Gee, Fixing Welfare Seemed Like a Snap
By GARDINER HARRIS
The New York Times
June 19, 2005
WASHINGTON — REMEMBER the hot debate over the transformation of the American welfare system? When President Bill Clinton signed the welfare reform act in 1996, which gave states wide latitude in determining benefits, the federal government believed it had changed the way the country thought about antipoverty programs.
But if overhauling welfare as we knew it gave politicians headaches almost a decade ago, fixing Medicaid - the nation's largest antipoverty program - will give them ulcers.
Medicaid has grown so large, providing health care to more than 52 million people, that it is bankrupting state governments. The program now soaks up 22 percent of the average state budget and takes a larger share of state spending than spending on all elementary and secondary education, according to the National Governors Association. Nearly two-thirds of nursing home residents have their care paid for by Medicaid.
And as the population ages, Medicaid spending will only skyrocket - a prospect that has alarmed both governors and the federal government.
Mike Huckabee, the Republican governor of Arkansas, representing his colleagues, told the Senate and House last week that Medicaid is unsustainable in its current form. Representative Joe L. Barton, a Texas Republican, said in an interview that he would produce legislation this year that would cut Medicaid spending.
Other states have already taken some substantial steps. Tennessee will soon terminate coverage of more than 300,000 adults. Missouri, Pennsylvania, Ohio and Mississippi have either cut benefits or enrollments. Governors say they want legislation that will give them the flexibility to make even more changes.
Under the federal welfare law, states were free to experiment, but doing so under Medicaid will be more difficult. The program is endlessly complicated, and any changes could have unintended and expensive consequences.
Moreover, politicians may have a hard time selling the public on any proposal. After all, voters may be more comfortable spending money on health care than on a government dole. And, unlike welfare, the middle class benefits from Medicaid, either directly through nursing home payments for their elderly parents and or indirectly, through local economies that depend on health care.
In hindsight, the overhaul of welfare was a relatively simple concept. Drop someone from the rolls, and give them incentives, and they might take a job at McDonald's, become a manager, and eventually open their own restaurant. However unlikely, this chain of events is possible.
Medicaid is endlessly more complex. For instance, 42 percent of Medicaid's expenses underwrite care for elderly people who are also eligible for Medicare. Substantive changes in either program tend to affect the other. Medicaid is also affected by rules governing private health insurance, since anything that makes private insurance more expensive tends to increase the Medicaid rolls.
And any ill-considered change could have expensive consequences, say many health care economists. A growing number of uninsured patients might crowd hospital emergency rooms with problems that could have been treated earlier and more cheaply had the patients remained in Medicaid.
To pay for treating the uninsured, hospitals increase rates for the insured. Insurance rates rise. Strapped employers drop coverage. And the newly uninsured apply for Medicaid or further crowd hospitals. Some analysts worry that as the ranks of the uninsured grow - they now number more than 45 million - the nation may reach a tipping point where the nation's private health care system starts to collapse.
Cutting Medicaid financing could also adversely affect the economies of some communities.
Consider the situation of Hazard, Ky., a poor town of about 4,800 in Appalachia.
"If Medicaid took a big cut, our civic infrastructure would just about be destroyed," said Judy J. Owens, director of the University of Kentucky Center for Rural Health, which is based in Hazard. "This is very scary for us."
Even before the welfare overhaul, Medicaid payments into Perry County - where Hazard is - dwarfed those for welfare.
In 1995, the federal and state governments spent $3.7 million on welfare payments in Perry County and $27.8 million in Medicaid reimbursements.
By 2003, the most recent year for which numbers are available, welfare payments in Perry County had dropped 25 percent to $2.7 million while Medicaid spending in the county doubled to $55.2 million. Annual welfare payments in Perry County now total less than three weeks' worth of Medicaid reimbursements.
Indeed, Medicaid has become the area's lifeblood. One of Hazard's biggest employers is its hospital, Hazard A.R.H. Regional Medical Center. In the region, nursing jobs long ago outstripped coal mining jobs. "For the communities in Eastern Kentucky that have been successful since coal mining collapsed, their strategy has been to develop health care," Ms. Owens said. There is also the question of whether voters think of Medicaid as a government program that they want to dispense with - like welfare - or that they want to keep, like Social Security. And that may make cutbacks difficult.
"There is no real or perceived demon in Medicaid as there was with the 'welfare queens' of a decade ago," said Gov. Mark Warner of Virginia, a Democrat. "Nobody talks about the cycle of Medicaid dependency."
Instead, the conflict could well be generational.
While half of Medicaid's enrollees are children, they receive only 19 percent of the program's resources. The rest finances the needs of the elderly, disabled and other adults.
"The emotional debate that we're eventually going to have to have is the old-versus-the-young debate," said Representative Barton. "Two-thirds of the dollars in Medicaid go to old people when two-thirds of the needs in terms of health care are in children and young people. No politician wants to touch that." |
