiser Family Foundation poll: Over half of respondents have some personal connection to Medicaid. Only 13% support major cuts in Medicaid spending. 3 in 10 support minor reductions and 53 percent want to see no reductions in Medicaid spending at all.A March Washington Post-ABC News poll found that - by a margin of 76% to 22% - respondents opposed cutting state funding for the Medicaid health insurance program to help reduce state budget deficits. 15 A non-profit service and advocacy organization © 2009. National Council on Aging

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