Can New YorkState
really stop spending so much money on Medicaid? And do it without hurting
people?
Or will the
money we save now just cost us more in the end?
Once again,
the governor is promising to do something about Medicaid. In his budget address
last week he warned, again, that Medicaid costs in New
York are skyrocketing, that New
York has the highest Medicaid costs in the country,
that New York can’t let the costs
keep going up.
“If left
unchecked,” Pataki said, “within the next six years Medicaid costs could
actually consume more than half of our entire state budget.”
And so
Pataki outlined, to borrow a phrase from his State of the State message earlier
this month, bold measures to deal with Medicaid. One is crucial: Currently,
most of the state’s Medicaid costs are borne by the federal government and the
state. But New York requires its
counties to contribute as well, and that’s a major cause of the increase in
local budgets and property taxes.
Pataki
wants to shift that burden and have the state absorb the local Medicaid costs
by 2008. State legislators may not like it, but taxpayers and county officials
— who have been pushing for this for years — will love it, and this may be
the year progress is finally made.
Shifting
the cost to the state won’t address the cost of Medicaid, though, and it won’t
do anything to stop the increase in that cost. So Pataki has proposed a variety
of cuts in Medicaid services. “Let me be clear,” he said last week. “There can
be no Medicaid takeover without cost containment.”
The options
for saving money are obvious. New York
will have to provide fewer services, provide them to fewer people, or reduce
the cost of the services — or all three.
That is a
lot easier said than done.
Pataki’s
proposals will run up against powerful interests. For instance, he wants to cut
reimbursements to hospitals and nursing homes and increase their taxes.
Unionized workers, hospitals, and nursing homes are well organized, and they
give money to political campaigns. In the Medicaid discussions, they’ll fight
to protect their own interests. So will New York
businesses, taxpayer groups, and county leaders, who are insisting on lower
Medicaid costs.
In the end,
if there’s any change to Medicaid, it will be because of compromise. Somebody
will have to give up something. And the “somebody” may be people in need.
The elderly
poor, the disabled, the blind, people addicted to drugs and alcohol — the
people using Medicaid services — will have little voice. They’re the ones at
risk in the negotiations that will start soon in Albany.
The public
tends to assume that most Medicaid spending goes to care for low-income
children and non-elderly adults. Those children and adults are the majority of New York’s
Medicaid recipients: two-thirds, according to a study done in late 2003 by the Center
for Governmental Research. But that’s not what is driving up Medicaid costs and
driving state and county officials crazy. It’s the increasing cost of services
for the disabled and elderly.
The
statistics are startling. Only a quarter of the Medicaid budget goes for
services for able-bodied adults and children. The elderly, on the other hand,
are only 10 percent of the total number — but their services consume a third
of the Medicaid budget. And the number of elderly is expected to keep increasing.
The blind
or disabled are only one-fifth of the recipients — but half of the Medicaid
budget goes to providing their services.
In
addition, services for the elderly, the blind, and the disabled are more
expensive than those for able-bodied adults and children. Prescription-drug
expenses, for example, are one of the fastest growing areas of Medicaid. And
the elderly and disabled use more of those drugs, notes Charles Zettek, CGR’s
director of government management services and author of the 2003 report.
CGR
predicts that costs for the elderly and disabled will be responsible for
three-fourths of Medicaid’s cost increase over the next several years.
One way to reduce the costs of elderly care is to provide more in-home care, which is less
expensive than institutional care. Many elderly people would prefer to stay at
home, if sufficient, quality care were available.
But another
way to cut costs is to eliminate service altogether for some current
recipients: the non-poor elderly. Some middle-income New Yorkers have been able
to transfer their assets — putting them in trusts for their children, for
example — so that they don’t have to spend them down to qualify for Medicaid.
(The state has already begun to tighten up in this area.)
And that
raises both ethical and long-term cost questions. Is it reasonable, asks
Zettek, to require taxpayers to pay for long-term care for people who have the
assets to pay for it?
On the
other hand, says Zettek, maybe providing long-term care is an attraction for
the state — and not just for the elderly. Maybe it improves the quality of
life for families who want to be near their elderly parents.
“There’s
beginning to be a reverse migration of the elderly from the South to New
York,” says Zettek, “with people wanting to come back
to New York when they become less
mobile.”
Older New
Yorkers may raise yet another question: Should adequate long-term care be
considered a right, regardless of your income? There’s also a short-term,
long-term cost question. Taxpayers could save money by blocking aid to the
middle-income elderly. But if those New Yorkers spend themselves into poverty
to qualify for long-term care, won’t they now need taxpayer support? If later,
they’re able to return home but can’t support themselves — or if they leave
impoverished spouses who need state support — what are the savings?
Beyond that issue, what about the low-income elderly? What about the blind and the disabled?
Should they not receive the services Medicaid provides now? Is the state’s
growing Medicaid budget due to extravagance? Or need? Are we spending too much?
Or are other states not spending enough — not covering enough people, not
providing enough services?
In many
cases, says Zettek, nobody knows.
“What’s the
standard?” he asks. “Nobody’s really defined what the ideal is. What’s the
appropriate standard for health care for our type of population?”
“You can
predict what the short-term cost savings will be,” says Zettek, “but you cannot
predict what the long-term societal impact will be. There is some research out
there, but not on a comprehensive basis. It requires a long-term study that
cuts across populations.”
Pataki —
like many critics of the state’s Medicaid spending — talks about cutting off
funds for services like podiatry and clinical psychology. But we don’t know
what the result will be, says Zettek, if the state stops funding those
services. We don’t know, for instance, whether by saving $100 now for podiatry,
a patient’s back pain will increase and require back surgery that will cost
$100,000.
“The state
spends $44 billion on Medicaid,” says Zettek. “That’s a function of thousands
and thousands of decisions. Now let’s find out what works and what doesn’t
work.”
A good
example: spending for drug and alcohol treatment. Some counties that haven’t
studied costs and results have a high use of short-term outpatient treatment
programs, says Zettek. Others, however, have done an analysis and are using
longer, in-patient treatment. And they’re finding both that the cost and the
relapse rates are lower.
New
York, says Zettek, has to figure out what reduces
long-term costs.
Since it
hasn’t done that, should the state just be jumping right into reform?
“It looks
like we are going to,” says Zettek. “From the point of view of a social
scientist, it would be nice to have a better link between short-term savings
and long-term costs. On the other side of the coin, since we don’t have the
data, people will say, ‘We’ll just cut, because we’re just cutting fluff.’ It
evolves into an emotional argument rather than a rational argument.”
This article appears in Jan 26 – Feb 1, 2005.
