Health Policy for Low-Income People: Proﬁles of 13 States

Amy Westpfahl Lutzky John Holahan Joshua M. Wiener The Urban Institute

Occasional Paper Number 57

Assessing the New Federalism An Urban Institute Program to Assess Changing Social Policies Health Policy for Low-Income People: Profiles of 13 States

Amy Westpfahl Lutzky John Holahan Joshua M. Wiener The Urban Institute

Contributing Authors Randall R. Bovbjerg Amy Westpfahl Lutzky Niall Brennan Barbara Ormond Brian K. Bruen Mary Beth Pohl Julie Chesky Jane Tilly Teresa A. Coughlin Frank C. Ullman Ian Hill Joshua M. Wiener John Holahan Alyssa Wigton Stephanie Kendall Alshadye Yemane Sharon K. Long Stephen Zuckerman

Occasional Paper Number 57

The Urban Institute 2100 M Street, N.W. Washington, DC 20037 Phone: 202.833.7200 Fax: 202.429.0687 E-Mail: [email protected] An Urban Institute Program to Assess http://www.urban.org Changing Social Policies Copyright © May 2002. The Urban Institute. All rights reserved. Except for short quotes, no part of this book may be reproduced in any form or utilized in any form by any means, electronic or mechanical, including pho- tocopying, recording, or by information storage or retrieval system, without written permission from the Urban Institute.

This paper is part of the Urban Institute’s Assessing the New Federalism project, a multiyear project to monitor and assess the devolution of social programs from the federal to the state and local levels. Alan Weil is the project director. The project analyzes changes in income support, social services, and health programs. In collaboration with Child Trends, the project studies child and family well-being.

Health Policy for Low-Income People: Profiles of 13 States received special funding from the Robert Wood Johnson Foundation as part of the Urban Institute’s Assessing the New Federalism project. The project received additional financial support from The Annie E. Casey Foundation, the W. K. Kellogg Foundation, The Henry J. Kaiser Family Foundation, The Ford Foundation, The David and Lucile Packard Foundation, The John D. and Cather- ine T. MacArthur Foundaton, the Charles Stewart Mott Foundation, The McKnight Foundation, The Com- monwealth Fund, the Stuart Foundation, the Weingart Foundation, The Fund for New Jersey, The Lynde and Harry Bradley Foundation, the Joyce Foundation, and The Rockefeller Foundation.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. About the Series

ssessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and social services.A Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively. Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute’s web site (http://www.urban.org). This paper is one in a series of occasional papers analyzing information from these and other sources.

Contents

Introduction 1 State Fiscal Conditions and Health Policy 2 Health Care Coverage 3 Acute Care Issues 3 Long-Term Care 4 Alabama 5 Political and Fiscal Circumstances 5 Coverage Expansions 5 Acute Care 6 Long-Term Care 7 Other Developments 7 Conclusion 8 California 9 Political and Fiscal Circumstances 9 Coverage Expansions 9 Acute Care 10 Long-Term Care 11 Other Developments 12 Conclusion 12 Colorado 13 Political and Fiscal Circumstances 13 Coverage Expansions 14 Acute Care 15 Long-Term Care 15 Conclusion 16 Florida 17 Political and Fiscal Circumstances 17 Coverage Expansions 18 Acute Care 19 Long-Term Care 20 Conclusion 20 Massachusetts 23 Political and Fiscal Circumstances 23 Coverage Expansions 24 Acute Care 25 Long-Term Care 27 Other Developments 28 Conclusion 28 Michigan 29 Political and Fiscal Circumstances 29 Coverage Expansions 30 Acute Care 31 Long-Term Care 32 Conclusion 32 Minnesota 35 Political and Fiscal Circumstances 35 Coverage Expansions 35 Acute Care 36 Long-Term Care 37 Conclusion 38 Mississippi 41 Political and Fiscal Circumstances 41 Coverage Expansions 42 Acute Care 43 Long-Term Care 43 Other Developments 44 Conclusion 44 New Jersey 45 Political and Fiscal Circumstances 45 Coverage Expansions 46 Acute Care 48 Long-Term Care 48 Other Developments 49 Conclusion 50 New York 51 Political and Fiscal Circumstances 51 Coverage Expansions 51 Acute Care 53 Long-Term Care 54 Conclusion 55 Texas 57 Political and Fiscal Circumstances 57 Coverage Expansions 57 Acute Care 58 Long-Term Care 59 Other Developments 59 Conclusion 60 Washington 61 Political and Fiscal Circumstances 61 Coverage Expansions 62 Acute Care 63 Long-Term Care 64 Conclusion 65 Wisconsin 67 Political and Fiscal Circumstances 67 Coverage Expansions 67 Acute Care 68 Long-Term Care 69 Conclusion 70 Notes 71 About the Editors 77

Health Policy for Low-Income People: Profiles of 13 States

Introduction

The past five years have given states new opportunities in health policy for low- income people, yet also put new pressures on policy formulation. State flexibility increased as a result of many developments, including welfare reform and the delink- ing of Medicaid from cash assistance, new funding for children’s health insurance coverage under the State Children’s Health Insurance Program (SCHIP), repeal of federal minimum standards for nursing home and hospital reimbursement that had constrained states’ control over Medicaid payments, and federal willingness to grant waivers under Medicaid (and now under SCHIP as well). Fiscal capacity also rose— the result of booming revenues during the long economic expansion of the 1990s and new tobacco settlement funds. But new pressures on revenues and state policy have arisen––from recent federal economizing under Medicaid and Medicare, including cuts in safety net support that some states were believed to have abused; from political pressures for state tax cuts; and, starting in 2001, from a recession. New pressures were also generated by the Supreme Court’s Olmstead vs. L.C. decision, which detailed a limited right to home- and community-based services under the Americans with Disabilities Act; rapid growth in spending on pharmaceuticals; and by the difficulties encountered by Med- icaid managed care. Political demands for public action sprang from developments such as the rise in numbers of uninsured people, the growth in private and public managed care, increases in the costs of pharmaceuticals, and many hospitals’ fiscal woes, as well as from events specific to each state. To learn how states have responded to federal constraints and state flexibility during the past three years, the Assessing the New Federalism (ANF) project of the Urban Institute examined state priority-setting and program operations in health policy affecting the low-income populations in 13 states: Alabama, California, Colorado, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, Texas, Washington, and Wisconsin. A series of case study reports were developed that focus on changes in health care policy in each state, building on earlier baseline studies in the same states.1 Information for the case studies was obtained from publicly available documents, newspapers, web sites, and interviews with state officials, provider organizations, consumer advocates, and other stakeholders. In-person interviews in state capitals were conducted from February through June 2001. Questions were asked using an open-ended interview protocol, and state officials were given the opportunity to comment on the draft reports. Additional information was obtained to update the status of each state through roughly the end of 2001. Four major sets of issues are addressed in this set of reports. First, how have the political and fiscal circumstances of the states changed over the past several years? Second, has the state expanded public or private health insurance coverage, whether through Medicaid, SCHIP, Medicaid research and demonstration waivers, or state- funded programs? Third, how have Medicaid managed care and other acute care issues changed? For example, has access been affected by managed care plan withdrawals from Medicaid or backlash against plans by providers or beneficiaries? Fourth, how are states responding to pressures to expand home- and community- based services for disabled persons, their new freedom to set nursing home reimbursement rates, and the labor shortage? This report provides brief summaries of the findings from each state. Not sur- prisingly, states differ considerably in terms of their long- and short-term fiscal circumstances as well as their policy objectives. Therefore, it is difficult to draw con- clusions that would apply in all states. Nonetheless, the following key points emerge from the state summaries.

State Fiscal Conditions and Health Policy

• From 1995 to 2000, state economies were expanding, inflation and unemployment were low, and state revenues increased rapidly. As a result, states were able to increase spending, cut taxes, and increase the size of their “rainy day” funds. Medicaid state general revenue spending increased at only about 5 percent a year as a result of low rates of medical care inflation, falling enrollment due to welfare reform and a strong economy, cost savings from the expansion of managed care, and, arguably, repeal of federal minimum standards on Medicaid nursing home reimbursement. Many states used their good fiscal status to expand health programs, among others. • The national economy started to slow in 2000; by March 2001, the country was in a recession that reduced state revenues and caused state expenditures to climb. As states reexamine their already enacted fiscal year (FY) 2002 budgets and begin to plan their FY 2003 budgets, the ANF states generally do not appear to be planning major Medicaid cutbacks. Although growth in Medicaid and SCHIP spending was regarded as a major contributor to their fiscal problems, states generally do not appear to include significant cuts in these programs as a way to balance their budgets, although trimming optional benefits and cuts (or freezes) in provider reimbursement rates are likely. The loss of federal matching funds was often cited as a constraint on Medicaid cuts. If the recession deepens or is prolonged, this stance could change. But so far, the primary effect of the economic slowdown is likely to be the failure to take advantage of new coverage expansion opportunities, such as parent coverage under Section 1931(b) of the Social Secu-

rity Act or SCHIP waivers. 2 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 3

L STATES 13 OF PROFILES PEOPLE: LOW-INCOME FOR POLICY HEALTH

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issues of rate adequacy, administrative burdens, and difficulty maintaining difficulty and burdens, administrative adequacy, rate of issues

have diminished. Most states have experienced plan withdrawals, usually over usually withdrawals, plan experienced have states Most diminished. have

tations of the ability of Medicaid managed care to control costs and improve care improve and costs control to care managed Medicaid of ability the of tations

Alabama and Mississippi, where it was tried but quickly abandoned. But expec- But abandoned. quickly but tried was it where Mississippi, and Alabama

• Medicaid managed care remains strong in most states; the exceptions are exceptions the states; most in strong remains care managed Medicaid •

Acute Care Issues Care Acute

benefits of many employer health plans compared with Medicaid or SCHIP. or Medicaid with compared plans health employer many of benefits

sponsored insurance because of the administrative complexity and the limited the and complexity administrative the of because insurance sponsored

assistance programs that use Medicaid or SCHIP funds to subsidize employer- subsidize to funds SCHIP or Medicaid use that programs assistance

ents increases participation by children. There has been less interest in premium in interest less been has There children. by participation increases ents

was granted a waiver in early 2002. States argue that expanding coverage for par- for coverage expanding that argue States 2002. early in waiver a granted was

Section 1115 waivers under SCHIP to expand coverage to parents. California parents. to coverage expand to SCHIP under waivers 1115 Section

• In 2000, three ANF states––Minnesota, New Jersey, and Wisconsin––received and Jersey, New states––Minnesota, ANF three 2000, In •

ber who were previously uninsured is not known. known. not is uninsured previously were who ber

process. By December 2000, SCHIP had enrolled 2.7 million children; the num- the children; million 2.7 enrolled had SCHIP 2000, December By process.

many developed innovative strategies to streamline the eligibility determination eligibility the streamline to strategies innovative developed many

a welfare stigma. States have embarked on ambitious outreach campaigns, and campaigns, outreach ambitious on embarked have States stigma. welfare a

establish programs that were not open-ended entitlements and that did not have not did that and entitlements open-ended not were that programs establish

bility levels. Most states adopted programs separate from Medicaid, seeking to seeking Medicaid, from separate programs adopted states Most levels. bility

high income levels, even in states with historically very restrictive Medicaid eligi- Medicaid restrictive very historically with states in even levels, income high

responded strongly by expanding coverage for children in families with relatively with families in children for coverage expanding by strongly responded

• SCHIP was enacted in 1997 and began to be implemented in 1998. States 1998. in implemented be to began and 1997 in enacted was SCHIP •

during the same period. period. same the during

coverage expansions under Section 1115 research and demonstration waivers demonstration and research 1115 Section under expansions coverage

Massachusetts, Minnesota, Wisconsin, and New York had substantial Medicaid substantial had York New and Wisconsin, Minnesota, Massachusetts,

New Jersey and California, elected to expand coverage using Section 1931(b). Section using coverage expand to elected California, and Jersey New

higher incomes than was previously allowed. Only two of our thirteen states, thirteen our of two Only allowed. previously was than incomes higher

rity Act that allowed states to expand Medicaid eligibility to families with much with families to eligibility Medicaid expand to states allowed that Act rity

• Welfare reform created a new category under Section 1931(b) in the Social Secu- Social the in 1931(b) Section under category new a created reform Welfare •

recession. recession.

States are now anticipating additional increases in enrollment as a result of the of result a as enrollment in increases additional anticipating now are States

Medicaid rolls rebounded to some extent over the following couple of years. of couple following the over extent some to rebounded rolls Medicaid

Medicaid enrollment by reforming state outreach and enrollment practices, and practices, enrollment and outreach state reforming by enrollment Medicaid

Needy Families (TANF) rolls. States responded to the unintended declines in declines unintended the to responded States rolls. (TANF) Families Needy

Medicaid enrollment fell, though not as much as Temporary Assistance for Assistance Temporary as much as not though fell, enrollment Medicaid

ways, but because of confusion on the part of beneficiaries and caseworkers, and beneficiaries of part the on confusion of because but ways,

and welfare reform. Welfare reform allowed states to expand eligibility in new in eligibility expand to states allowed reform Welfare reform. welfare and

• Medicaid rolls fell between 1995 and 1998 because of the improved economy improved the of because 1998 and 1995 between fell rolls Medicaid • Health Care Coverage Care Health provider networks. Capitation rates have often been increased in response. As a result, Medicaid programs are not finding the same levels of new savings from managed care as they had in previous years. • Disproportionate share hospital (DSH) payments and upper payment limit (UPL) programs remain an important part of Medicaid financing. States have used considerable energy and creativity in developing arrangements that bring in substantial federal funds with little or no new state expenditures. The extent to which providers benefit from these initiatives varies. States are expanding these programs when they can, but they are seriously concerned about the fiscal con- sequences of federal cutbacks in DSH payments and new restrictions on the use of UPL programs. • Prescription drug outlays are a major issue for all states, with recent Medicaid expenditures for prescription drugs increasing by 14 percent to 18 percent per year. Federal rules limit the states’ ability to restrain drug prices and utilization. However, some states (Florida and Michigan) are developing innovative approaches that offer the potential to obtain greater discounts from manufacturers. • Several ANF states have adopted new programs to subsidize prescription drug coverage for the low-income elderly and disabled populations. These programs vary in the income groups that are covered and the structure of the subsidies.

Long-Term Care

• The long-term care sector, including nursing homes and community-based services, faces severe workforce shortages. Several states have responded with rate increases that must be used to raise workers’ wages. The labor shortage has serious short- and long-term implications for quality of care and program expenditures. • Several states have responded to concerns about the quality of care in nursing homes by raising reimbursement rates, tightening regulatory oversight, increasing staffing requirements, and providing consumers with more information. • States continue to expand home- and community-based services. These include expansions of home care through the Medicaid personal care option, but increasingly they depend on extensive use of Medicaid and home- and community- based services waivers. Efforts to expand home- and community-based services are driven in part by the Supreme Court’s 1999 Olmstead decision, which ruled that inappropriate institutionalization was discrimination against people with disabilities. However, some states have not yet responded to Olmstead because they believe their extensive range of home- and community-based services makes fur-

ther actions unnecessary. 4 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 5

L STATES 13 OF PROFILES PEOPLE: LOW-INCOME FOR POLICY HEALTH

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dren up to age 19 in families with incomes up to 100 percent of the federal poverty federal the of percent 100 to up incomes with families in 19 age to up dren

its SCHIP proposal. The first phase of this plan expanded Medicaid eligibility to chil- to eligibility Medicaid expanded plan this of phase first The proposal. SCHIP its

On January 30, 1998, Alabama became the first state to receive federal approval of approval federal receive to state first the became Alabama 1998, 30, January On

Coverage Expansions Coverage

about how they have been implemented in Alabama. Alabama. in implemented been have they how about

changes in these programs at the federal level, serious questions have been raised been have questions serious level, federal the at programs these in changes

These changes are likely to hit Alabama particularly hard because, in addition to the to addition in because, hard particularly Alabama hit to likely are changes These

cushion the program from the effects of changes in the DSH and UPL programs. UPL and DSH the in changes of effects the from program the cushion

downturn and the budget shortfalls that have plagued it in recent years and also to also and years recent in it plagued have that shortfalls budget the and downturn

revenues, is expected to protect the Medicaid program from both the economic the both from program Medicaid the protect to expected is revenues,

budgets were built. The Medicaid Trust Fund, established with tobacco settlement tobacco with established Fund, Trust Medicaid The built. were budgets

about $20 million a year and are consistent with the estimates on which FY 2001 FY which on estimates the with consistent are and year a million $20 about

tax cuts nor tax increases are likely. Alabama’s general fund revenues are growing at growing are revenues fund general Alabama’s likely. are increases tax nor cuts tax

reports that expenditures for state programs are on target for 2002 and that neither that and 2002 for target on are programs state for expenditures that reports

year led to mid-2001 budget cuts in some programs, notably education. The state The education. notably programs, some in cuts budget mid-2001 to led year

Alabama is facing serious budget pressures. The slowing economy over the past the over economy slowing The pressures. budget serious facing is Alabama

minimum federal requirements. requirements. federal minimum

losophy, the state’s social programs are relatively limited, designed primarily to meet to primarily designed limited, relatively are programs social state’s the losophy,

governor, however, favor conservative fiscal policies. Reflecting this conservative phi- conservative this Reflecting policies. fiscal conservative favor however, governor,

ity political party in both houses of the state legislature. Both the legislature and the and legislature the Both legislature. state the of houses both in party political ity

governor had the potential to significantly influence policy. Democrats are the major- the are Democrats policy. influence significantly to potential the had governor

ized by a strong executive and a relatively weak legislature; therefore, the change in change the therefore, legislature; weak relatively a and executive strong a by ized

Structurally, the state government is character- is government state the Structurally, of Democrat Siegelman’s campaign. Siegelman’s Democrat of

Improving the health of Alabama’s citizens, particularly the elderly, was a key focus key a was elderly, the particularly citizens, Alabama’s of health the Improving

Political and Fiscal Circumstances Fiscal and Political

care services for older people and younger persons with disabilities. disabilities. with persons younger and people older for services care

he has stated his commitment to expanding home- and community-based long-term community-based and home- expanding to commitment his stated has he

tion to long-term care for the elderly, particularly those with dementia. In addition, In dementia. with those particularly elderly, the for care long-term to tion

ing in September 1998. Since he became governor, Siegelman has turned his atten- his turned has Siegelman governor, became he Since 1998. September in ing

expansion, and added a second phase that included a private insurance option start- option insurance private a included that phase second a added and expansion,

SCHIP, the first to be approved nationally, began in February 1998 as a Medicaid a as 1998 February in began nationally, approved be to first the SCHIP,

behind the state’s SCHIP expansion when he was lieutenant governor. Alabama’s governor. lieutenant was he when expansion SCHIP state’s the behind

rent governor, Donald Siegelman, elected in November 1998, was the driving force driving the was 1998, November in elected Siegelman, Donald governor, rent

The past three years have seen renewed attention to health care in Alabama. The cur- The Alabama. in care health to attention renewed seen have years three past The

Barbara Ormond and Alyssa Wigton Alyssa and Ormond Barbara Alabama level (FPL). Before this expansion, older adolescents in the state were eligible only up to the state’s Aid to Families with Dependent Children (AFDC) level of 15 percent of FPL—the lowest in the nation. In August 1998, Alabama received federal approval to expand eligibility for all children up to 200 percent of FPL through a newly created program called ALL Kids. Alabama’s aggressive and effective outreach program for SCHIP has resulted not only in strong SCHIP enrollment but also in increased enrollment of children in Medicaid. The state streamlined the enrollment and recertification process for Med- icaid and other insurance programs for the uninsured poor to improve the take-up rate and enrollee retention and to reduce administrative costs. In addition, it has raised Medicaid reimbursement rates for physicians and dentists in an effort to increase provider participation and improve access for enrollees.

Acute Care

Historically, Medicaid managed care has not been a large part of health care in Alabama. Commercial managed care penetration is low and much of the state is rural, hindering the development of provider networks. In 1997, under a Section 1115 waiver, Alabama instituted capitated managed care in Medicaid, the Better Access for You (BAY) Health Plan, in Mobile County. However, in October 1999, the community health centers, which felt they were not getting a fair share of the patients or adequate reimbursement for their services, withdrew from the plan network. This withdrawal left the state in violation of the terms of the program’s waiver and the program ended. Alabama’s primary care case management program, Patient First, also began in 1997 under a Section 1915(b) waiver. Within two years the program was expanded throughout the state, with the exception of Mobile County, where the BAY Health pilot project was operating. When BAY Health ended, its enrollees were transferred first to fee-for-service, and then in the spring of 2000 to Patient First, in what was said to have been a smooth transition. A significant issue affecting acute care providers in Alabama is the impact of changes in the DSH and UPL programs. The federal Balanced Budget Act of 1997 (BBA) had a negative impact on hospital operating budgets in Alabama by reducing both Medicare reimbursement rates and DSH spending. Although the state was granted a waiver to fold DSH payments into capitation payments—allowing it to maintain its hospital reimbursement system (Partnership Hospital Program or PHP) and avoid the hospital-specific caps on DSH payment—the waiver is up for renewal in early 2002 and is facing serious scrutiny from the Centers for Medicare and Med- icaid Services (CMS, formerly HCFA). Furthermore, Alabama’s DSH allotment was reduced by the BBA. While the reduction was postponed by subsequent legislation, allotments are scheduled to fall again after 2002. Because the state retains a large share of the federal payments, as its DSH allotments are reduced Alabama is losing

an important source of the financing for its Medicaid program. 6 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 7

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population covered by insurance is lower than in urban areas, and the proportion in proportion the and areas, urban in than lower is insurance by covered population

Nearly a third of Alabama’s population live in rural areas. The proportion of the rural the of proportion The areas. rural in live population Alabama’s of third a Nearly

Other Developments Other

idents, and physical requirements for facilities. facilities. for requirements physical and idents,

licensure, administration, personnel and training, storage of medications, care of res- of care medications, of storage training, and personnel administration, licensure,

adopted revised rules that provide stricter state oversight and regulation relating to relating regulation and oversight state stricter provide that rules revised adopted

of deaths in Alabama’s assisted living facilities. The Department of Public Health has Health Public of Department The facilities. living assisted Alabama’s in deaths of

Quality of long-term care in Alabama emerged as a key issue following a number a following issue key a as emerged Alabama in care long-term of Quality

staff shortages. shortages. staff

They may also consider raising the pay of private duty nurses in an effort to address to effort an in nurses duty private of pay the raising consider also may They

and Medicaid officials would like it raised to allow better pay for direct care workers. care direct for pay better allow to raised it like would officials Medicaid and

and RNs. Reimbursement for home health is below the average for southern states, southern for average the below is health home for Reimbursement RNs. and

see some shortages in direct care workers, particularly skilled workers such as LPNs as such workers skilled particularly workers, care direct in shortages some see

officials do not think the problem is as severe in Alabama as in other states, they do they states, other in as Alabama in severe as is problem the think not do officials

The labor shortages seen across the country are also affecting Alabama. Although Alabama. affecting also are country the across seen shortages labor The

in the community. community. the in

share of any Medicaid funding increases, leaving little to direct toward new services new toward direct to little leaving increases, funding Medicaid any of share

based services or see home care as competition, its annual rate increases take a large a take increases rate annual its competition, as care home see or services based

the nursing home industry does not oppose expansion of home- and community- and home- of expansion oppose not does industry home nursing the

home bed supply is relatively low and reimbursement relatively generous. Although generous. relatively reimbursement and low relatively is supply bed home

institutional and community-based, is controlled to help contain costs. Nursing costs. contain help to controlled is community-based, and institutional

nursing home industry. Eligibility criteria are strict, and the supply of services, both services, of supply the and strict, are criteria Eligibility industry. home nursing

is heavily skewed toward institutional care, with policy strongly influenced by the by influenced strongly policy with care, institutional toward skewed heavily is

as a priority for his administration. Despite this public commitment, long-term care long-term commitment, public this Despite administration. his for priority a as

The governor has identified increased access to home- and community-based services community-based and home- to access increased identified has governor The

Long-Term Care Long-Term

that its payments to hospitals were made in accordance with federal regulations. regulations. federal with accordance in made were hospitals to payments its that

ments, an additional $68.7 million. Alabama disputes the OIG findings and believes and findings OIG the disputes Alabama million. $68.7 additional an ments,

pitals by the state after the OIG audit period or repay the federal share of these pay- these of share federal the repay or period audit OIG the after state the by pitals

addition, the OIG wants the state to either justify retroactive payments made to hos- to made payments retroactive justify either to state the wants OIG the addition,

excessive payments to hospitals, which the OIG calculated to be $168.3 million. In million. $168.3 be to calculated OIG the which hospitals, to payments excessive

required to reimburse the federal government for the federal share of the allegedly the of share federal the for government federal the reimburse to required

If the OIG’s findings are upheld, Alabama will be will Alabama upheld, are findings OIG’s the If sistent with the state plan. state the with sistent

had changed the method for calculating the UPL in ways that were not always con- always not were that ways in UPL the calculating for method the changed had

the PHP program, contrary to the “spirit” of the matching arrangement, and that it that and arrangement, matching the of “spirit” the to contrary program, PHP the

grams in which it said that the state had made no actual outlay of its own funds for funds own its of outlay actual no made had state the that said it which in grams

Health and Human Services issued reports on Alabama’s PHP, DSH, and UPL pro- UPL and DSH, PHP, Alabama’s on reports issued Services Human and Health In 2001 the Office of the Inspector General (OIG) of the U.S. Department of Department U.S. the of (OIG) General Inspector the of Office the 2001 In poor or fair health is higher. In spite of their poorer health status, rural residents are less likely to have seen a physician or other health professional. Several initiatives are under way to address these disparities. The Robert Wood Johnson Foundation is providing financial support to improve access to primary care through matching funds to rural communities for health care facilities improvement and equipment purchases. In addition, to address the problem of provider recruitment and retention, the state legislature created the Family Practice Rural Health Board to enhance training and preparation of family physicians for rural areas. Efforts to improve provider availability in rural areas include merit scholarships and loan forgiveness and repayment programs for health professions students.

Conclusion

Alabama is characterized by political and fiscal conservatism, and historically it has taken a minimalist approach to public health and welfare programs. Under Governor Siegelman, there has been renewed attention to health, but the cost of expanding public programs means that progress is likely to come in small increments. The ability to generate revenues is the biggest constraint the state faces. Alabama has a regres- sive tax structure with a heavy reliance on sales taxes and very low property taxes. The state is currently facing serious budget pressures. The slowing economy over the past year led to mid-year budget cuts in some programs, notably education, although health programs were spared. However, problems may be on the horizon for Alabama’s Medicaid program. Medicaid enrollment is rising, and if economic conditions deteriorate further, the number of Medicaid eligibles could increase. Without fundamental reform of the structure of its tax system, Alabama’s ability to increase revenues will remain very limited. Moreover, for a Medicaid program that is peren- nially near financial crisis, the OIG’s rulings on DSH and UPL, the phase-out of these programs, and the questions about the continuation of the PHP program rep-

resent the most important current threats to the program. 8 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 9

L STATES 13 OF PROFILES PEOPLE: LOW-INCOME FOR POLICY HEALTH

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dren’s health insurance program which provides coverage to children age 1 through 1 age children to coverage provides which program insurance health dren’s

up to 100 percent of FPL. Second, the state created Healthy Families, a separate chil- separate a Families, Healthy created state the Second, FPL. of percent 100 to up

erage. First, the state expanded Medi-Cal eligibility to all children in families earning families in children all to eligibility Medi-Cal expanded state the First, erage.

response to SCHIP and the opportunity to improve children’s health insurance cov- insurance health children’s improve to opportunity the and SCHIP to response

Beginning under Governor Wilson, California took a two-pronged approach in approach two-pronged a took California Wilson, Governor under Beginning

Coverage Expansions Coverage

Medicaid program) antifraud initiatives. initiatives. antifraud program) Medicaid

ments, exploring pharmacy rebate options, and expanding Medi-Cal (California’s Medi-Cal expanding and options, rebate pharmacy exploring ments,

ity. In the 2001–02 budget, “cost avoidance” efforts included freezing provider pay- provider freezing included efforts avoidance” “cost budget, 2001–02 the In ity.

efforts are being made to control costs without cutting covered services or eligibil- or services covered cutting without costs control to made being are efforts

it adopted a “cost avoidance” strategy for Health and Human Services, meaning that meaning Services, Human and Health for strategy avoidance” “cost a adopted it

California avoided any major cuts in the Health and Human Services budget, but budget, Services Human and Health the in cuts major any avoided California

at improving patient protections for those enrolled in managed care. care. managed in enrolled those for protections patient improving at

quality of care in nursing homes, and the creation of a new state department aimed department state new a of creation the and homes, nursing in care of quality

and health plan payment rate increases, a number of initiatives aimed at improving at aimed initiatives of number a increases, rate payment plan health and

has embodied moderate eligibility expansions and enrollment simplification, provider simplification, enrollment and expansions eligibility moderate embodied has

spite of substantial growth in state revenues. Since 1998, California’s health policy health California’s 1998, Since revenues. state in growth substantial of spite

est in keeping education his top priority, has yielded somewhat restrained reforms in reforms restrained somewhat yielded has priority, top his education keeping in est

ever, Davis’s preference for fiscally conservative policymaking, coupled with his inter- his with coupled policymaking, conservative fiscally for preference Davis’s ever,

ernor Gray Davis, some hoped for swift and progressive health care reform. How- reform. care health progressive and swift for hoped some Davis, Gray ernor

With the shift in 1998 from Republican Governor Pete Wilson to Democratic Gov- Democratic to Wilson Pete Governor Republican from 1998 in shift the With

Political and Fiscal Circumstances Fiscal and Political

make some policy options unaffordable. unaffordable. options policy some make

able. After a period of robust economic growth, a slowdown in state revenues may revenues state in slowdown a growth, economic robust of period a After able.

grams low relative to national averages as a means of keeping broad eligibility afford- eligibility broad keeping of means a as averages national to relative low grams

lic coverage. Historically, the state has kept reimbursement rates in its public pro- public its in rates reimbursement kept has state the Historically, coverage. lic

a county-based system of indigent care for those uninsured and not eligible for pub- for eligible not and uninsured those for care indigent of system county-based a

eligibility for its publicly funded health insurance system while providing support for support providing while system insurance health funded publicly its for eligibility

addressing the needs of its low-income population is to maintain reasonably broad reasonably maintain to is population low-income its of needs the addressing

not eligible for most publicly funded programs. California’s basic strategy for strategy basic California’s programs. funded publicly most for eligible not

has a large immigrant population, many of whom are undocumented and therefore and undocumented are whom of many population, immigrant large a has

rates of uninsurance. Policy choices are further complicated by the fact that the state the that fact the by complicated further are choices Policy uninsurance. of rates

that has very low rates of employer-sponsored health insurance and, as a result, high result, a as and, insurance health employer-sponsored of rates low very has that

Health policymakers in California are challenged to meet the needs of a population a of needs the meet to challenged are California in policymakers Health

Amy Westpfahl Lutzky and Stephen Zuckerman Stephen and Lutzky Westpfahl Amy California 19 with family incomes between 100 and 200 percent of FPL.1 Healthy Families has been in the spotlight since its implementation in 1998 and is one of the governor’s top health policy priorities—in part because of the program’s potential to cover uninsured children, but also because it is a nonentitlement program and allows for greater administrative flexibility and a better federal matching rate than Medi-Cal. During his first year in office, Davis increased eligibility limits for Healthy Families to 250 percent of FPL. In January 2001, California also submitted an SCHIP waiver proposal to expand the Healthy Families program to parents with incomes up to 200 percent of FPL. The state received approval in January 2002 and hopes to implement the program as early as summer 2002. Although initially criticized for low and slow-building enrollment, Healthy Fam- ilies has been gaining momentum, and California has implemented a number of strategies to simplify children’s enrollment in Healthy Families and Medi-Cal. These simplification strategies include shortening the joint Healthy Families/Medi-Cal application, piloting an electronic application (Health-e-App), and implementing 12 months of continuous coverage for children in Medi-Cal to make it consistent with Healthy Families. Medi-Cal has also been changing under Governor Davis. In 2000, California expanded eligibility for Medi-Cal under a 1931(b) program by making all parents with incomes up to 100 percent of FPL eligible for coverage (the previous limit was roughly 74 percent of FPL). In addition, California increased the Medically Needy eligibility level for the aged, blind, and disabled to 133 percent of FPL (up from a maintenance need level of 84 to 90 percent of FPL). As part of the federal Ticket to Work and Work Incentives Improvement Act, California has extended Medi-Cal benefits to working individuals with disabilities earning below 250 percent of FPL.

Acute Care

In addition to changes resulting from the recent eligibility expansions, the state’s Medi-Cal managed care program continues to evolve. Although actual Medi-Cal managed care enrollment fell short of projections, as a result of welfare reform and the improving economy, approximately 52 percent of Medi-Cal beneficiaries are currently enrolled in managed care and 26 of 58 counties enroll some or all of Medi- Cal beneficiaries into managed care. To improve access and quality within the Medi- Cal program, and in part because California has long been known for having among the lowest Medicaid payment rates in the country, the state adopted a broad package of rate increases for Medi-Cal providers totaling $800 million in the Budget Act 2000–01. As part of these increases, California increased capitation rates by 9.2 percent for plans participating in the “two-plan” model, a managed care model implemented in 12 large counties that includes a county-developed plan (e.g., a local initiative) and a commercial plan. California operates one of the largest DSH programs in the country under Medi- Cal, with state and federal expenditures of about $2.5 billion in 1998.2 In the mid-

1990s there was some concern that California’s DSH program would collapse. Pub- 10 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 11

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gible caregivers for individuals with long-term care needs. needs. care long-term with individuals for caregivers gible

promote community-based care such as a $500 tax credit for taxpayers who are eli- are who taxpayers for credit tax $500 a as such care community-based promote

increase oversight of nursing home facilities. The initiative also included measures to measures included also initiative The facilities. home nursing of oversight increase

nity Initiative included a provider rate increase as well as a series of measures to measures of series a as well as increase rate provider a included Initiative nity

address the quality of long-term care in California, the governor’s Aging with Dig- with Aging governor’s the California, in care long-term of quality the address

process for nursing home residents seeking placement in other care settings. To settings. care other in placement seeking residents home nursing for process

holder meetings, and developed a proposal to pilot a new assessment and transition and assessment new a pilot to proposal a developed and meetings, holder

planning work group, solicited public input through stake- through input public solicited group, work planning Olmstead an established

planning, and thus far it has it far thus and planning, Olmstead in role central the assigned been also has cil

The Coun- The agencies, the Long-Term Care Council was established in January 2000. January in established was Council Care Long-Term the agencies,

tional care. In order to improve policy and program coordination across state-level across coordination program and policy improve to order In care. tional

bursement, in addition to furthering more community-based alternatives to institu- to alternatives community-based more furthering to addition in bursement,

term care system’s fragmentation, poor nursing home quality, and low provider reim- provider low and quality, home nursing poor fragmentation, system’s care term

Under the Davis administration, a number of developments have addressed the long- the addressed have developments of number a administration, Davis the Under

Long-Term Care Long-Term

10 to 24 percent discount on what they might otherwise pay. pay. otherwise might they what on discount percent 24 to 10

prescriptions at the Medi-Cal rate. Potentially, this program provides seniors with a with seniors provides program this Potentially, rate. Medi-Cal the at prescriptions

the opportunity to use any California pharmacy that accepts Medi-Cal and to receive to and Medi-Cal accepts that pharmacy California any use to opportunity the

ruary 2000, California implemented a new program that offers Medicare recipients Medicare offers that program new a implemented California 2000, ruary

out-of-pocket costs prescription drugs pose for California’s senior citizens. In Feb- In citizens. senior California’s for pose drugs prescription costs out-of-pocket

far, is to explore pharmacy rebate options. There has also been concern about the about concern been also has There options. rebate pharmacy explore to is far,

budget increases in FY 2000–2001 and FY 2001–2002. The state’s response, thus response, state’s The 2001–2002. FY and 2000–2001 FY in increases budget

state policymakers’ agenda, and it was considered a major cost driver in Medi-Cal in driver cost major a considered was it and agenda, policymakers’ state

The rise in pharmaceutical costs has been another acute medical care issue on the on issue care medical acute another been has costs pharmaceutical in rise The

amount of 1255 payments that are available to hospitals. to available are that payments 1255 of amount

payments will count against the federal UPL, there could be actual limits on the total the on limits actual be could there UPL, federal the against count will payments

regulations on UPLs will affect its supplemental payment program. Because 1255 Because program. payment supplemental its affect will UPLs on regulations

As in other states, California is uncertain about how federal how about uncertain is California states, other in As 1992–93 and 1997–98. and 1992–93

stantially in the 1990s, with gross 1255 payments quintupling between fiscal years fiscal between quintupling payments 1255 gross with 1990s, the in stantially

gram after the legislative bill that created the program. The 1255 program grew sub- grew program 1255 The program. the created that bill legislative the after gram

Services and Supplemental Payment Fund, commonly referred to as the “1255” pro- “1255” the as to referred commonly Fund, Payment Supplemental and Services

California also has a supplemental hospital payment program, the Emergency the program, payment hospital supplemental a has also California

DSH funds has been state law. state been has funds DSH

net DSH benefit. Since fall 1997, this 50/50 distribution of net federal Medi-Cal federal net of distribution 50/50 this 1997, fall Since benefit. DSH net

uncompensated-care levels and to pay public hospitals 50 percent of the aggregate the of percent 50 hospitals public pay to and levels uncompensated-care

make gross DSH payments to its public hospitals up to 175 percent of their of percent 175 to up hospitals public its to payments DSH gross make

passage of the BBA, which contained a special exemption that allowed California to California allowed that exemption special a contained which BBA, the of passage

on hospitals’ gross Medi-Cal DSH payments. This situation was resolved after the after resolved was situation This payments. DSH Medi-Cal gross hospitals’ on

in the number of private hospitals qualifying for DSH and the federally imposed cap imposed federally the and DSH for qualifying hospitals private of number the in

private hospitals’ payments were increasing. This effect was attributed to the increase the to attributed was effect This increasing. were payments hospitals’ private

sion of intergovernmental transfers (IGTs), their net payments were declining while declining were payments net their (IGTs), transfers intergovernmental of sion lic hospitals were frustrated that despite financing the program through their provi- their through program the financing despite that frustrated were hospitals lic As with many other states, California’s health care systems, particularly those providing long-term care, have been challenged with a health care workforce shortage. To address the high turnover rate among long-term care workers, the broad package of rate increases in the 2000–01 budget included a 7.5 percent increase in nursing home rates that was to be used to increase wages by the same percentage for workers in nursing homes. The state also passed a law in 1999 mandating that each county establish an entity to serve as the employer of record for independent providers within California’s In-Home Supportive Services (IHSS) program by Jan- uary 2003.6 The intent of this legislation is to provide a mechanism for collective bargaining over wages, hours, and benefits. IHSS independent providers also benefited from a $0.50 minimum wage increase, effective January 1, 2001, and an additional $0.50 wage increase effective January 1, 2002.

Other Developments

California has also implemented a number of managed care reforms to provide patient protection and education for its 23.5 million citizens enrolled in managed care plans. In 1999, California passed a law that allows patients to hold health plans accountable in court when a health maintenance organization (HMO) causes “substantial harm” to a patient. Another significant development, particularly in light of the national debate on a patient’s bill of rights, is the creation of the California Department of Managed Health Care. Launched in July 2000, the Department has an HMO Help Center where consumers can go 24 hours a day, 7 days a week, for assistance in dealing with their health plan. In addition to the Help Center, the Department of Managed Health Care is responsible for licensing all plans (including SCHIP and Medi-Cal plans), providing an annual HMO report card, and monitor- ing the financial solvency of the state’s health plans and medical groups––in response to recent medical group insolvencies that challenged plans’ abilities to maintain continuity of care.

Conclusion

In light of the recent economic downturn, Davis feels that his fiscally conservative approach to policymaking has been vindicated. By not having committed to large spending increases, and by dedicating the state’s sizable tobacco settlement to health programs, the governor’s 2001 budget revision––which reflects lower revenue projections––avoided major cuts in Health and Human Services spending. Nevertheless, the future course of California health policy is far from certain. California does not yet know how its supplemental payment program, which subsidizes many safety net hospitals, will be curtailed as federal regulations limiting Medicaid payments are phased in. In addition, with Medicaid enrollment expected to increase as a result of eligibility expansions, simplified enrollment procedures, and an uncertain economy,

California may face some difficult policy tradeoffs in the coming year. 12 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES Colorado

Jane Tilly and Julie Chesky

Colorado policymakers have taken advantage of some of the opportunities available under federal-state programs, particularly Medicaid and SCHIP, to piece together a safety net for people with low incomes who lack private health coverage. In addition, Colorado has used regulation of the state’s small-group health insurance market to try to ensure affordability and accessibility of these policies. Nevertheless, the state’s safety net is strained because of the slowing economy and the state’s constitutional limits on revenues and increases, known as the Taxpayer’s Bill of Rights (TABOR), that force an annual examination of health care programs for ways to contain costs.

Political and Fiscal Circumstances

Although Colorado is a conservative state, Bill Owens was the first Republican to be elected governor in Colorado in 28 years; his four-year term began in 1999. He succeeded former Governor Roy Romer, a three-term Democrat, whose priorities included the expansion of children’s health programs. At the time of the site visit, Republicans controlled the House and the Democrats narrowly controlled the Sen- ate. Health care does not appear to be a prominent issue on Governor Owens’s agenda, taking a back seat to public education initiatives. The governor does not want to expand public programs to cover the uninsured, and he prefers to focus reform efforts on private-sector solutions such as vouchers or tax credits to help the uninsured buy insurance. The governor also does not advocate providing pharmaceutical benefits to Medicare beneficiaries through a publicly funded state program because he believes such coverage should come from the federal government. How- ever, under Governor Owens, enrollment in Colorado’s SCHIP program (CHP+) has been made easier. In addition, the governor brought the CHP+ board under Medicaid to improve communication between the two programs and agreed to use tobacco settlement funds to add a dental benefit to SCHIP. Among the most contentious health care issues in the 2001 legislative session were the small-group insurance “reforms” that health plans supported. The proposals would have weakened the state’s community rating for parts of this market and the provider network adequacy requirements. However, the final legislation made only minor modifications to regulation of the small-group market. Colorado faces a unique fiscal situation in that it has state constitutional limits on tax revenues and most public expenditures. TABOR, established in 1991, limits the state’s revenue growth in the current year to inflation plus population growth in the previous year; this is less than real growth in the state’s economy. State-funded public expenditures, with the exception of capital improvements such as new roads and prisons, are limited to 6 percent growth a year with no adjustment for inflation or population growth. Although earlier projections for FY 2002 indicated that allow-

THE URBAN

INSTITUTE HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 13 L able state revenues would exceed allowable state spending by about $253 million, state officials say that these projections are being revised downward because of increased expenditures and a slowing economy. In December 2001, state officials anticipated a $170.2 million shortfall in FY 2002, despite cuts of $390 million in September 2001. These reductions in the FY 2002 budget came primarily from capital and transportation projects, but there were some health care cost reductions including changes to Medicaid pharmaceutical payments. State officials also predict a budget shortfall in FY 2003. Regardless of the state of the economy, these constitutional limits have had pro- found effects on efforts to improve or expand publicly funded health programs. These programs are in competition with one another and with other programs for funds. The pressures to contain Medicaid costs are particularly strong. Colorado’s total Medicaid expenditures grew quite rapidly at an average annual rate of 7.7 percent from 1995 through 1998, much higher than the national rate of 3.9 percent. Medicaid expenditures, excluding those for the Department of Human Services, grew 10.6 percent in FY 2000—the first double-digit increase in four years.1 Major public program expansions appear to be out of the question politically and financially, unless the state’s constitution is amended, which would require a statewide referendum.

Coverage Expansions

In 1998, Colorado implemented CHP+, which provides coverage to children through age 18 with family incomes up to 185 percent of FPL. It was preceded by the state-sponsored Colorado Child Health Plan, which provided primarily out- patient services to low-income children in rural areas. As of June 2001, 32,588 of the estimated 70,000 potentially eligible children were enrolled in Colorado’s CHP+ program.2 Imposition of relatively high premiums (up to $360 annually) and the method by which they were collected were thought by state officials to be partially responsible for preventing Colorado from reaching enrollment goals. As of April 2000, about 4,800 or 37 percent of the 13,000 families enrolled in CHP+ were behind in paying their premiums and faced disenrollment from the program.3 These 4,800 families represented about half of those required to pay premiums. Opposition to these premiums peaked in the summer of 2000, and Governor Owens responded by declaring a premium holiday from September through December 2000. In 2001, premiums were replaced with a $25 annual premium for one child and $35 for two or more children in families with incomes above 150 percent of FPL. Among the issues for future consideration are what type of mental health benefit CHP+ should offer and how best to enroll children whose parents are not used to dealing with public-sector programs. Colorado has no plans to provide full coverage to the parents of children in CHP+. Moreover, while Medicaid eligibility standards will not be expanded significantly in FY 2002, the Colorado Department of Health Care Policy and Financing (DHCPF) and the Department of Human Services are

jointly developing the Colorado Benefits Management System to simplify the eligi- 14 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 15

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state uses a single-point-of-entry system to manage home and community services community and home manage to system single-point-of-entry a uses state

Colorado’s public programs for people with disabilities vary by type of disability. The disability. of type by vary disabilities with people for programs public Colorado’s

Long-Term Care Long-Term

future.

Medicaid UPL strategy to obtain indigent care funds, but it plans to do so in the in so do to plans it but funds, care indigent obtain to strategy UPL Medicaid

some areas outside the Denver metropolitan area. The state does not yet use the use yet not does state The area. metropolitan Denver the outside areas some

are low for some providers and because availability of indigent care is inadequate in inadequate is care indigent of availability because and providers some for low are

This portion of the safety net is under significant pressure because these payments these because pressure significant under is net safety the of portion This

funds go to nine hospitals that operate primarily in the Denver metropolitan area. metropolitan Denver the in primarily operate that hospitals nine to go funds

marily through maximization of DSH payments under Medicaid. Most of these of Most Medicaid. under payments DSH of maximization through marily

Another part of the safety net—the state’s indigent care programs—is funded pri- funded programs—is care indigent state’s net—the safety the of part Another

satisfaction rates comparable to those of beneficiaries in the PCP program. PCP the in beneficiaries of those to comparable rates satisfaction

state cited improved access to care for enrollees in managed care plans and enrollee and plans care managed in enrollees for care to access improved cited state

that the state’s shift to Medicaid managed care generally has been successful. The successful. been has generally care managed Medicaid to shift state’s the that

els of satisfaction with managed care plans and the PCP program. Most observers say observers Most program. PCP the and plans care managed with satisfaction of els

Despite disputes over rates, Medicaid beneficiary surveys indicate reasonable lev- reasonable indicate surveys beneficiary Medicaid rates, over disputes Despite

petitive bidding process for Medicaid managed care plans. care managed Medicaid for process bidding petitive

ugly battles” over HMO rates. These battles have delayed state plans to begin a com- a begin to plans state delayed have battles These rates. HMO over battles” ugly

State officials concede that they have had “some had have they that concede officials State the DHCPF allegedly withheld. allegedly DHCPF the

Health Plan of Colorado filed suit in late 2000 to recover years of back payments that payments back of years recover to 2000 late in suit filed Colorado of Plan Health

Likewise, the Kaiser Foundation Kaiser the Likewise, aries analyze the state’s rate-setting mechanism. rate-setting state’s the analyze aries

lion in back payments, and the state and the HMO agreed to have independent actu- independent have to agreed HMO the and state the and payments, back in lion

of state payments. In May 2000, a judge awarded Rocky Mountain HMO $18 mil- $18 HMO Mountain Rocky awarded judge a 2000, May In payments. state of

Colorado has a contentious history with HMOs regarding the fairness and timeliness and fairness the regarding HMOs with history contentious a has Colorado

that are required by law to be limited to 95 percent of estimated fee-for-service costs. fee-for-service estimated of percent 95 to limited be to law by required are that

The Medicaid program pays participating HMOs risk-adjusted capitated rates capitated risk-adjusted HMOs participating pays program Medicaid The

program.

eficiaries will receive care through five HMOs and 54,724 through the PCP the through 54,724 and HMOs five through care receive will eficiaries

agement and entering an HMO. In FY 2002, the state anticipates that 136,334 ben- 136,334 that anticipates state the 2002, FY In HMO. an entering and agement

ries, including those who are disabled, have a choice between primary care case man- case care primary between choice a have disabled, are who those including ries,

a network of a Medicaid HMO to enroll in that HMO. Other Medicaid beneficia- Medicaid Other HMO. that in enroll to HMO Medicaid a of network a

Colorado began requiring PCP enrollees whose primary care physician belonged to belonged physician care primary whose enrollees PCP requiring began Colorado

Medicaid beneficiaries enroll in primary care physician (PCP) programs. In 1997, In programs. (PCP) physician care primary in enroll beneficiaries Medicaid

Colorado was one of the first states to obtain a federal waiver to mandate that most that mandate to waiver federal a obtain to states first the of one was Colorado

Acute Care Care Acute

efit programs with one application form and one interview. one and form application one with programs efit

tem will allow people the opportunity to apply for the entire spectrum of public ben- public of spectrum entire the for apply to opportunity the people allow will tem bility determination process for public benefits. This computerized application sys- application computerized This benefits. public for process determination bility and nursing home care for older persons and younger persons with physical disabilities. Services for older persons are dominated by nursing home care, where quality issues have arisen. Those persons with mental health conditions or developmental disabilities primarily receive services in the home and community. Managed care dominates delivery of mental health care to Medicaid beneficiaries, and the state relies on community-centered boards to manage home and community services for persons with developmental disabilities. Elimination in 1997 of the federal Boren amendment, which required that Med- icaid pay providers reasonable and adequate rates “to meet the costs which must be incurred by efficiently and economically operated facilities,” has allowed the state to pursue a number of provider rate changes. The state capped certain cost centers for nursing homes and reduced annual cost increases from 9 to 10 percent a year to 3 to 4 percent a year. Further changes are in store for nursing home rates because a 2000 law requires establishment of a case-mix-adjusted reimbursement system for nursing facilities participating in Medicaid.8 As for future issues, state officials point to the need to address the labor shortage in home and community settings and resulting challenges to quality assurance. There have been several recent initiatives to address quality of care. In FY 2000, funding was allocated to the Department of Public Health and Environment to hire 11 new staff who are devoted to improving nursing home inspections.9 Legislation enacted in 2001 requires this department to implement a consumer satisfaction survey for nursing home residents and to respond within five working days to complaints about nursing home quality.

Conclusion

Colorado has a relatively stable but increasingly strained health care system for people with low incomes. Further expansions of public-sector health care programs do not appear likely because the economy is weakening, because the governor supports private-sector efforts to expand coverage, and because of TABOR, the state’s constitutional limits on revenues and public expenditures. Pressure on Medicaid to control its cost growth is likely to continue because of TABOR and will be exacerbated by rising Medicaid expenditures and the state’s revenue shortfalls. Although the modified community rating system for small-group health insurance plans remains in place, insurers who feel that it increases their expenses are likely to continue apply-

ing pressure for reform. 16 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 17

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admissions, developed several competitive bidding processes for the purchase of cer- of purchase the for processes bidding competitive several developed admissions,

Florida also instituted a prior-authorization policy for nonemergency inpatient nonemergency for policy prior-authorization a instituted also Florida ers.

go beyond the federally mandated discounts it currently receives from manufactur- from receives currently it discounts mandated federally the beyond go

negotiated the receipt of “supplemental manufacturer rebates”—that is, rebates that rebates is, rebates”—that manufacturer “supplemental of receipt the negotiated

beneficiaries’ use of prescription drugs to medicines for which it has successfully has it which for medicines to drugs prescription of use beneficiaries’

tion of a new Medicaid prescription drug formulary that will allow Florida to restrict to Florida allow will that formulary drug prescription Medicaid new a of tion

ciencies in current operations. Principal among the state’s strategies was the adop- the was strategies state’s the among Principal operations. current in ciencies

adopted policies that sought to control spending growth rates and find more effi- more find and rates growth spending control to sought that policies adopted

icant program cuts during the regular 2001 legislative session. Instead, the state the Instead, session. legislative 2001 regular the during cuts program icant

mated Medicaid shortfall of $1.5 billion, state officials avoided implementing signif- implementing avoided officials state billion, $1.5 of shortfall Medicaid mated

mentation of large tax cuts. Interestingly, however, even though they faced an esti- an faced they though even however, Interestingly, cuts. tax large of mentation

drugs), as well as declines in general revenue funds due in part to the recent imple- recent the to part in due funds revenue general in declines as well as drugs),

community-based program funding, and health care costs (in particular, prescription particular, (in costs care health and funding, program community-based

matic growth in Medicaid spending as a result of increases in enrollment, home- and home- enrollment, in increases of result a as spending Medicaid in growth matic

During the past five years, budget shortfalls emerged in Florida, fueled by dra- by fueled Florida, in emerged shortfalls budget years, five past the During

nerable populations better. populations nerable

sophical construct, innovations continue to emerge as the state works to serve vul- serve to works state the as emerge to continue innovations construct, sophical

partnering of state and local governments and the private sector. Within this philo- this Within sector. private the and governments local and state of partnering

government, and sees solutions to health policy challenges involving the cooperative the involving challenges policy health to solutions sees and government,

is more fiscally conservative, embraces a less expansionary view of the role of state of role the of view expansionary less a embraces conservative, fiscally more is

development, along with a slowing economy, has helped create an environment that environment an create helped has economy, slowing a with along development,

alignment of its executive and legislative branches within the Republican Party. This Party. Republican the within branches legislative and executive its of alignment

ture in 1998, Florida saw for the first time in recent history the complete political complete the history recent in time first the for saw Florida 1998, in ture

lican Jeb Bush, and with Republican majorities elected to both houses of the legisla- the of houses both to elected majorities Republican with and Bush, Jeb lican

With the passing of the gubernatorial reins from Democrat Lawton Chiles to Repub- to Chiles Lawton Democrat from reins gubernatorial the of passing the With

Political and Fiscal Circumstances Fiscal and Political

were emulated by other states. other by emulated were

sion of Medicaid managed care. Many of these efforts were viewed as “models” and “models” as viewed were efforts these of Many care. managed Medicaid of sion

efficiency and cost-management in the health system through the aggressive expan- aggressive the through system health the in cost-management and efficiency

gram, reducing infant mortality through the Healthy Start program, and improving and program, Start Healthy the through mortality infant reducing gram,

of low-income children through Medicaid expansions and the Healthy Kids pro- Kids Healthy the and expansions Medicaid through children low-income of

ket through the Community Health Purchasing Alliances, increasing health coverage health increasing Alliances, Purchasing Health Community the through ket

Security Act, implementing managed competition in the small-group insurance mar- insurance small-group the in competition managed implementing Act, Security

tives, including expanding health insurance coverage through the Florida Health Florida the through coverage insurance health expanding including tives,

officials, Florida proposed and/or implemented a wide array of progressive initia- progressive of array wide a implemented and/or proposed Florida officials,

health policy. Under the creative leadership of both executive and legislative branch legislative and executive both of leadership creative the Under policy. health

Through the early and mid-1990s, Florida could be described as an innovator in innovator an as described be could Florida mid-1990s, and early the Through

Alshadye Yemane and Ian Hill Ian and Yemane Alshadye Florida tain Medicaid services, and facilitated the increase in Medicaid capitated plan enrollment so as to take advantage of perceived cost efficiencies. The catastrophic events of September 11, 2001, however, precipitated a significant downturn in the state’s economy, which created huge unexpected deficits in the state’s FY 2002 budget. As a result, the governor was forced to convene two special legislative sessions late in 2001 during which several cost-cutting measures were enacted, including the elimination of the Medically Needy program for adults, which effectively ends coverage for almost 19,000 Medicaid beneficiaries.2,3 The state also reduced income eligibility thresholds for the state’s elderly and disabled Medicaid expansion program, causing an additional 1,500 beneficiaries to lose coverage, and eliminated Medicaid coverage of dental, vision, and hearing services for adults, restricting access for approximately 190,000 beneficiaries who use at least one of these services.4 It remains to be seen whether the cost efficiencies the state has invested in will prevent future cuts to Medicaid and other health care programs in the event of a prolonged economic recession.

Coverage Expansions

Problems of uninsurance continued to loom large, fueled by continually low rates of employer-sponsored insurance and very low Medicaid income eligibility levels for adults. Yet, by the end of the regular 2001 session, policymakers had no plans to pursue public coverage expansions through such avenues as Section 1931 Medicaid expansions or SCHIP “family coverage” waivers. Rather, the state promoted expanded private-sector coverage through such strategies as the creation of the Small Employer Health Alliance to permit group pooling/purchasing by small employers, and the governor’s proposed HealthFlex program, which would allow insurers, HMOs, and community-based organizations to offer low-end policies that would cover major medical and preventative services on a pilot basis in selected portions of the state with relatively high uninsurance. State officials, however, admit that these policies would have only a marginal effect on the uninsured rate. Addressing the problem of uninsurance among Florida’s children has been a policy priority for the state. KidCare was officially established in 1998—though its roots date back to 1990 with the creation of the school-based child health insurance initiative called Healthy Kids. Today, the KidCare program represents a relatively complex “combination program”; that is, it comprises both Medicaid and separate program components, including (1) a Medicaid program expansion that extends coverage to infants with family income between 185 percent and 200 percent of FPL and teens age 15 to 18 under 100 percent of FPL; (2) Medikids, which is a nonentitlement Medicaid “look-alike” program that offers Medicaid benefits to children age 1 through 4 with family income between 133 and 200 percent of FPL; (3) Healthy Kids (which was grandfathered into the Title XXI program and builds on the original child health insurance program), a joint venture between the government and private industry that provides coverage for kids age 5 through 6 with fam-

ily income between 133 and 200 percent of FPL and kids age 7 through 18 with 18 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 19

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islature has also sought to develop a pharmaceutical expense assistance program for program assistance expense pharmaceutical a develop to sought also has islature

To address the impact of rising prescription costs on Florida’s residents, the leg- the residents, Florida’s on costs prescription rising of impact the address To

ties for Florida in the future. future. the in Florida for ties

state’s UPL payments to providers will undoubtedly limit UPL funding opportuni- funding UPL limit undoubtedly will providers to payments UPL state’s

guidelines that will lower the rate at which the federal government will match a match will government federal the which at rate the lower will that guidelines

hospital operations; but new proposed Center for Medicaid and Medicare Services Medicare and Medicaid for Center proposed new but operations; hospital

matching dollars through the UPL flexibility, an effort that could potentially bolster potentially could that effort an flexibility, UPL the through dollars matching

throughout the 1990s, plans call for enhancing the state’s drawdown of federal of drawdown state’s the enhancing for call plans 1990s, the throughout

arrangements with insurers. Although Florida had a relatively small DSH program DSH small relatively a had Florida Although insurers. with arrangements

tions that have strengthened their market position when negotiating payment negotiating when position market their strengthened have that tions

circumstances have improved, partly because of the numerous mergers and acquisi- and mergers numerous the of because partly improved, have circumstances

ened the financial position of hospitals. More recently, however, hospitals’ financial hospitals’ however, recently, More hospitals. of position financial the ened

after the BBA, coupled with steady increases in uncompensated-care provision, weak- provision, uncompensated-care in increases steady with coupled BBA, the after

cial difficulty in the past few years. Significant reductions in Medicare reimbursement Medicare in reductions Significant years. few past the in difficulty cial

ulations. As with the HMO industry, the hospital sector has experienced some finan- some experienced has sector hospital the industry, HMO the with As ulations.

built around provider groups that traditionally serve low-income and vulnerable pop- vulnerable and low-income serve traditionally that groups provider around built

development of an alternative model called the “Provider Service Network” that is that Network” Service “Provider the called model alternative an of development

state oversight more firmly in place. At the same time, recent years have seen the seen have years recent time, same the At place. in firmly more oversight state

“healthier” in light of these developments, with financially sound plans and better and plans sound financially with developments, these of light in “healthier”

ing in Medicaid. Yet many policymakers describe the managed care market as market care managed the describe policymakers many Yet Medicaid. in ing

caused numerous plans to leave the state entirely, and other plans to stop participat- stop to plans other and entirely, state the leave to plans numerous caused

the aftermath of quality-of-care scandals, coupled with intense competition, have competition, intense with coupled scandals, quality-of-care of aftermath the

have weathered turbulent times. In the managed care sector, tighter regulations in regulations tighter sector, care managed the In times. turbulent weathered have

Acute care systems—primarily managed care organizations (MCOs) and hospitals— and (MCOs) organizations care managed systems—primarily care Acute

Acute Care Acute

may weaken its ability to sustain enrollment increases. increases. enrollment sustain to ability its weaken may

2000 state legislature during its regular session, but the recent economic downturn economic recent the but session, regular its during legislature state 2000

its capacity for enrollment even further with the additional funding provided by the by provided funding additional the with further even enrollment for capacity its

The state was expected to expand to expected was state The Families and the Healthy Kids eligibility systems. eligibility Kids Healthy the and Families

ing more sophisticated linkages between the state’s Department of Children and Children of Department state’s the between linkages sophisticated more ing

taken to streamline the application process and expedite enrollment, including build- including enrollment, expedite and process application the streamline to taken

by the Healthy Kids model. State officials report that a number of steps have been have steps of number a that report officials State model. Kids Healthy the by

shortfalls in some counties that could not provide the local match resources required resources match local the provide not could that counties some in shortfalls

tially slowed by backlogs and delays in the enrollment process and, more recently, by recently, more and, process enrollment the in delays and backlogs by slowed tially

the third largest CHIP program in the nation—participation in the program was ini- was program the in nation—participation the in program CHIP largest third the

Although KidCare has generally achieved high rates of enrollment—Florida has enrollment—Florida of rates high achieved generally has KidCare Although

structure. structure.

expansion and the desire to implement a program utilizing the state’s existing infra- existing state’s the utilizing program a implement to desire the and expansion

Care program is the result of strong political sentiment against a pure Medicaid pure a against sentiment political strong of result the is program Care

eligible children with special health care needs. The complex structure of the Kid- the of structure complex The needs. care health special with children eligible

separate and specialized health care delivery system that is extended to all SCHIP- all to extended is that system delivery care health specialized and separate family income between 100 and 200 percent of FPL; and (4) the CMS program, a program, CMS the (4) and FPL; of percent 200 and 100 between income family Florida’s senior citizens who are eligible for both Medicaid and Medicare. In 2000, the legislature passed the Senior Prescription Affordability Act (SPAA) to provide assistance for dually eligible low-income seniors in the amount of an $80 monthly benefit for prescription drugs with a 10 percent copayment requirement. Eligible recipients must have an income between 90 and 120 percent of FPL and not be enrolled in a Medicare HMO that provides a pharmacy benefit. The SPAA also includes provisions that allow Medicare recipients, regardless of income, to receive discounts on prescription drugs at Medicaid-participating pharmacies. As a condition of participating in the Medicaid or SPAA low-income assistance programs, pharmacies must agree to cap drug prices for Medicare beneficiaries at the average wholesale price minus 9 percent with a dispensing fee of $4.50. Recent news about this phase of the program indicates that in some cases the pharmacies’ standard senior discount rates are lower than the wholesale-based rate participants are required to pay under this program.

Long-Term Care

A full-blown crisis has emerged within Florida’s long-term care system, one that threatens to further undermine the quality of the nursing home system. A complex set of interrelated factors have “domino-ed” to create this situation: chronic staffing shortages, which led to an erosion in quality of care, which led to lawsuits that resulted in extremely large awards for complainants and skyrocketing liability insurance rates for the industry. The situation is further compounded in the long term by the lack of home- and community-based alternatives to nursing home care in a state that already has a very high proportion of older people and is projected to see dramatic increases in the size of that population in the future. In contrast to the state of home- and community-based services programs for the elderly, Florida has made tremendous strides in its efforts to implement community- based alternatives for younger Floridians with developmental disabilities. Governor Bush has surprised many with his efforts to focus resources on this population and, using the Olmstead decision as leverage, has successfully argued with federal officials for the approval of pending Medicaid home- and community-based services waivers and state plan amendments.

Conclusion

Though the past few years have seen clear innovation in state policymaking, uncer- tainty still exists about the impact of these innovations. As Florida’s budget reached crisis levels partly because of the tragic events of September 11, 2001, it remains to be seen whether the current policies of cost containment will be able to minimize the need for future budget cuts to health programs for low-income populations in the event of a prolonged economic slowdown. Although the size and scope of problems

with the uninsured have stabilized, the limited potential for “public/private partner- 20 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 21

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care costs incurred by the state. the by incurred costs care

reforms to improve the quality of care received by patients and control the long-term the control and patients by received care of quality the improve to reforms

uninsurance rates. Questions also surround the ability of the recent long-term care long-term recent the of ability the surround also Questions rates. uninsurance

could cause Florida to lose the gains it has made in addressing the problem of high of problem the addressing in made has it gains the lose to Florida cause could

lems experienced in local SCHIP funding that have inhibited program enrollment, program inhibited have that funding SCHIP local in experienced lems

nificantly reduce rates of uninsurance, coupled with Medicaid cutbacks and the prob- the and cutbacks Medicaid with coupled uninsurance, of rates reduce nificantly

ship” proposals such as the Small Employer Health Alliance and and Alliance Health Employer Small the as such proposals ship” to sig- to HealthFlex

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predecessors, has made a no-new-taxes pledge but supports health care expansion. care health supports but pledge no-new-taxes a made has predecessors,

tenant Governor Jane Swift became the state’s first female governor. She, like her like She, governor. female first state’s the became Swift Jane Governor tenant

example by resigning a year and a half early to become ambassador to Canada. Lieu- Canada. to ambassador become to early half a and year a resigning by example

ernor and won election in his own right in 1998. In April 2001, he followed Weld’s followed he 2001, April In 1998. in right own his in election won and ernor

an unsuccessful bid to become ambassador to Mexico. Cellucci became acting gov- acting became Cellucci Mexico. to ambassador become to bid unsuccessful an

1994. In July 1997, just after the start of MassHealth expansions, Weld resigned in resigned Weld expansions, MassHealth of start the after just 1997, July In 1994.

they still do. Weld and Lieutenant Governor Paul Cellucci were easily reelected in reelected easily were Cellucci Paul Governor Lieutenant and Weld do. still they

icy shifted markedly, although Democrats continued to dominate the legislature, as legislature, the dominate to continued Democrats although markedly, shifted icy

narrow victory that year, running as a fiscal conservative and a social liberal, and pol- and liberal, social a and conservative fiscal a as running year, that victory narrow

over a failed presidential campaign and a recessionary economy. William Weld won a won Weld William economy. recessionary a and campaign presidential failed a over

Michael Dukakis, who decided not to seek a fourth term in 1991 after he presided he after 1991 in term fourth a seek to not decided who Dukakis, Michael

Three consecutive Republican governors have succeeded Democratic Governor Democratic succeeded have governors Republican consecutive Three

setts politics also features strong popular support for mandatory universal coverage. universal mandatory for support popular strong features also politics setts

coverage-promoting programs. Unlike politics in almost any other state, Massachu- state, other any almost in politics Unlike programs. coverage-promoting

cacy groups are numerous and influential, and state agencies compete to share in share to compete agencies state and influential, and numerous are groups cacy

1997. There is bipartisan backing for incremental expansions, private health advo- health private expansions, incremental for backing bipartisan is There 1997.

taxes and regulation while expanding state health care coverage, especially after especially coverage, care health state expanding while regulation and taxes

Under Republican governors and Democratic legislatures since 1991, the state cut state the 1991, since legislatures Democratic and governors Republican Under

noted for liberal support of health coverage, high taxes, and strong regulation. strong and taxes, high coverage, health of support liberal for noted

By tradition and voter registration, Massachusetts is a heavily Democratic state, long state, Democratic heavily a is Massachusetts registration, voter and tradition By

Political and Fiscal Circumstances Fiscal and Political

budgeting.

Medicaid has done better than the rest of state government under cutback under government state of rest the than better done has Medicaid

economizing measures, but not unusually large ones, and some expansions continue. expansions some and ones, large unusually not but measures, economizing

care safety net, especially through Medicaid. The program has made some moderate some made has program The Medicaid. through especially net, safety care

despite worsening times, Massachusetts continues to support an expansive health expansive an support to continues Massachusetts times, worsening despite

A dramatic drop in state revenues since June 2001 has forced budget cuts, but cuts, budget forced has 2001 June since revenues state in drop dramatic A

a high-level, bipartisan task force to systematically reconsider state health policies. health state reconsider systematically to force task bipartisan high-level, a

the state’s largest HMO, which also owns the largest Medicaid HMO; and convened and HMO; Medicaid largest the owns also which HMO, largest state’s the

health, developmental disabilities, and long-term care; dealt with the insolvency of insolvency the with dealt care; long-term and disabilities, developmental health,

maceutical coverage for seniors; continued to expand community services in mental in services community expand to continued seniors; for coverage maceutical

3 percent of children lacked coverage in 2000. The state also recently increased phar- increased recently also state The 2000. in coverage lacked children of percent 3

matically reduced uninsurance. Only 6 percent of Massachusetts residents and only and residents Massachusetts of percent 6 Only uninsurance. reduced matically

aid waiver. The expansions plus high rates of employer-sponsored insurance have dra- have insurance employer-sponsored of rates high plus expansions The waiver. aid

state redesigned and significantly expanded its MassHealth coverage under a Medic- a under coverage MassHealth its expanded significantly and redesigned state

chusetts health policy from the mid-1990s through calendar year 2001. In 1997, the 1997, In 2001. year calendar through mid-1990s the from policy health chusetts

Major expansions of public coverage for low-income people have dominated Massa- dominated have people low-income for coverage public of expansions Major

Randall R. Bovbjerg and Frank C. Ullman C. Frank and Bovbjerg R. Randall Massachusetts Massachusetts’s economy performed robustly after emerging from an especially deep recession in the early 1990s. FY 2001 revenues ended strong, leaving a $453 million surplus—quite unlike many states’ shortfalls—which Acting Governor Swift proposed to split between a modest tax cut and social priorities, including $40 million for distressed hospitals.1 Collections worsened thereafter because of the national recession, especially after the attacks of September 11.2 The governor froze state hiring and took other measures, but also announced an increase in health care support for the newly unemployed. The fiscal 2002 budget was not agreed upon until early December. Some health-related programs have been cut, but core Medicaid as well as pharmaceutical assistance for the elderly was little affected. More changes may occur if the downturn is prolonged. Massachusetts Medicaid spending has always been high, but its growth was held to only 1.5 percent a year between 1995 and 1998, well below half of the national average rate. Expenditures rose faster after that because of the MassHealth expansions. In FY 2001 Medicaid needed a supplemental appropriation to cope with a $258 million deficit, and expenditures have been predicted to increase 7.5 percent for FY 2002. Recent cost drivers include increases in provider rates and pharmaceutical costs, as well as higher utilization.

Coverage Expansions

Coverage has expanded markedly since the state began implementing its large Sec- tion 1115 Medicaid waiver in July 1997. Overall, the state increased the number of enrollees by almost a third between 1997 and 2001. The state has also moved from a patchwork of programs toward a jointly administered family of coverages known as MassHealth and from different income ceilings toward more consistent targeting of low-income residents. The recent expansions are among the largest in the nation in terms of income ceilings for eligibility, categories of beneficiaries, and comprehen- siveness of benefits provided. Taken together, the programs now offer some form of assistance to all low-income children (those with household incomes up to 200 percent of FPL), almost all parents to 133 percent of FPL (with some help to up to 200 percent), and many childless adults to 133 percent as well. MassHealth has six main constituent programs—MassHealth Standard, Com- monHealth, Basic, Family Assistance, Limited, and Buy-in. • MassHealth Standard is essentially traditional Medicaid plus SCHIP. Coverage is available up to 200 percent of FPL for pregnant women and infants, to 150 percent for children, to 133 percent for parents of covered children and for disabled adults below age 65, and to 100 percent for seniors and refugees (meeting asset tests), as well as to all Supplemental Security Income (SSI) recipients and some others. Standard includes about 85 percent of all MassHealth enrollees and produced most of the rapid early growth under the waiver. Growth was especially

high among disabled enrollees, while the senior component remained flat. 24 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 25

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enrollment has been allowed to decline, and market consolidation and Medicaid and consolidation market and decline, to allowed been has enrollment

from primary care case management into capitated MCOs. In practice, capitated practice, In MCOs. capitated into management case care primary from

In the mid-1990s, Massachusetts officials had expected to move more beneficiaries more move to expected had officials Massachusetts mid-1990s, the In

Acute Care Care Acute

of state support for unemployed workers’ health coverage. health workers’ unemployed for support state of

spending, but not in health coverage. Indeed, the governor announced expansions announced governor the Indeed, coverage. health in not but spending,

In the aftermath of September 11, the administration began trimming much state much trimming began administration the 11, September of aftermath the In

in benefits. in

ceilings may be eligible. About 1 percent of MassHealth members receive Buy- receive members MassHealth of percent 1 About eligible. be may ceilings

persons with disabilities whose income or assets exceed MassHealth eligibility MassHealth exceed assets or income whose disabilities with persons

cants, subsidizing enrollees’ premiums, deductibles, and copayments. Seniors or Seniors copayments. and deductibles, premiums, enrollees’ subsidizing cants,

resembles Basic and is available to Medicare-eligible appli- Medicare-eligible to available is and Basic resembles • MassHealth Buy-in MassHealth

bers, but numbers are expected to increase. to expected are numbers but bers,

immigration status. Limited enrolls only about 2 percent of MassHealth mem- MassHealth of percent 2 about only enrolls Limited status. immigration

for people who are ineligible for other MassHealth coverage only because of because only coverage MassHealth other for ineligible are who people for

covers emergency services, including labor and delivery, and labor including services, emergency covers • MassHealth Limited MassHealth

future.

greater start-up difficulties, but they are expected to grow more in the near the in more grow to expected are they but difficulties, start-up greater

with direct coverage. Premium assistance and employer incentives had inherently had incentives employer and assistance Premium coverage. direct with

Assistance enrolls fewer than 4 percent of the MassHealth total, mainly children mainly total, MassHealth the of percent 4 than fewer enrolls Assistance

they do have ESI access. Parents and other adults get premium subsidy. Family subsidy. premium get adults other and Parents access. ESI have do they

direct coverage from the state if they lack access to ESI or premium subsidy if subsidy premium or ESI to access lack they if state the from coverage direct

ers and ESI (employer-sponsored insurance) plans also qualify. Children get Children qualify. also plans insurance) (employer-sponsored ESI and ers

FPL, as well as to childless adults from 0 to 200 percent of FPL whose employ- whose FPL of percent 200 to 0 from adults childless to as well as FPL,

children age 1 through 18 and their parents between 150 and 200 percent of percent 200 and 150 between parents their and 18 through 1 age children

incentives to certain small employers of qualified workers. Eligibility extends to extends Eligibility workers. qualified of employers small certain to incentives

nbet ulf o tnado omnelhcvrg,ad()employer (3) and coverage, CommonHealth or Standard for qualify to unable

mium assistance to children, (2) premium assistance to some working adults working some to assistance premium (2) children, to assistance mium

• has three parts: (1) direct coverage or pre- or coverage direct (1) parts: three has MassHealth Family Assistance Family MassHealth

than expected postwaiver growth. postwaiver expected than

cent of FPL. Basic enrolls almost 8 percent of MassHealth members after higher after members MassHealth of percent 8 almost enrolls Basic FPL. of cent

uninsured or underinsured, are below age 65, and have incomes below 133 per- 133 below incomes have and 65, age below are underinsured, or uninsured

vices or nonemergency transportation) to long-term unemployed adults who are who adults unemployed long-term to transportation) nonemergency or vices

offers less comprehensive benefits (not long-term care ser- care long-term (not benefits comprehensive less offers • MassHealth Basic MassHealth

person.

rapid growth, but they are largely nonworking disabled adults with high costs per costs high with adults disabled nonworking largely are they but growth, rapid

monHealth includes only about 1 percent of MassHealth enrollees, even after even enrollees, MassHealth of percent 1 about only includes monHealth

Com- enrollees’ incomes are below that level but above Standard’s ceilings. Standard’s above but level that below are incomes enrollees’

sharing on a sliding scale is required above 200 percent of FPL, so most so FPL, of percent 200 above required is scale sliding a on sharing

abled individuals ineligible for Standard. There is no income ceiling, but cost but ceiling, income no is There Standard. for ineligible individuals abled

• offers comprehensive Medicaid benefits to dis- to benefits Medicaid comprehensive offers MassHealth CommonHealth MassHealth withdrawals cut the number of participating MCOs from 13 in 1992 to 4 today. Only one of the remaining plans has significant commercial membership, and con- flicts are emerging among the four because of the higher rates paid to the two MCOs run by safety net hospitals. Most MassHealth beneficiary groups are required to enroll in either the Primary Care Clinician Plan (PCCP), a primary care case management system, or MCOs. About one-fourth of the MassHealth population is exempt from mandatory participation—individuals dually enrolled in Medicaid and Medicare, individuals with commercial health insurance, and residents in health care institutions. Managed care is slowly being extended to the disabled population. More than 70 percent of managed care enrollees are in PCCP; the balance are in one of the four MCOs. The state’s unusual uncompensated-care pool pays for medically necessary services at hospitals and community health centers (CHCs) for uninsured and underinsured residents with low or moderate income. Hospitals and CHCs screen applicants for MassHealth eligibility, and if the applicant has no other funding, the pool will pay for free care for those with family income up to 200 percent of FPL. Beneficiaries up to 400 percent of FPL get partial free care; they must meet a per-family annual deductible. People with even higher incomes may qualify for “medical hardship” eligibility if they have very high medical expenses—similar to Medicaid “spend down” eligibility. Eligibility lasts one year, and some hospitals issue insurance-like cards. The pool was created in 1985 to spread the cost of uncompensated care across hospitals. Funds initially came from uniform hospital surcharges on private payers under rate regulation. Hospitals with more collections than uncompensated care paid in; hospitals in deficit drew out. The state later got federal Medicaid support by qualifying the pool for DSH payments, but the pool’s size was capped. Under price competition after 1991, payouts were limited to charity care, and hospitals found it harder to pass through assessments to payers. Most hospitals also lost ground because the pool was capped while costs were not, and because the two big safety net hospitals were given ever larger support. A 1997 reform raised funds by assessing health care payers and adding Medicaid funds earmarked for the two hospitals while cutting hospital assessments. For a time all hospitals got full payment, but free care again exceeded the available funds by 2001; more state funds were added in the 2002 budget, and hospital assessments were cut again. To assist seniors with rising pharmaceutical costs, Massachusetts created ever more generous pharmaceutical programs—in 1997, 1999, and 2001. The first pharmaceutical assistance program offered limited benefits to seniors earning 133 percent of FPL, and when enrollment lagged, benefits were boosted and eligibility raised to 150 percent. The program was renamed and expanded in 1999, adding disabled beneficiaries and going up to 188 percent of FPL. Further, a new unlimited benefit was added on a trial basis for most elders as well as younger persons with disabilities with high prescription costs relative to their incomes. The program was expanded and renamed again in April 2001. “Prescription Advantage” is touted as the nation’s first universally available drug coverage for the elderly and younger disabled persons. It offers unlimited benefits and imposes no income ceilings, although enrollees pay pre-

miums of up to $82 a month (graduated by income) as well as deductibles and 26 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 27

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eral Tom Reilly announced, in December 2000, a five-year, $114 million plan to plan million $114 five-year, a 2000, December in announced, Reilly Tom eral

Americans, Health and Human Services Secretary Bill O’Leary and Attorney Gen- Attorney and O’Leary Bill Secretary Services Human and Health Americans,

ruling on inappropriate institutionalization of disabled of institutionalization inappropriate on ruling Olmstead 1999 the and

care have developed, prompting two recent lawsuits. In response to this litigation this to response In lawsuits. recent two prompting developed, have care

funding for community-based care, waiting lists for noninstitutional mental health mental noninstitutional for lists waiting care, community-based for funding

from 19 percent in FY 1998 to 24 percent in 2002. However, despite increased despite However, 2002. in percent 24 to 1998 FY in percent 19 from

percentage of long-term-care spending, community services are projected to increase to projected are services community spending, long-term-care of percentage

munity spending growth outpaced facility growth by 16 percent to 2 percent. As a As percent. 2 to percent 16 by growth facility outpaced growth spending munity

1996. The annual rise has been especially large starting in FY 2000. That year, com- year, That 2000. FY in starting large especially been has rise annual The 1996.

community spending has risen much faster than facility spending since at least FY least at since spending facility than faster much risen has spending community

under MassHealth, Massachusetts’s regular Medicaid program. State data show that show data State program. Medicaid regular Massachusetts’s MassHealth, under

nity-based waivers, such as personal care attendants, are covered as optional services optional as covered are attendants, care personal as such waivers, nity-based

the elderly. Many of the services that other states provide under home- and commu- and home- under provide states other that services the of Many elderly. the

care. Massachusetts funds a broad array of home- and community-based services for services community-based and home- of array broad a funds Massachusetts care.

Another priority is continuing the shift from institutional to community-based to institutional from shift the continuing is priority Another

year.

update, then more in June as the state shifts updates to match its July–June fiscal July–June its match to updates shifts state the as June in more then update,

December 2001, rates were scheduled to rise modestly in the traditional January traditional the in modestly rise to scheduled were rates 2001, December

and improved planning and data collection, especially on access and quality. As of As quality. and access on especially collection, data and planning improved and

Medicaid payment rates but tying new resources to quality of care, better staffing, better care, of quality to resources new tying but rates payment Medicaid

quality deterioration. The task force’s working groups have recommended increasing recommended have groups working force’s task The deterioration. quality

homes could not attract and retain qualified staff and that there is “potential” for “potential” is there that and staff qualified retain and attract not could homes

about 50 percent in 1997 to about 75 percent in 2001. Concern was expressed that expressed was Concern 2001. in percent 75 about to 1997 in percent 50 about

try, and the percentage of nursing homes running at a loss was expected to rise from rise to expected was loss a at running homes nursing of percentage the and try,

ment rates. Massachusetts nursing home margins are among the worst in the coun- the in worst the among are margins home nursing Massachusetts rates. ment

the key recent concern has not been high spending, but rather the adequacy of pay- of adequacy the rather but spending, high been not has concern recent key the

care services for elderly, mentally ill, and developmentally disabled persons. However, persons. disabled developmentally and ill, mentally elderly, for services care

Institutional costs are the largest single line item of Medicaid spending for long-term for spending Medicaid of item line single largest the are costs Institutional

Long-Term Care Long-Term

planning.

going beyond Medicaid, but disagreements with the governors have delayed serious delayed have governors the with disagreements but Medicaid, beyond going

ture has also long supported a broad bulk purchasing pool for pharmaceuticals, for pool purchasing bulk broad a supported long also has ture

generic equivalents are available, and modified pricing for pharmacies. The legisla- The pharmacies. for pricing modified and available, are equivalents generic

ber of refills per prescription, required prior approval for brand-name drugs when drugs brand-name for approval prior required prescription, per refills of ber

in autumn 2001 that lowered the maximum days per prescription, limited the num- the limited prescription, per days maximum the lowered that 2001 autumn in

2000, from $300 million to $686 million. New Medicaid controls were announced were controls Medicaid New million. $686 to million $300 from 2000,

1990s has been prescription drugs, a cost that more than doubled between 1995 and 1995 between doubled than more that cost a drugs, prescription been has 1990s

the general population. The state’s fastest growing acute care cost since the mid- the since cost care acute growing fastest state’s The population. general the

A simultaneous concern has been control of drug spending for Medicaid and for and Medicaid for spending drug of control been has concern simultaneous A

of about $100 million a year was maintained through 2002’s budgetary cuts. budgetary 2002’s through maintained was year a million $100 about of

hold income. As of July 2001, about 41,000 people had enrolled. The initial budget initial The enrolled. had people 41,000 about 2001, July of As income. hold copayments up to an annual out-of-pocket ceiling of $2,000 or 10 percent of house- of percent 10 or $2,000 of ceiling out-of-pocket annual an to up copayments eliminate the waiting list for services to individuals with mental retardation. In the 2002 budget, the legislature cut support for community placement, but most was restored after the governor’s veto.

Other Developments

The HMO market has drawn attention because of increased concentration and the near-failure in January 2000 of the then-largest HMO, Harvard-Pilgrim Health Care. That crisis drew heavy media coverage and required major state intervention. Along with provider-patient backlash against managed care, the insolvency also helped generate more regulation of managed care. Managed care concerns also fueled the campaign for a government-led system of universal coverage, which was narrowly defeated in a ballot initiative of November 2000.

Conclusion

Massachusetts is almost uniquely supportive of health care, especially for low-income residents. Tradition, political ideology, the influential nonprofit hospital industry, ample state revenues, and a generous federal 1115 waiver have all combined to create very strong support for expansions. Through the end of FY 2001 in June, state policy remained resolutely expansionist, despite increasing concerns over the economy and the phasing in of a very large tax cut. The most prominent health policy issues included raising provider rates, implementing expanded prescription drug coverage for aged and disabled persons, expanding long-term care alternatives, and further strengthening the state’s uncompensated-care pool, as well as implementing newly strengthened oversight of health plans and patient protections. The state budget ended the 2001 year in unexpected surplus, a share of which was earmarked as aid to distressed hospitals. Agreement on a fiscal 2002 budget was delayed until December 2001, by which time revenue projections were down dramatically. Nonetheless, through the end of calendar 2001, Massachusetts continued providing generous support for health care as cutbacks fell more heavily on other public programs. Future developments depend heavily on the depth and duration of recession-

ary shortfalls in revenue.4 28 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 29

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Medicaid. Medicaid.

number of small health care programs, and implementing a preferred drug list for list drug preferred a implementing and programs, care health small of number

funds by reducing payments to hospitals and nursing homes, cutting funds for a for funds cutting homes, nursing and hospitals to payments reducing by funds

of Community Health decreased its budget by $193 million in state and federal and state in million $193 by budget its decreased Health Community of

rainy day fund, and restraining increases in governmental spending. The Department The spending. governmental in increases restraining and fund, day rainy

short-term borrowing for capital improvements, accessing monies from the state’s the from monies accessing improvements, capital for borrowing short-term

from the softening economy, prompted state policymakers to consider increasing consider to policymakers state prompted economy, softening the from

levels forecast in January 2001. Projected revenue shortfalls in FY 2002, resulting 2002, FY in shortfalls revenue Projected 2001. January in forecast levels

the state’s May 2001 revenue estimates were $592 million below million $592 were estimates revenue 2001 May state’s the fiscal year 2000, year fiscal

began changing in 2001. Although Michigan’s reserves rose to $1.3 billion in state in billion $1.3 to rose reserves Michigan’s Although 2001. in changing began

year revenue, and the state’s overall robust economy. But the budgetary situation budgetary the But economy. robust overall state’s the and revenue, year

efiting from increases in the state sales tax, constitutional limits on spending current- spending on limits constitutional tax, sales state the in increases from efiting

Michigan’s budget remained in the black during the latter half of the 1990s, ben- 1990s, the of half latter the during black the in remained budget Michigan’s

vices to the state’s Medicaid population with disabilities. with population Medicaid state’s the to vices

tion drug coverage to older Medicare beneficiaries, and home and community ser- community and home and beneficiaries, Medicare older to coverage drug tion

gained prominence, especially providing health care coverage to children, prescrip- children, to coverage care health providing especially prominence, gained

for Governor John Engler after his election in 1990. Over time, though, health has health though, time, Over 1990. in election his after Engler John Governor for

legislature and the governor’s office. Health care was not at first a notable priority notable a first at not was care Health office. governor’s the and legislature

Republicans set health policy in Michigan as they control both houses of the state the of houses both control they as Michigan in policy health set Republicans

Political and Fiscal Circumstances Fiscal and Political

Michigan is considering serious budget cuts. budget serious considering is Michigan

shortfalls are likely to affect state health programs, including Medicaid, because Medicaid, including programs, health state affect to likely are shortfalls

because of the terrorist attacks of September 11. The resulting projected revenue projected resulting The 11. September of attacks terrorist the of because

However, by the fall of 2001 the state’s economy began deteriorating, partly deteriorating, began economy state’s the 2001 of fall the by However,

cent of adults nationally. nationally. adults of cent

its adults were uninsured, compared with roughly 13 percent of children and 16 per- 16 and children of percent 13 roughly with compared uninsured, were adults its

of the country. As a result, only 7 percent of the state’s children and 11 percent of percent 11 and children state’s the of percent 7 only result, a As country. the of

role in health care coverage for Michigan’s low-income population than in the rest the in than population low-income Michigan’s for coverage care health in role

whole in the late 1990s. And employer-sponsored health insurance played a larger a played insurance health employer-sponsored And 1990s. late the in whole

Fewer adults and children lived in poverty in Michigan than in the nation as a as nation the in than Michigan in poverty in lived children and adults Fewer

the financial resources to support these efforts. these support to resources financial the

dents, and expanding Medicaid managed care. For most of this period, Michigan had Michigan period, this of most For care. managed Medicaid expanding and dents,

implementing a relatively generous prescription drug program for its senior resi- senior its for program drug prescription generous relatively a implementing

licly funded health care programs by creating a new health care program for children, for program care health new a creating by programs care health funded licly

Since the late 1990s, Michigan has expanded and implemented changes in its pub- its in changes implemented and expanded has Michigan 1990s, late the Since

Jane Tilly, Frank Ullman, and Julie Chesky Julie and Ullman, Frank Tilly, Jane Michigan The state has become more focused on controlling the growth of Medicaid costs. In recent years, average annual Medicaid expenditure growth has been about 5 percent. To contain Medicaid costs, during the late 1990s Michigan undertook a shift from fee-for-service delivery of health care services to a system dominated by HMOs. Though Medicaid cost increases have moderated under managed care, state officials worry about growth in pharmaceutical expenditures, which currently absorb 15 percent of the Medicaid budget and are increasing more rapidly than any other service. Pressures to contain Medicaid costs are likely to increase because the state projects a budget shortfall of about $800 million in FY 2003.

Coverage Expansions

Although Medicaid is the primary source of public health care coverage, Michigan implemented a new program for children in 1998. Using Title XXI or SCHIP funds, Michigan created MIChild, which covers children through age 18 with family incomes between 150 and 200 percent of FPL. The state relies on HMOs and the Blue Cross/Blue Shield Preferred Provider Organization network to deliver services to MIChild enrollees. The state also used SCHIP funds to expand Medicaid to include children ages 16 through 18 in families with incomes up to 150 percent of FPL. Medicaid, however, was not the major focus of expansion under SCHIP because such an expansion would have created a new entitlement and policymakers wanted to give children access to a program resembling mainstream health insurance. SCHIP enrollment and expenditures were initially lower than anticipated but they have grown over time. In December 1998, total SCHIP enrollment was 10,949.2 According to state officials, by June 2001, 21,691 children were enrolled in MIChild and 29,626 in the SCHIP Medicaid expansion. The increase in enrollment is attributed, in part, to the state’s outreach efforts, which have included major media campaigns, grants to local agencies, and the involvement of numerous state agencies. In addition to state efforts, the Blue Cross Blue Shield of Michigan Foundation introduced an initiative called Seek- Find-Enroll: Reducing the Number of Uninsured Children in Michigan, which awarded grants to community coalitions to conduct outreach activities, identify and reduce barriers to enrollment, and enroll eligible children in Medicaid and MIChild. Three Michigan communities—Detroit/Wayne County, Muskegon County, and the Upper Peninsula—also benefit from a $1 million grant from The Robert Wood Johnson Foundation to help fund outreach. In January 2002 the governor announced Michigan’s plans to submit a waiver to expand health coverage to 200,000 adults. The plan would increase income eligibility limits under Medicaid to expand coverage to more low-income and disabled people but also would cut some

services to current beneficiaries. 30 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 31

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more difficult to absorb. to difficult more

in DSH and UPL payments with minimal difficulty, but future reductions will be will reductions future but difficulty, minimal with payments UPL and DSH in

continue to be significant. To date, state officials have been able to absorb declines absorb to able been have officials state date, To significant. be to continue

the DSH program to increase state revenues. However, DSH and UPL payments UPL and DSH However, revenues. state increase to program DSH the

Recent federal legislation has imposed some limits on Michigan’s ability to use to ability Michigan’s on limits some imposed has legislation federal Recent

tal, one of the state’s largest public hospitals. hospitals. public largest state’s the of one tal,

Medicare would have paid. Michigan also provides UPL funding to Hurley Hospi- Hurley to funding UPL provides also Michigan paid. have would Medicare

payments are based on the difference between what Medicaid pays and what and pays Medicaid what between difference the on based are payments

units—county-owned medical care facilities and hospital chronic care units. These units. care chronic hospital and facilities care medical units—county-owned

the indigent, Michigan has UPL programs that make payments to nursing facility nursing to payments make that programs UPL has Michigan indigent, the

In addition to financing public hospitals and several county health care programs for programs care health county several and hospitals public financing to addition In

health care services to low-income residents not eligible for other public programs. public other for eligible not residents low-income to services care health

example, in Ingham and Wayne counties, Medicaid DSH funds are used to provide to used are funds DSH Medicaid counties, Wayne and Ingham in example,

incomes. These payments also help finance county-based indigent care programs. For programs. care indigent county-based finance help also payments These incomes.

marily payments to public hospitals that serve large numbers of people with low with people of numbers large serve that hospitals public to payments marily

services, amounting to about $1 billion a year. DSH payments to hospitals are pri- are hospitals to payments DSH year. a billion $1 about to amounting services,

Medicaid DSH and UPL strategies are significant sources of funds for acute care acute for funds of sources significant are strategies UPL and DSH Medicaid

and asthma patients, among others. others. among patients, asthma and

encourages HMOs to use established clinical standards for diabetic, AIDS, cardiac, AIDS, diabetic, for standards clinical established use to HMOs encourages

tain service delivery issues such as customer service and access to specialists. The state The specialists. to access and service customer as such issues delivery service tain

levels of consumer satisfaction but substantial variation among plans related to cer- to related plans among variation substantial but satisfaction consumer of levels

the state has produced reports on HMO performance, which show generally good generally show which performance, HMO on reports produced has state the

ever, these HMOs are now engaging in more quality assurance activities. Since 1999, Since activities. assurance quality more in engaging now are HMOs these ever,

inherent complexity and lack of prior experience with this type of reporting. How- reporting. of type this with experience prior of lack and complexity inherent

the most difficulty with this requirement, according to state officials, because of the of because officials, state to according requirement, this with difficulty most the

Care Organizations by the summer of 2002. Medicaid-only plans are experiencing are plans Medicaid-only 2002. of summer the by Organizations Care

mittee on Quality Assurance or the Joint Commission on the Accreditation of Health of Accreditation the on Commission Joint the or Assurance Quality on mittee

(HEDIS) quality data and must have certification from either the National Com- National the either from certification have must and data quality (HEDIS)

ance for HMOs. Plans must report Health Employment Data Information Set Information Data Employment Health report must Plans HMOs. for ance

The state has used its role as a purchaser of services to improve its quality assur- quality its improve to services of purchaser a as role its used has state The

plans are expected to show a profit on their Medicaid contracts in FY 2001. 2001. FY in contracts Medicaid their on profit a show to expected are plans

As a result of these changes, these of result a As responsible for the cost of psychotropic medications. psychotropic of cost the for responsible

11.7 percent in FY 2001 and eliminated the requirement that plans be financially be plans that requirement the eliminated and 2001 FY in percent 11.7

and other providers, the state increased HMO rates by 4 percent in FY 2000 and by and 2000 FY in percent 4 by rates HMO increased state the providers, other and

gan’s Medicaid managed care program. In response to complaints from health plans health from complaints to response In program. care managed Medicaid gan’s

Payment rates to participating HMOs have been a controversial issue in Michi- in issue controversial a been have HMOs participating to rates Payment

currently enrolled in managed care. care. managed in enrolled currently

medically needy, to enroll in HMOs. About 70 percent of Medicaid beneficiaries are beneficiaries Medicaid of percent 70 About HMOs. in enroll to needy, medically

nursing home residents, those dually eligible for Medicare and Medicaid, and the and Medicaid, and Medicare for eligible dually those residents, home nursing

a Medicaid freedom-of-choice waiver that required Medicaid beneficiaries, except beneficiaries, Medicaid required that waiver freedom-of-choice Medicaid a

including increasing reliance on Medicaid managed care. In 1997, Michigan received Michigan 1997, In care. managed Medicaid on reliance increasing including

Michigan has taken a number of steps to change its delivery of acute care services, care acute of delivery its change to steps of number a taken has Michigan Acute Care Acute Michigan is among those states implementing a relatively generous prescription drug coverage program for its older citizens; it replaces two programs that relied on tax credits and vouchers. In October 2001, Michigan began enrolling people age 65 and over with incomes below 200 percent of FPL in the Elder Prescription Insurance Coverage (EPIC) program, which receives funding from state general revenues and tobacco settlement funds. Beneficiaries pay a sliding-scale premium to enroll in EPIC.

Long-Term Care

Michigan has two large Medicaid home and community services programs and several much smaller state-funded programs that provide services to qualified persons with disabilities. The MI Choice Waiver for the Elderly and Disabled provides home care agency-based services to about 14,000 people who would otherwise be eligible for nursing home care. The Medicaid Home Help program (an optional personal care service), which began in the 1970s, provides personal care services using a consumer-directed model, where most beneficiaries hire and fire individual workers. In 2001, the Michigan Department of Community Health (MDCH) created a new administrative entity—the Long-Term Care Initiative—to coordinate all long- term care programs serving older persons and younger adults with physical disabilities, including the Medicaid MI Choice waiver and the Home Help program. The Initiative is also responsible for developing and implementing a new, comprehensive long-term care system based on models designed to contain costs through capitated payment and to offer more choice to beneficiaries. Michigan moved to managed care for persons with developmental disabilities and mental health conditions in 1998 because the state and consumer advocates wanted more flexibility for participants than was possible under the old system. In 1998, Michigan received approval for a Medicaid waiver to establish a statewide Medicaid managed care program for long-term recipients of mental health, substance abuse, and developmental disability services. The MDCH contracts with local or regional Community Mental Health Service Programs to manage and provide Medicaid mental health, substance abuse, and developmental disability services and supports under a prepaid, shared-risk arrangement.

Conclusion

Since the late 1990s, the state has implemented two major expansions of health care coverage: SCHIP and EPIC. The program for children had slow initial enrollment, but the state has tackled that issue with increased outreach efforts. The prescription drug program was implemented in October 2001, and the program’s experience with prescription drug cost increases will be instructive given recent rapid escalation

in use of this health care service in the Medicaid program. 32 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 33

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cymakers, particularly in light of the softening economy. economy. softening the of light in particularly cymakers,

cost growth. Medicaid cost containment is likely to remain a priority for state poli- state for priority a remain to likely is containment cost Medicaid growth. cost

icaid managed care will be a key issue for the state, as will managed care’s effects on effects care’s managed will as state, the for issue key a be will care managed icaid

disabled Medicaid beneficiaries. The effects of this pronounced trend toward Med- toward trend pronounced this of effects The beneficiaries. Medicaid disabled

now moving toward a capitated system to deliver long-term care services to aged and aged to services care long-term deliver to system capitated a toward moving now

has stabilized with increased payment rates and protections for enrollees. The state is state The enrollees. for protections and rates payment increased with stabilized has

recent years. Although implementation of this effort was controversial, the situation the controversial, was effort this of implementation Although years. recent The shift to Medicaid managed care has also been a key health policy issue in issue policy health key a been also has care managed Medicaid to shift The

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required that funds be used on new programs rather than supplementing programs supplementing than rather programs new on used be funds that required

to 275 percent of FPL under MinnesotaCare. Because the SCHIP legislation SCHIP the Because MinnesotaCare. under FPL of percent 275 to

gram. In 1997, Minnesota already received Medicaid matching funds for children up children for funds matching Medicaid received already Minnesota 1997, In gram.

under Medicaid and MinnesotaCare, Minnesota operates only a small SCHIP pro- SCHIP small a only operates Minnesota MinnesotaCare, and Medicaid under

In part because of its long commitment to covering its low-income population low-income its covering to commitment long its of because part In

within its SCHIP and Medicaid programs. programs. Medicaid and SCHIP its within

In recent years, the state has continued to expand coverage around the margins the around coverage expand to continued has state the years, recent In

their parents, and pregnant women with family incomes up to 275 percent of FPL. of percent 275 to up incomes family with women pregnant and parents, their

grams. Between Medicaid and MinnesotaCare, the state offers coverage for children, for coverage offers state the MinnesotaCare, and Medicaid Between grams.

Minnesota has established generous eligibility standards for its health insurance pro- insurance health its for standards eligibility generous established has Minnesota

Coverage Expansions Coverage

a projected deficit of nearly $2 billion in FY 2002–03. 2002–03. FY in billion $2 nearly of deficit projected a

Nevertheless, Minnesota is beginning 2002 with 2002 beginning is Minnesota Nevertheless, than that of the nation as a whole. a as nation the of that than

began to slow in 2001 and into 2002, the state’s recovery is predicted to be faster be to predicted is recovery state’s the 2002, into and 2001 in slow to began

biennium of 1999–2001 (fiscal years 2000 and 2001). Although the state’s economy state’s the Although 2001). and 2000 years (fiscal 1999–2001 of biennium

surplus grew steadily larger over that period, reaching a projected $5 billion for the for billion $5 projected a reaching period, that over larger steadily grew surplus

Minnesota had significant budget surpluses every year from 1996 to 2001. The 2001. to 1996 from year every surpluses budget significant had Minnesota

views on the distribution of funding and the nature of sustainable tax cuts. tax sustainable of nature the and funding of distribution the on views

itics, with each legislative chamber and the governor often maintaining divergent maintaining often governor the and chamber legislative each with itics,

control of the DFL. This unusual tripartisan government has complicated state pol- state complicated has government tripartisan unusual This DFL. the of control

Farmer-Labor (DFL) Party to the Republicans. The state senate remains under the under remains senate state The Republicans. the to Party (DFL) Farmer-Labor

1998. The state house of representatives also changed hands, from the Democratic the from hands, changed also representatives of house state The 1998.

social liberal, and former pro-wrestler, to replace Governor Arne Carlson (R) in (R) Carlson Arne Governor replace to pro-wrestler, former and liberal, social

been the election of Jesse Ventura (I), a third-party candidate, fiscal conservative, fiscal candidate, third-party a (I), Ventura Jesse of election the been

The most notable political development in Minnesota over the past five years has years five past the over Minnesota in development political notable most The

Political and Fiscal Circumstances Fiscal and Political

care programs over the past few years. years. few past the over programs care

eral Assistance Medical Care program. The state has continued to invest in its health its in invest to continued has state The program. Care Medical Assistance eral

ance program for the low-income population (MinnesotaCare) and a generous Gen- generous a and (MinnesotaCare) population low-income the for program ance

liberal eligibility policies and a rich set of benefits, as well as a subsidized health insur- health subsidized a as well as benefits, of set rich a and policies eligibility liberal

population. The state supports a comprehensive Medicaid program, characterized by characterized program, Medicaid comprehensive a supports state The population.

been a national leader in state efforts to expand health insurance to the low-income the to insurance health expand to efforts state in leader national a been

Minnesota boasts one of the lowest uninsurance rates in the nation, and it has long has it and nation, the in rates uninsurance lowest the of one boasts Minnesota

Sharon K. Long and Stephanie Kendall Stephanie and Long K. Sharon Minnesota already in place,3 Minnesota had little opportunity to use its federal SCHIP allotment. Consequently, Minnesota submitted and received approval in 1998 for a small SCHIP program that would serve as a “placeholder” to prevent the state from losing its allotted SCHIP funds. Minnesota’s SCHIP program offers coverage to children under age 2 with family incomes between 275 and 280 percent of FPL. The program covers about 20 children.4 In December 2000, Minnesota applied for an amendment to its existing 1115 waiver under new Health Care Financing Administration (HCFA) guidelines that would allow it to use SCHIP funds to improve its existing programs. The state received HCFA approval in June 2001 to, among other things, receive SCHIP funds with an enhanced federal match for parents or relative caretakers of children enrolled in MinnesotaCare with incomes between 100 and 200 percent of FPL. Although Minnesota already receives Medicaid matching funds for this population, SCHIP provides a higher percentage match than Medicaid.5 Eligibility for Medicaid in Minnesota has historically been very extensive, and the state has continued to expand eligibility around the margins. Recent expansions of coverage include a small adjustment for inflation in the income standards for Medic- aid under Section 1931 provisions,6 an increase in the income standards for aged, blind, and disabled individuals from 70 to 100 percent of FPL, the removal of an asset test for pregnant women and children, and the extension of Medicaid benefits to higher-income employed disabled persons.7 The state has also garnered Medicaid matching funds for adults enrolled in its MinnesotaCare program under its Section 1115 waiver. Federal matching funds were extended to include the parents and caretakers of children8 enrolled in MinnesotaCare with incomes up to 175 percent of FPL in 1999 and up to 275 percent of FPL in 2001.9 In addition, beginning in July 2002, the income limit for children under Medicaid will be raised to 170 percent of FPL, while the income limit for parents will be raised to 100 percent of FPL, increasing continuity of coverage and raising the income threshold at which the family is subject to premiums under MinnesotaCare. A particularly significant expansion has been the extension of the Medicaid program to working persons with disabilities at higher income levels. In 1999, Min- nesota enacted the Medical Assistance for Employed Persons with Disabilities program, which offers Medicaid coverage to employed disabled persons under 65 at any income level but with assets below $20,000. Enrollment under the program, at 5,500 in December 2000, has exceeded state expectations, and proposals to address higher-than-expected program costs are being considered.10

Acute Care

Minnesota is also known for its innovation in health care delivery. Starting in 1985, the state began moving its Medicaid population into capitated managed care under one of the first Section 1115 Medicaid competition demonstrations—the Prepaid Medical Assistance Program (PMAP). By early 2001, Minnesota had successfully

established PMAP in nearly all of its counties, and it continues its efforts to intro- 36 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 37

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to address the health care needs of its aging population more efficiently. The state is state The efficiently. more population aging its of needs care health the address to

Minnesota is in the early stages of a major restructuring of its long-term care system care long-term its of restructuring major a of stages early the in is Minnesota

Long-Term Care Long-Term

include disabled people under age 65 with income less than 120 percent of FPL. of percent 120 than less income with 65 age under people disabled include

seniors had enrolled in PDP. The PDP program is set to expand in July 2002 to 2002 July in expand to set is program PDP The PDP. in enrolled had seniors

after the enrollee pays the $35 monthly deductible. As of January 2001, about 5,600 about 2001, January of As deductible. monthly $35 the pays enrollee the after

gram increased to 135 percent of FPL. The program pays for most prescription drugs prescription most for pays program The FPL. of percent 135 to increased gram

In January 2002, the income standard for the pro- the for standard income the 2002, January In $18,000 or less for a couple. a for less or $18,000

at or below 120 percent of FPL and assets of $10,000 or less for an individual or individual an for less or $10,000 of assets and FPL of percent 120 below or at

program, which began in 1999, serves elderly persons age 65 or older with income with older or 65 age persons elderly serves 1999, in began which program,

Prescription Drug Program (PDP), originally called the Senior Drug Program. The Program. Drug Senior the called originally (PDP), Program Drug Prescription

low-income elderly and disabled persons through a new state program, Minnesota’s program, state new a through persons disabled and elderly low-income

In response to rising prescription drug prices, Minnesota has focused on helping on focused has Minnesota prices, drug prescription rising to response In

to reinstate the full amount of funding. of amount full the reinstate to

2000–2002 remained at $16 million. Minnesota congressional members are working are members congressional Minnesota million. $16 at remained 2000–2002

funding for fiscal years 1998 and 1999; however, federal funding for fiscal years fiscal for funding federal however, 1999; and 1998 years fiscal for funding

Congressional action resulted in a reinstatement of the full $33 million in federal in million $33 full the of reinstatement a in resulted action Congressional

allotment to roughly $16 million because of an error in federal and state reporting. state and federal in error an of because million $16 roughly to allotment

gram was dramatically cut when the BBA reduced the state’s $33 million federal million $33 state’s the reduced BBA the when cut dramatically was gram

Medicaid program in Minnesota (only $56 million in 1998), Minnesota’s small pro- small Minnesota’s 1998), in million $56 (only Minnesota in program Medicaid

Although DSH payments have not been a significant source of funds for the for funds of source significant a been not have payments DSH Although

dents noted little evidence of improvement. of evidence little noted dents

most severe shortages of trained workers. Despite these efforts, however, respon- however, efforts, these Despite workers. trained of shortages severe most

Care Administrative Partnership to provide appropriate training in areas with the with areas in training appropriate provide to Partnership Administrative Care

joined with the state and some business groups to form a coalition called the Health the called coalition a form to groups business some and state the with joined

ers in the private sector are also taking steps to ease the shortage—hospitals have shortage—hospitals the ease to steps taking also are sector private the in ers

to reduce education barriers to increasing the supply of health care workers. Employ- workers. care health of supply the increasing to barriers education reduce to

ments for some workers, and establishing loan forgiveness and scholarship programs scholarship and forgiveness loan establishing and workers, some for ments

run by the Minnesota Job Skills Partnership program, relaxing certification require- certification relaxing program, Partnership Skills Job Minnesota the by run

eral initiatives, including funding a two-year worker training and retention program retention and training worker two-year a funding including initiatives, eral

The state has attempted to address the health care worker shortage through sev- through shortage worker care health the address to attempted has state The

shortage of health care workers. workers. care health of shortage

to growing immigrant populations), concern about reimbursement rates, and the and rates, reimbursement about concern populations), immigrant growing to

ronment, including uncompensated-care increases in urban areas (attributed in part in (attributed areas urban in increases uncompensated-care including ronment,

administrators and state officials. Several factors have contributed to the current envi- current the to contributed have factors Several officials. state and administrators

bond downgrades and dips in profit margins are cause for concern among hospital among concern for cause are margins profit in dips and downgrades bond

they are beginning to show some of the strains of rising health care costs. Recent costs. care health rising of strains the of some show to beginning are they

Though hospitals in Minnesota have been quite stable over the past several years, several past the over stable quite been have Minnesota in hospitals Though

Medicaid eligibility expansions. eligibility Medicaid

ing counties. Under the waiver, savings generated under PMAP are used to support to used are PMAP under generated savings waiver, the Under counties. ing duce either PMAP or alternative versions of Medicaid managed care in the remain- the in care managed Medicaid of versions alternative or PMAP either duce investing heavily in home- and community-based care (with a growing emphasis on consumer-directed care), while reducing institutional care for its elderly and disabled populations. Because of the scope of Minnesota’s home- and community-based services, state officials have not felt it necessary to prepare a specific plan that addresses the Olmstead decision. Minnesota operates six home- and community-based care waiver programs under Section 1915 of the Social Security Act. Five of those waivers provide home- and community based services to specific populations at risk for institutionalization. Min- nesota’s sixth waiver represents a major innovation in care delivery—the Minnesota Senior Health Options Program (MSHO). MSHO provides coordinated primary, acute, and long-term care services under Medicaid and Medicare services for dually eligible persons age 65 or older, and represents the first of only four joint Medicaid and Medicare waivers granted by the HCFA.13 As of 2001, MSHO was operating in seven counties in the Twin Cities metropolitan area and three rural counties, with enrollment totaling 4,138 as of April 2001.14 The state is also moving forward with a new program to enroll younger disabled Medicaid beneficiaries into managed care, called the Minnesota Disability Health Options (MnDHO) program. Like MSHO, MnDHO integrates primary, acute, and long-term services under Medicaid and Medicare.15 In addition to Minnesota’s efforts under the Medicaid program, the state also supports the Alternative Care Program (ACP), which is aimed at increasing home- and community-based care for elderly persons who do not qualify for Medicaid. ACP serves state residents age 65 or older who are at risk of nursing home placement but do not have personal income or assets to cover 180 days in a nursing facility. In 2000, the ACP served 10,696 people at a cost of more than $49 million.16 Like other sectors of the health care industry, long-term care providers have been struggling with the worker shortage. Some nursing homes have been forced to eliminate beds or even close entire wings because of an inability to meet minimum staffing levels. This has contributed to waiting lists for some nursing homes in the state.17 The legislature has taken a number of steps to try to address the shortage of long-term care workers. Most notably, every year since 1997 the state has approved reimbursement rate increases to support increases in salaries for health care workers.

Conclusion

Minnesota continues to build on its strong health care system, both by expanding coverage to new populations and by refining its service delivery strategies. Most notably, Minnesota has efforts under way to expand health care coverage for elderly and disabled persons, to reshape its long-term care system to meet the needs of an aging population at lower costs, to control prescription drug costs for elderly and disabled persons, and to implement quality initiatives for health plans participating in public programs. Minnesota’s health care efforts into 2001 were bolstered by a

strong economy and high levels of employer-sponsored health insurance coverage, a 38 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 39

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funds.

rising health care costs and competing demands on the state budget and tobacco and budget state the on demands competing and costs care health rising

The resolution of this issue could have a lasting impact on program funding, given funding, program on impact lasting a have could issue this of resolution The

ums, and drug wholesalers to either the general budget or tobacco settlement funds. settlement tobacco or budget general the either to wholesalers drug and ums,

proposal to shift funding for MinnesotaCare from taxes on providers, HMO premi- HMO providers, on taxes from MinnesotaCare for funding shift to proposal

the right in recent years. Moreover, the health policy agenda may be affected by a by affected be may agenda policy health the Moreover, years. recent in right the

turn in 2001–2002 and the political environment in Minnesota, which has shifted to shifted has which Minnesota, in environment political the and 2001–2002 in turn

issues are resolved in the future will be shaped by both the state’s economic down- economic state’s the both by shaped be will future the in resolved are issues

Minnesota must deal with the needs of a growing immigrant population. How these How population. immigrant growing a of needs the with deal must Minnesota

health care workers, and increasing uncompensated care in urban areas. In addition, In areas. urban in care uncompensated increasing and workers, care health

rising health care costs (particularly prescription drug costs), a severe shortage of shortage severe a costs), drug prescription (particularly costs care health rising

However, there are signs of increasing stress in the health care system, including system, care health the in stress increasing of signs are there However,

lic to the state’s considerable health care system. care health considerable state’s the to lic substantial tobacco settlement, and a commitment from elected officials and the pub- the and officials elected from commitment a and settlement, tobacco substantial

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The budget problems are expected to worsen in the coming year, and whether Med- whether and year, coming the in worsen to expected are problems budget The

of those funds has helped mitigate the budget crunch for health-related programs. health-related for crunch budget the mitigate helped has funds those of

All of Mississippi’s tobacco settlement funds are targeted for health, and the use the and health, for targeted are funds settlement tobacco Mississippi’s of All

lic health and mental health. health. mental and health lic

programs and on health programs not receiving federal matching funds, such as pub- as such funds, matching federal receiving not programs health on and programs

February 2001. Medicaid was spared these cuts, which fell primarily on nonhealth on primarily fell which cuts, these spared was Medicaid 2001. February

enue shortfall, two rounds of budget cuts were announced, in November 2000 and 2000 November in announced, were cuts budget of rounds two shortfall, enue

the state has been under severe budget pressure (in FY 2001). In response to a rev- a to response In 2001). FY (in pressure budget severe under been has state the

part to the increase in revenues from the growing gaming industry. More recently, More industry. gaming growing the from revenues in increase the to part

Improvement in the operating budget came from strong growth in revenues, due in due revenues, in growth strong from came budget operating the in Improvement

uary 2000, the state’s rainy day fund was about 7.5 percent of appropriations. of percent 7.5 about was fund day rainy state’s the 2000, uary

math of recession, the state’s rainy day fund was nearly depleted. When he left in Jan- in left he When depleted. nearly was fund day rainy state’s the recession, of math

below the national average. When Governor Fordice took office in 1992 in the after- the in 1992 in office took Fordice Governor When average. national the below

1990s, the state still ranks last in per capita income––$20,993 in 1999, about $9,000 about 1999, in income––$20,993 capita per in last ranks still state the 1990s,

Although Mississippi’s economy performed well throughout the latter half of the of half latter the throughout well performed economy Mississippi’s Although

76.8 and 83.8 percent, respectively. percent, 83.8 and 76.8

en by the generous federal matching rates for both Medicaid and SCHIP, currently SCHIP, and Medicaid both for rates matching federal generous the by en

The strength of political support for state health spending appears to be strong, driv- strong, be to appears spending health state for support political of strength The

may be rising as a priority, as evidenced by a series of health care summits in 2001. in summits care health of series a by evidenced as priority, a as rising be may

increasing enrollment in the Mississippi Health Benefits program. Health care issues care Health program. Benefits Health Mississippi the in enrollment increasing

tration, the governor has been supportive of many health initiatives, particularly initiatives, health many of supportive been has governor the tration,

himself. Although health care has not been a high priority in Musgrove’s adminis- Musgrove’s in priority high a been not has care health Although himself.

governor, replaced the two-term Republican Kirk Fordice, who could not succeed not could who Fordice, Kirk Republican two-term the replaced governor,

the governor’s office. Governor Ronnie Musgrove, formerly the state’s lieutenant state’s the formerly Musgrove, Ronnie Governor office. governor’s the

senators. In contrast, at the state level, Democrats control both the legislature and legislature the both control Democrats level, state the at contrast, In senators.

Mississippi’s U.S. congressional delegation is majority Republican, including both including Republican, majority is delegation congressional U.S. Mississippi’s

Political and Fiscal Circumstances Fiscal and Political

term care options for people with mental illness or developmental disabilities. disabilities. developmental or illness mental with people for options care term

age expansions for children and the aged, blind, and disabled; and expanding long- expanding and disabled; and blind, aged, the and children for expansions age

state’s health programs in an era of emerging fiscal constraints; implementing cover- implementing constraints; fiscal emerging of era an in programs health state’s

gram. Other current health policy issues include maximizing federal dollars for the for dollars federal maximizing include issues policy health current Other gram.

and implementation of Mississippi’s SCHIP, the Mississippi Health Benefits pro- Benefits Health Mississippi the SCHIP, Mississippi’s of implementation and

SCHIP in the late 1990s resulted in swift response as attention focused on the design the on focused attention as response swift in resulted 1990s late the in SCHIP

been dedicated to health activities. The availability of new federal funding under funding federal new of availability The activities. health to dedicated been

available, the state has acted. The state’s proceeds from the tobacco settlement have settlement tobacco the from proceeds state’s The acted. has state the available,

limit opportunities for new initiatives. In recent years, when funding has been made been has funding when years, recent In initiatives. new for opportunities limit

State health policy in Mississippi evolves slowly because funding constraints generally constraints funding because slowly evolves Mississippi in policy health State

Barbara Ormond and Frank Ullman Frank and Ormond Barbara Mississippi icaid will continue to be protected is an important question. The rate of increase in Medicaid expenditures has been rising, driven in part by the rising cost of pharmaceuticals and rising expenditures on nursing homes. Increased enrollment has also fueled expenditure growth, with expansions for children under SCHIP that have increased participation in Medicaid and, more significantly, for high-cost groups such as those with disabilities or with HIV. Although proposals in the current (January 2002) legislative session do not include cutbacks in eligibility, officials are seeking to limit enrollment by eliminating outreach under both Medicaid and SCHIP. Cuts in services and reimbursement have also been proposed. Mississippi has a relatively large DSH program ($136 billion in federal payments in 2000) and has recently begun to take advantage of the UPL program to bring additional federal funds into Medicaid. The state’s DSH allotments were cut somewhat by the BBA and are scheduled to decrease again after 2002. The state share is funded through intergovernmental transfers, and participating hospitals keep a percentage of the federal payments; the rest is returned to the state. Mississippi began its first UPL program for nursing homes in fall 2000 and, encouraged by the hospital association, expanded participation to hospitals in summer 2001. Reductions in these federal payments will add to the problems the state is facing because of the recession.

Coverage Expansions

While Mississippi’s expansion for poverty-level aged and disabled adults is notewor- thy as the most generous in the nation, the bulk of policymakers’ attention has been focused on children. The first phase of the state’s SCHIP, undertaken in October 1998, effectively accelerated the federally mandated phase-in of Medicaid coverage for older children with family incomes up to 100 percent of FPL. In February 1999, Mississippi received federal approval to offer private, non-Medicaid coverage to children in families with incomes up to 133 percent of FPL (subsequently increased to 200 percent). This non-Medicaid phase of Mississippi’s SCHIP was implemented on December 20, 2000. The two phases of the program are known jointly as the Mis- sissippi Health Benefits Program, which also encompasses Medicaid coverage for pregnant women and children. A joint application covers all three components of the Mississippi Health Benefits Program. Both phases of Mississippi’s SCHIP started slowly. Consequently, enrollment and total expenditures were initially lower than anticipated. Enrollment has grown over time. In December 1998, enrollment was 5,968; by June 2000 enrollment had reached 21,217.1 Of these enrollees, about half were in the Medicaid SCHIP expansion and half in the non-Medicaid component. According to state figures, 41,542 children were enrolled in May 2001. Nonetheless, Mississippi had spent only 50 percent of the state’s 1998 federal allotment by the end of 2000––$29 million out of $56 million.2 To boost enrollment and draw down the allotment, the state eased eli-

gibility rules and eliminated the required six months with no insurance before eligi- 42 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 43

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abled residents who need or will need services, (2) an estimate of the cost to imple- to cost the of estimate an (2) services, need will or need who residents abled

working group is to develop a plan to provide (1) an estimate of the number of dis- of number the of estimate an (1) provide to plan a develop to is group working

sippi Access to Care, a working group with open membership, was created. The created. was membership, open with group working a Care, to Access sippi

. In response, Missis- response, In . Olmstead on lead the take to Medicaid of Division the ordered

decision. In November 2000, Governor Musgrove Governor 2000, November In decision. Olmstead the to responses

system will come out of the task force that has been set up to draft the state’s the draft to up set been has that force task the of out come will system

enough or whether nursing facility care was required). They are hopeful that such a such that hopeful are They required). was care facility nursing whether or enough

both eligibility and level of care (whether home- or community-based services were services community-based or home- (whether care of level and eligibility both

a system in which people needing long-term care would be screened to determine to screened be would care long-term needing people which in system a

Demand for alternatives to institutional care is growing. Medicaid officials envision officials Medicaid growing. is care institutional to alternatives for Demand

Long-Term Care Long-Term

abled once remaining issues with the TANF population are resolved. resolved. are population TANF the with issues remaining once abled

MACS, but officials are considering expanding the program to the elderly and dis- and elderly the to program the expanding considering are officials but MACS,

beneficiaries. Currently, only TANF-related beneficiaries are eligible for Health- for eligible are beneficiaries TANF-related only Currently, beneficiaries.

tations, they see the program as worthwhile in its establishment of medical homes for homes medical of establishment its in worthwhile as program the see they tations,

icaid officials have not achieved cost savings commensurate with their original expec- original their with commensurate savings cost achieved not have officials icaid

While Med- While 1993 and currently covers almost 65 percent of the eligible population. eligible the of percent 65 almost covers currently and 1993

management program, HealthMACS. HealthMACS was implemented in October in implemented was HealthMACS HealthMACS. program, management

for-service Medicaid and then, if they were eligible, to the state’s primary care case care primary state’s the to eligible, were they if then, and Medicaid for-service

As the program folded, Medicaid HMO enrollees were easily shifted back to fee- to back shifted easily were enrollees HMO Medicaid folded, program the As

dominantly rural state, making the development of provider networks difficult. difficult. networks provider of development the making state, rural dominantly

ficiaries had had much experience with managed care. Finally, Mississippi is a pre- a is Mississippi Finally, care. managed with experience much had had ficiaries

is very little commercial managed care in Mississippi, so neither providers nor bene- nor providers neither so Mississippi, in care managed commercial little very is

care introduced the potential for adverse selection into the program. Second, there Second, program. the into selection adverse for potential the introduced care

limits on inpatient care days, physician visits, and prescription drugs) in managed in drugs) prescription and visits, physician days, care inpatient on limits

receivership because of several factors. First, the removal of service restrictions (i.e., restrictions service of removal the First, factors. several of because receivership

By 2000, all of the participating HMOs had either withdrawn or been placed in placed been or withdrawn either had HMOs participating the of all 2000, By

and to make enrollment voluntary rather than mandatory. mandatory. than rather voluntary enrollment make to and

legislature decided to scale back from a statewide to a pilot program in 11 counties 11 in program pilot a to statewide a from back scale to decided legislature

aged care on which to build quickly led to reduced support for the program. The program. the for support reduced to led quickly build to which on care aged

managed care in neighboring Tennessee and the lack of a base of commercial man- commercial of base a of lack the and Tennessee neighboring in care managed

originally envisioned as a statewide program, but negative publicity surrounding publicity negative but program, statewide a as envisioned originally

HMO contract and capitation rates in January 1996. Medicaid managed care was care managed Medicaid 1996. January in rates capitation and contract HMO

as a way to control rising expenditures. The HCFA (now CMS) approved a model a approved CMS) (now HCFA The expenditures. rising control to way a as

In 1995, the legislature created a program of capitated managed care for Medicaid for care managed capitated of program a created legislature the 1995, In

Acute Care Care Acute

who had failed to recertify until the recertification process could be fixed. fixed. be could process recertification the until recertify to failed had who bility. Recertification has been a problem, so the state stopped disenrolling children disenrolling stopped state the so problem, a been has Recertification bility. ment the plan, and (3) a proposal for funding. The long-range goal is make community-based services available to all persons with disabilities by June 30, 2011.

Other Developments

Eighty percent of the state’s hospitals, representing two-thirds of total beds, are located in rural areas. To assist rural hospitals, the state enacted the Mississippi Rural Hospital Flexibility Act of 1998 to strengthen rural hospital systems by designating certain rural hospitals as “critical access hospitals” in accordance with the federal Medicare Rural Hospital Flexibility Program.4 This federal program allows small rural hospitals to operate as less than full-service institutions and still receive cost- based Medicare reimbursement. However, the program is not as attractive to rural hospitals as its designers had hoped. In response to dwindling inpatient revenues in the 1990s, rural hospitals have diversified their activities, often tailoring their service offerings not only to need but also to the availability of preferential reimbursement for skilled nursing facilities and distinct part geriatric psychiatry units. The hospitals would have to close these units in order to qualify for critical access status. In addition to the wider nursing shortage, rural areas face major challenges in the recruitment and retention of physicians. The state recently established a loan repayment program for medical graduates and began allowing physician assistants to practice throughout the state, not just in urban areas, to help ease the health professional shortage in rural areas.

Conclusion

Mississippi suffers from the dual problem of a large poor population with significant health care needs and a small state budget with which to meet these needs. The recent change in governor in Mississippi has brought a new approach to addressing the problem––looking to Medicaid as a way to bring federal dollars into the state to help meet the needs of Mississippi’s poorer citizens––although the state has yet to fully implement this strategy. In addition, the tobacco settlement funds, which the state has chosen to devote almost entirely to health, and the SCHIP have provided new opportunities for the state to expand its public programs. However, the current economic downturn may exacerbate Mississippi’s woes with potentially rising Med-

icaid rolls coupled with stagnating state revenues. 44 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 45

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As she left in January 2001, the 2001, January in left she As exceeded base revenue by roughly $1.59 billion. $1.59 roughly by revenue base exceeded

took office in 1994 in the aftermath of the recession, when annual expenditures annual when recession, the of aftermath the in 1994 in office took

$35,551 in 1999, about $7,000 above the national average. Governor Whitman Governor average. national the above $7,000 about 1999, in $35,551

early 1990s recession. The state ranked second among states in per capita income— capita per in states among second ranked state The recession. 1990s early

New Jersey’s economy performed robustly after a difficult emergence from the from emergence difficult a after robustly performed economy Jersey’s New

Health policy was not prominent in the campaign. the in prominent not was policy Health

Democrats regained control of the assembly, and the senate was split evenly, 20-20. evenly, split was senate the and assembly, the of control regained Democrats

Democrat Jim McGreevey won the gubernatorial election of November 2001, November of election gubernatorial the won McGreevey Jim Democrat

became acting governor as well, but withdrew from campaigning for the office. the for campaigning from withdrew but well, as governor acting became

Agency in the Bush administration. Senate President Donald DiFrancesco then DiFrancesco Donald President Senate administration. Bush the in Agency

a year early, leaving in January 2001 to run the federal Environmental Protection Environmental federal the run to 2001 January in leaving early, year a

FamilyCare. Whitman won a second term in 1997, although narrowly, then resigned then narrowly, although 1997, in term second a won Whitman FamilyCare.

age expansions beyond conventional Medicaid, through NJ KidCare and then NJ then and KidCare NJ through Medicaid, conventional beyond expansions age

already begun. Over time, she gave health care higher priority, especially for cover- for especially priority, higher care health gave she time, Over begun. already

key health policy shift of the early 1990s––deregulation of hospital rates––had hospital of 1990s––deregulation early the of shift policy health key

Governor Whitman’s key priorities. Health care was not a prominent issue, and the and issue, prominent a not was care Health priorities. key Whitman’s Governor

maintain services during the recession. Tax cutting and economic development were development economic and cutting Tax recession. the during services maintain

breaking clear campaign promises by pushing through a large tax increase in 1990 to 1990 in increase tax large a through pushing by promises campaign clear breaking

Christie Whitman over incumbent Governor Jim Florio, who was discredited after discredited was who Florio, Jim Governor incumbent over Whitman Christie

control of the legislature in 1992 and the governorship in 1994. Voters elected Voters 1994. in governorship the and 1992 in legislature the of control

Republicans dominated state politics from 1992 until 2002. They gained complete gained They 2002. until 1992 from politics state dominated Republicans

Political and Fiscal Circumstances Fiscal and Political

threatened than most state programs. state most than threatened

in percentage terms. Further cuts are expected, although health care appears less appears care health although expected, are cuts Further terms. percentage in

took office in January 2002, New Jersey seemed to face the largest deficit of any state any of deficit largest the face to seemed Jersey New 2002, January in office took

taneously, state revenues began to decline markedly. As a new Democratic governor Democratic new a As markedly. decline to began revenues state taneously,

ceiling was reached for covering adults not eligible for traditional Medicaid. Simul- Medicaid. traditional for eligible not adults covering for reached was ceiling

in the early 1990s. The expansionary era ended in September 2001 because a preset a because 2001 September in ended era expansionary The 1990s. early the in

Republicans assumed control of the governorship and both houses of the legislature the of houses both and governorship the of control assumed Republicans

been prompted both by economic downturn and by a shift in political philosophy as philosophy political in shift a by and downturn economic by both prompted been

tory Medicaid managed care for cash-assistance beneficiaries. Such downsizing had downsizing Such beneficiaries. cash-assistance for care managed Medicaid tory

hospital uncompensated care, cuts in hospital and nursing home rates, and manda- and rates, home nursing and hospital in cuts care, uncompensated hospital

state had been implementing hospital deregulation, major reductions in support for support in reductions major deregulation, hospital implementing been had state

of active public retrenchment and downsizing. During the early to mid-1990s, the mid-1990s, to early the During downsizing. and retrenchment public active of

public oversight of private coverage. This was a marked shift from the previous era previous the from shift marked a was This coverage. private of oversight public

lic coverage increased, especially for low- and moderate-income children, and so did so and children, moderate-income and low- for especially increased, coverage lic

In recent years, New Jersey substantially expanded its role in health financing. Pub- financing. health in role its expanded substantially Jersey New years, recent In

Randall R. Bovbjerg and Frank C. Ullman C. Frank and Bovbjerg R. Randall New Jersey New state was projecting a $1 billion surplus in the $22 billion budget proposed for 2002, of which about two-thirds constituted a formal rainy day fund whose use is restricted. In addition, control over Medicaid spending has consistently been a key priority and has met with considerable success. Starting from a high spending base, Medicaid grew only 3 percent a year from 1995 to 2000, compared with 5 percent nationally. Budgetary pressures were building, however. In 2000, state expenditures slightly outgrew projections for the fiscal year, but so did revenues. The state had also accu- mulated a high level of debt, which it was able to finance. Supplemental appropriations were needed in mid-2000, for instance, to deal with damage from Hurricane Floyd. The HMO bailout legislation also needed a supplemental appropriation, but Medicaid and other health programs did not. NJ FamilyCare enrollment grew far faster than expected once fully implemented early in calendar 2001, but extra costs were met with slack elsewhere in the budget. As the FY 2002 budget was adopted in June 2001, revenues were still expected to grow, but much more slowly than had been assumed by Whitman’s proposals in January. The final budget raised revenues and cut spending by nearly $1 billion. More adjustments quickly became needed as revenues began falling well below projections. The administration deferred much capital and other spending, announced a hiring freeze, cut administrative funding across the board, and asked departments to prepare program cuts. Adjustments largely spared Medicaid, however, whose FamilyCare expansion had already reached its target ceiling and been curtailed. Governor-elect McGreevey called for even more drastic measures, estimating even higher shortfalls. As he took office in January 2002, yet higher estimates of deficit were publicized.

Coverage Expansions

In the late 1990s, public coverage expanded incrementally to quite generous levels. By early 2001, New Jersey offered coverage to children with family incomes up to 350 percent of FPL, parents up to 200 percent, and childless adults up to 100 percent, funded by a mix of funding streams. Some state funding is contributed with no federal match, using a large portion of the tobacco settlement funds—more of which goes to health care in New Jersey than in the average state. The state’s income eligibility levels are among the highest in the nation. Medicaid, children’s, and adult coverages now operate as varying benefit packages within a single program, dubbed NJ FamilyCare. New Jersey’s SCHIP expansion for children is the most generous in the nation, whether measured as the highest income eligibility threshold or the largest rise in threshold after SCHIP. SCHIP expanded in several phases. The first expansion, in February 1998, covered children up to age 19 in families with incomes up to 133 percent of FPL, who were enrolled in Medicaid. This group included older children, age 6 to 18, who were not already eligible for Medicaid. A month later, New Jersey began offering non-Medicaid coverage to children with family incomes between 133

and 200 percent of FPL. In July 1999, the state expanded non-Medicaid coverage 46 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 47

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year’s eligibility. year’s

pants might be disenrolled for ignoring repeated notices to re-enroll at the end of a of end the at re-enroll to notices repeated ignoring for disenrolled be might pants

2001, although officials warned in January that up to 15,000 FamilyCare partici- FamilyCare 15,000 to up that January in warned officials although 2001,

queue before September. Further cuts had not been announced through December through announced been not had cuts Further September. before queue

Prior eligibility was maintained for existing enrollees and applicants in the in applicants and enrollees existing for maintained was eligibility Prior care plan. care

for new adult applicants and delayed benefits until enrollees actually enter a managed a enter actually enrollees until benefits delayed and applicants adult new for

needed to stay within budget. In mid-August, officials drastically curbed eligibility curbed drastically officials mid-August, In budget. within stay to needed

maintain high eligibility ceilings and authorized administrators to do whatever was whatever do to administrators authorized and ceilings eligibility high maintain

help cope with the unexpectedly rapid enrollment, but did not add enough funds to funds enough add not did but enrollment, rapid unexpectedly the with cope help

early August. In June, the final FY 2002 budget added modest new state funding to funding state new modest added budget 2002 FY final the June, In August. early

enrollees in three years, but reached 75,000 within three months, and 123,285 by 123,285 and months, three within 75,000 reached but years, three in enrollees

ment. Enrollment greatly exceeded expectations. The state planned for 125,000 for planned state The expectations. exceeded greatly Enrollment ment.

where. But support was capped and eligibility was understood not to be an entitle- an be to not understood was eligibility and capped was support But where.

because of the tobacco settlement funds and controlled growth in Medicaid and else- and Medicaid in growth controlled and funds settlement tobacco the of because

they see as a high-quality program. Fiscal support for the program was available was program the for support Fiscal program. high-quality a as see they

All New Jersey interviewees spoke with pride of creating NJ FamilyCare, which FamilyCare, NJ creating of pride with spoke interviewees Jersey New All

of FPL are eligible for a managed care package. care managed a for eligible are FPL of

Medicaid-like benefits, and childless adults with income between 50 and 100 percent 100 and 50 between income with adults childless and benefits, Medicaid-like

matching. Childless adults with income below 50 percent of FPL are eligible for eligible are FPL of percent 50 below income with adults Childless matching.

waiver. NJ FamilyCare also covers childless adults, using state dollars without federal without dollars state using adults, childless covers also FamilyCare NJ waiver.

state began operations a few months earlier, using state funds in expectation of the of expectation in funds state using earlier, months few a operations began state

percent of FPL whose children already qualify for either Medicaid or SCHIP. The SCHIP. or Medicaid either for qualify already children whose FPL of percent

expansion. The state uses SCHIP funds to pay for parents with income up to 200 to up income with parents for pay to funds SCHIP uses state The expansion.

and Wisconsin) received the first federal Section 1115 SCHIP waiver for this type of type this for waiver SCHIP 1115 Section federal first the received Wisconsin) and

various types of enrollees. In January 2001, New Jersey (along with Rhode Island Rhode with (along Jersey New 2001, January In enrollees. of types various

ate a single, seamless system for families, combining different sources of funding for funding of sources different combining families, for system seamless single, a ate

also raised income ceilings for pregnant women. The new program attempts to cre- to attempts program new The women. pregnant for ceilings income raised also

FamilyCare in June 2000, NJ FamilyCare subsumed NJ KidCare. NJ FamilyCare NJ KidCare. NJ subsumed FamilyCare NJ 2000, June in FamilyCare

the NJ KidCare model to parents and childless adults. Once the legislature enacted legislature the Once adults. childless and parents to model KidCare NJ the

The original plan was to use new tobacco settlement funds to extend to funds settlement tobacco new use to was plan original The FamilyCare.

In December 1999, Governor Whitman proposed a new coverage expansion, NJ expansion, coverage new a proposed Whitman Governor 1999, December In

employers. employers.

had had individual coverage and those who were involuntarily disenrolled by disenrolled involuntarily were who those and coverage individual had had

had employer-sponsored coverage and was completely eliminated for children who children for eliminated completely was and coverage employer-sponsored had

200 percent of FPL). The period was cut from 12 to 6 months for children who had who children for months 6 to 12 from cut was period The FPL). of percent 200

“waiting period” of uninsurance before granting eligibility to poor children (below children poor to eligibility granting before uninsurance of period” “waiting

was dropped in favor of a mail-in application. The state also shortened the required the shortened also state The application. mail-in a of favor in dropped was

eased eligibility rules and administration. The Medicaid-style face-to-face interview face-to-face Medicaid-style The administration. and rules eligibility eased

lower than anticipated, but then grew over time. To boost enrollment, the state the enrollment, boost To time. over grew then but anticipated, than lower

state’s ambitious expansions, enrollment and expenditures for children were initially were children for expenditures and enrollment expansions, ambitious state’s to children in higher income families (200 to 350 percent of FPL). Despite the Despite FPL). of percent 350 to (200 families income higher in children to Acute Care

New Jersey relies heavily on managed care, which enrolls most Medicaid recipients and all enrollees under the NJ FamilyCare expansion. Medicaid managed care enrollment declined somewhat in the late 1990s as state welfare and Medicaid rolls declined, but it has since rebounded to an all-time high and was expected to grow further as NJ FamilyCare implementation continued. Since 1995, virtually all TANF and TANF-related Medicaid enrollees have been required to enroll in MCOs. Other eligibility groups could voluntarily enroll in managed care, but few did. In October 2000, after long planning, the state began phasing in mandatory enrollment for aged, blind, and disabled recipients. Implementation began in three counties and should be statewide by the end of calendar 2001. Cuts in federal DSH payments appear to have affected state policy very little. Between 1995 and 1998, DSH declined 7.4 percent per year, almost precisely the national average. State officials said the shift was absorbed within the state budget without much difficulty. Much of DSH spending is in the state’s long-standing uncompensated-care pool. With hospital rate deregulation in 1993, the pool was cut and focused on charitable services only, with increased assistance for higher-need hospitals. In FY 2001, pool funding rose by $36.3 million, to $356.3 million, mainly through a new supplemental program for hospitals providing lesser amounts of charity, intended to ensure that every facility receives at least $0.20 of support for each dollar of charity. As in many other states, the rising cost of prescription drugs greatly increases New Jersey’s Medicaid costs. Some initiatives are under way, but New Jersey seems constrained in holding down drug prices within Medicaid; the pharmaceutical industry is very important to the state. Beyond Medicaid, New Jersey has long aided low- income seniors with prescription costs through Pharmaceutical Assistance to the Aged and Disabled (PAAD). PAAD has subsidized low-income elderly and disabled residents since 1975, reaching nearly 200,000 beneficiaries. As of January 1, 2001, annual income limits were $19,238 for singles and $23,589 for married couples. PAAD spending has risen rapidly—about 9 percent annually since 1995—well beyond the annual 3 percent rise in casino revenues, the program’s primary funding source. Administrators initially sought to respond with new controls, but the political response was new spending. The legislature expanded PAAD into a new Senior Gold program in May 2001, with eligibility income limits raised about $10,000, though with somewhat higher cost sharing.

Long-Term Care

Policy on long-term care is dominated by continuing shifts from institutional to community-based care, along with ongoing containment of institutional spending. Community care is increasing for the elderly, people with mental illness, and people

with developmental disabilities. Consumer-directed personal assistance services are 48 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 49

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oversight included strong new patient protection legislation. protection patient new strong included oversight

increase regulatory powers to try to avoid future problems. Other managed care managed Other problems. future avoid to try to powers regulatory increase

both to deal with the insolvencies’ immediate financial and medical shortfalls and to and shortfalls medical and financial immediate insolvencies’ the with deal to both

oversee HMO risk bearing and cope with insolvencies. New legislation was needed was legislation New insolvencies. with cope and bearing risk HMO oversee

health insurers, but the insolvencies showed shortcomings in officials’ authority to authority officials’ in shortcomings showed insolvencies the but insurers, health

tections (solvency and reporting requirements) for both HMOs and conventional and HMOs both for requirements) reporting and (solvency tections

The state had long had conventional regulatory pro- regulatory conventional had long had state The HMOs and one other insurer. other one and HMOs

other concerns. In the late 1990s, state regulators had to take over two insolvent two over take to had regulators state 1990s, late the In concerns. other

ulus was HMO insolvencies; market consolidation and losses among HMOs are HMOs among losses and consolidation market insolvencies; HMO was ulus

Upheavals in insurance markets renewed attention to state oversight. The key stim- key The oversight. state to attention renewed markets insurance in Upheavals

Other Developments Other

from hospitals and the loss of healthier patients to assisted living. living. assisted to patients healthier of loss the and hospitals from

turnover, and increasing severity of patients’ conditions because of earlier discharges earlier of because conditions patients’ of severity increasing and turnover,

until they find problems. Homes feel constrained by a tight labor market, high staff high market, labor tight a by constrained feel Homes problems. find they until

well by national standards, state and federal surveyors in New Jersey keep looking keep Jersey New in surveyors federal and state standards, national by well

started in January 1998. The industry complains that, although the state’s homes do homes state’s the although that, complains industry The 1998. January in started

the nation. The key recent state initiative is report cards based on federal standards, federal on based cards report is initiative state recent key The nation. the

The quality of nursing home care is a long-standing concern in New Jersey, as in as Jersey, New in concern long-standing a is care home nursing of quality The

tional adjustments. tional

than $1,000 per patient each year—and policymakers have shelved plans for addi- for plans shelved have policymakers year—and each patient per $1,000 than

bied against the changes—one association citing losses of nearly $40 million, or more or million, $40 nearly of losses citing association changes—one the against bied

Nursing home associations lob- associations home Nursing rates under prior law and won in Boren litigation. Boren in won and law prior under rates

ment requirements was not a factor in state policymaking, as the state had already cut already had state the as policymaking, state in factor a not was requirements ment

above 10 percent for two years. Observers agree that federal repeal of Boren Amend- Boren of repeal federal that agree Observers years. two for percent 10 above

allowances for administrative costs and reduced rates for facilities with vacancy rates vacancy with facilities for rates reduced and costs administrative for allowances

system, phasing in reforms during the year ending July 2000. The reforms cut reforms The 2000. July ending year the during reforms in phasing system,

In 1999, the state again modified its payment its modified again state the 1999, In nationally in nursing home payments. home nursing in nationally

nursing home payment rates. The state cut rates in 1995, but still ranked high ranked still but 1995, in rates cut state The rates. payment home nursing

As have other states, New Jersey has also given high priority to holding down holding to priority high given also has Jersey New states, other have As

policy and, unlike many other states, New Jersey does not expect litigation. expect not does Jersey New states, other many unlike and, policy

icymakers are meeting with various advocacy and other constituencies to help set help to constituencies other and advocacy various with meeting are icymakers

recognized that more home- and community-based support is needed, so state pol- state so needed, is support community-based and home- more that recognized

ruling on inappropriate institutionalization of disabled Americans. It is It Americans. disabled of institutionalization inappropriate on ruling Olmstead

The state is seeking cooperative implementation of the Supreme Court’s 1999 Court’s Supreme the of implementation cooperative seeking is state The

congeniality is seen as a change, a result more of federal than of state developments. state of than federal of more result a change, a as seen is congeniality

warmly of relations with HCFA over program issues, including waiver requests. This requests. waiver including issues, program over HCFA with relations of warmly being implemented for persons with chronic physical disabilities. Officials speak Officials disabilities. physical chronic with persons for implemented being Conclusion

Currently prominent health policy issues include maintaining the downsized coverage expansion for children and families, implementing Medicaid managed care for the disabled, closing institutions for the people with mental illness and people with developmental disabilities, and expanding long-term care alternatives, as well as implementing the recently strengthened state financial oversight of health plans and patient protections, including potential for-profit conversion of the state’s large Blue Cross plan. Other 1990s initiatives seem stable and hence less salient concerns, including reorganization of the health department, administration of Medicaid managed care for poverty-related beneficiaries, expansion of state subsidies for prescription drugs for aged and disabled persons, redesign of the hospital uncompensated- care pool, and most quality regulation of HMOs. New Jersey is broadly supportive of health care for the indigent, but cautious with its own funds. As of the end of 2001, two new developments were creating considerable uncer- tainty. The first is a dramatic drop in state revenues, the worst in 20 years. The FY 2002 budget required $1 billion in adjustments between the governor’s proposal of January 2001 and the enacted budget of June. The adjustments included minor revenue enhancements in the collection of business taxes, but there is major political resistance to broad tax increases. As FY 2002 progressed, additional cuts proved necessary, but under Republican control largely spared health programs. Second, Democrats won the November 2001 elections. New Governor McGreevey campaigned against Republican overspending and has promised large cuts in government to avoid raising taxes as Democrat Jim Florio did during the last recession. Health care has not been a target, but given the fiscal outlook, the future challenge seems not to be crafting further growth in public activities but rather just

maintaining past expansions, notably for children. 50 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 51

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expansions, and more recently to adults with the passage of HCRA 2000. 2000. HCRA of passage the with adults to recently more and expansions,

erage to children through the Child Health Plus (CHPlus) program and Medicaid and program (CHPlus) Plus Health Child the through children to erage

sured population. Coverage expansions during this time focused on extending cov- extending on focused time this during expansions Coverage population. sured

care issues was principally aimed at addressing the state’s large and growing unin- growing and large state’s the addressing at aimed principally was issues care

This study reveals that during the late 1990s, New York’s policy attention on health on attention policy York’s New 1990s, late the during that reveals study This

Coverage Expansions Coverage

projected to be at least $1.63 billion during the 2001–02 fiscal year. year. fiscal 2001–02 the during billion $1.63 least at be to projected

impact on New York state. Revenue losses attributed to the terrorist attacks alone are alone attacks terrorist the to attributed losses Revenue state. York New on impact

downturn, the terrorist attacks of September 11 have had a direct and significant and direct a had have 11 September of attacks terrorist the downturn,

months. Although many state budgets have been affected by the national economic national the by affected been have budgets state many Although months.

omy. However, New York’s fiscal circumstances have changed substantially in recent in substantially changed have circumstances fiscal York’s New However, omy.

settlement money in 2000, monies from a cigarette tax increase, and a good econ- good a and increase, tax cigarette a from monies 2000, in money settlement

New York was able to undertake progressive HCRA reforms because of tobacco of because reforms HCRA progressive undertake to able was York New

grams (particularly Medicaid) has not changed much in recent years. years. recent in much changed not has Medicaid) (particularly grams

get growth, New York’s reputation for sponsoring well-financed health care pro- care health well-financed sponsoring for reputation York’s New growth, get

enacted in each year of Pataki’s leadership and a slowdown in year-to-year state bud- state year-to-year in slowdown a and leadership Pataki’s of year each in enacted

Moreover, although the state has become more fiscally conservative, with tax cuts tax with conservative, fiscally more become has state the although Moreover,

includes funding for several new programs to expand coverage to the uninsured. the to coverage expand to programs new several for funding includes

Health Care Reform Act (HCRA) of 2000—a sweeping piece of legislation that legislation of piece sweeping 2000—a of (HCRA) Act Reform Care Health

through a variety of ambitious health care reforms, most recently and notably the notably and recently most reforms, care health ambitious of variety a through

York has continued to address challenging issues facing the health care market care health the facing issues challenging address to continued has York

licans maintain the majority of seats in the senate. With this political leadership, New leadership, political this With senate. the in seats of majority the maintain licans

and Democrats still maintain the majority of seats in the assembly while the Repub- the while assembly the in seats of majority the maintain still Democrats and

Pataki, a Republican, started his second four-year term as governor in January 1999, January in governor as term four-year second his started Republican, a Pataki,

Little has changed in New York’s political environment in recent years: George years: recent in environment political York’s New in changed has Little

Political and Fiscal Circumstances Fiscal and Political

providers.

and it has a number of well-funded subsidy programs to help support safety net safety support help to programs subsidy well-funded of number a has it and

place some of the most far-reaching small-group and individual insurance reforms, insurance individual and small-group far-reaching most the of some place

the country, as well as a generous SCHIP expansion. In addition, New York has in has York New addition, In expansion. SCHIP generous a as well as country, the

covered—the state operates one of the most comprehensive Medicaid programs in programs Medicaid comprehensive most the of one operates state covered—the

income population. By almost any measure—eligibility, provider payment, services payment, provider measure—eligibility, any almost By population. income

New York has a tradition of funding an extensive health care system for its low- its for system care health extensive an funding of tradition a has York New

Teresa A. Coughlin and Amy Westpfahl Lutzky Westpfahl Amy and Coughlin A. Teresa New York New Though most SCHIP programs were newly developed under Title XXI of the Social Security Act in 1997, New York has been providing health insurance coverage to children since 1991 through the state-sponsored CHPlus program. With the passage of Title XXI, New York applied for SCHIP funding for CHPlus and received federal approval in April 1998. In 1999, CMS approved an amendment to New York’s SCHIP waiver as well as an expansion of Medicaid coverage for children. Under SCHIP, New York expanded Medicaid to cover children age 15 to 18 with family incomes up to 100 percent of FPL and expanded CHPlus to cover children up to age 19 living in households with income up to 250 percent of FPL. New York’s pre-SCHIP CHPlus program provided a strong foundation for rapid implementation of the expansions. By June 2000, CHPlus enrollment totaled 522,058, accounting for nearly a quarter of SCHIP enrollment nationwide.1 Although CHPlus has a relatively large enrollment, concern has been growing about simplifying the program’s eligibility determination processes. State efforts to improve the enrollment process have included allowing SCHIP applicants to mail in their applications, eliminating the asset test, and making presumptive eligibility available to all applicants. In addition, New York established a “facilitated enrollment” process in spring 2000 to improve eligibility screening for Medicaid and CHPlus and to make the process more user-friendly for applicants. Under facilitated enrollment, families are assisted with the joint application and enrollers determine which program the child appears eligible for and helps the family collect the required documenta- tion. Retention of children in Medicaid and CHPlus has also been a growing concern, with some health plans estimating that as many as 25 to 50 percent of children are disenrolled because they fail to complete the eligibility redetermination process.2 In addition to expanding coverage for children, recent initiatives have addressed the state’s adult uninsured population through HCRA 2000—the centerpiece of New York’s health policy legislation that addresses virtually all dimensions of the state’s health care system, from indigent care to graduate medical education to poi- son control. In addition to reauthorizing a number of established programs, HCRA 2000 contained funding for several new programs, including Family Health Plus (FHPlus) and Healthy New York. Together, these programs are designed to extend coverage to about 1 million previously uninsured New Yorkers, at a cost to the state of nearly $500 million over three and half years. FHPlus expands coverage through Medicaid to parents with incomes up to 150 percent of FPL and single adults and childless couples with incomes up to 100 percent of FPL.3 Estimates suggest that about 600,000 individuals will qualify for the program. The impetus for FHPlus came from a range of health care stakeholders, including the hospital industry and health care unions, as well as community groups. Designed to build on CHPlus, FHPlus offers participants comprehensive acute care health benefits. FHPlus participants will also receive services through managed care plans, just like the state’s CHPlus and Medicaid programs. New York received federal approval to implement FHPlus on May 30, 2001, and implemented the program in October 2001. The Healthy New York initiative was spearheaded by Governor Pataki and is

intended to address the significant and growing number of working uninsured indi- 52 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 53

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1115 Partnership Plan waiver. New York essentially traded some of its DSH spend- DSH its of some traded essentially York New waiver. Plan Partnership 1115

1998. This decline is related to the “budget neutrality” provisions of New York’s New of provisions neutrality” “budget the to related is decline This 1998.

dropped substantially in the late 1990s, from $2.9 billion in 1995 to $1.8 billion in billion $1.8 to 1995 in billion $2.9 from 1990s, late the in substantially dropped

eral DSH dollars to qualifying hospitals. The state’s Medicaid DSH expenditures DSH Medicaid state’s The hospitals. qualifying to dollars DSH eral

federal DSH funds to be used for other purposes, but rather provides the bulk of fed- of bulk the provides rather but purposes, other for used be to funds DSH federal

totaling $1.8 billion in 1998. Unlike many other states, New York does not “retain” not does York New states, other many Unlike 1998. in billion $1.8 totaling

New York operates a relatively large Medicaid DSH program with spending with program DSH Medicaid large relatively a operates York New

and hospitals’ perception that the Medicaid capitation rates are too low. too are rates capitation Medicaid the that perception hospitals’ and

aid managed care health plans and lack of support from hospitals—related to plans’ to hospitals—related from support of lack and plans health care managed aid

tivity around past marketing abuses in New York City, and the exit of several Medic- several of exit the and City, York New in abuses marketing past around tivity

pated because of several factors, including a decline in Medicaid enrollment, sensi- enrollment, Medicaid in decline a including factors, several of because pated

Implementation of the waiver has moved more slowly than antici- than slowly more moved has waiver the of Implementation waiver program. waiver

imately 34 percent of all Medicaid recipients eligible for managed care under the under care managed for eligible recipients Medicaid all of percent 34 imately

about 700,000 adults and children statewide were enrolled in managed care, approx- care, managed in enrolled were statewide children and adults 700,000 about

receive federal Medicaid matching dollars for program recipients. As of May 2001, May of As recipients. program for dollars matching Medicaid federal receive

general assistance program—the Safety Net program—which allows the state to state the allows program—which Net Safety program—the assistance general

cost recipients. The waiver also includes an expansion of Medicaid to New York’s New to Medicaid of expansion an includes also waiver The recipients. cost

well as special programs—called special needs plans—for selected high-need/high- selected plans—for needs special programs—called special as well

the TANF, TANF-related, and Supplemental Security Income (SSI) populations, as populations, (SSI) Income Security Supplemental and TANF-related, TANF, the

aged care on a mandatory basis. When implemented, the waiver program will include will program waiver the implemented, When basis. mandatory a on care aged

for the phased-in enrollment of more than 2 million Medicaid recipients into man- into recipients Medicaid million 2 than more of enrollment phased-in the for

high on the agenda of policymakers and advocates. New York’s Partnership Plan calls Plan Partnership York’s New advocates. and policymakers of agenda the on high

The state’s rollout of its Partnership Plan Section 1115 Medicaid waiver program is program waiver Medicaid 1115 Section Plan Partnership its of rollout state’s The

Acute Care Acute

New York City lost more than 100,000 jobs as a result of the terrorist attacks. attacks. terrorist the of result a as jobs 100,000 than more lost City York New

tions and because of the increased number of New Yorkers eligible for Medicaid— for eligible Yorkers New of number increased the of because and tions

Trade Center damaged the city’s computer system that processes Medicaid applica- Medicaid processes that system computer city’s the damaged Center Trade

The program was implemented because the September 11 attacks on the World the on attacks 11 September the because implemented was program The

than 75,000 New Yorkers enrolling in Medicaid in the first six weeks of the program. the of weeks six first the in Medicaid in enrolling Yorkers New 75,000 than

form. The new program has resulted in a surge in Medicaid enrollment, with more with enrollment, Medicaid in surge a in resulted has program new The form.

the spot” Medicaid coverage if they complete a single-page, streamlined application streamlined single-page, a complete they if coverage Medicaid spot” the

Relief Medicaid program, which enables applicants to sign up for four months of “on of months four for up sign to applicants enables which program, Medicaid Relief

In the wake of the September 11 attacks, New York established the Disaster the established York New attacks, 11 September the of wake the In

as of mid-2001, the program had roughly 900 enrollees. 900 roughly had program the mid-2001, of as

under Healthy New York. Healthy New York became operational January 2001, and 2001, January operational became York New Healthy York. New Healthy under

whose incomes are below 250 percent of FPL are able to purchase direct coverage direct purchase to able are FPL of percent 250 below are incomes whose

workers and their families who work for firms that do not provide coverage and coverage provide not do that firms for work who families their and workers

per year, and be willing to pay at least 50 percent of employee premiums. Uninsured premiums. employee of percent 50 least at pay to willing be and year, per

erage for the past 12 months, have one-third of employees make less than $30,000 than less make employees of one-third have months, 12 past the for erage

ers must have 50 or fewer eligible employees, have offered no employer-based cov- employer-based no offered have employees, eligible fewer or 50 have must ers

small employers and for individual workers. To be eligible for the program, employ- program, the for eligible be To workers. individual for and employers small viduals in New York. The program provides state-subsidized health coverage for coverage health state-subsidized provides program The York. New in viduals ing to be allowed to receive a federal match for the Safety Net population and still maintain budget neutrality. The decline in DSH spending also relates to the BBA, which cut New York’s federal DSH allotment nearly $239 million over the 1998 to 2002 period. To date, the drop in DSH funding has not been a major issue for policymakers or hospitals, primarily because of the Community Health Care Conversion Demonstration Project, which provides $1.25 billion in federal funds (no state match is required) over the five-year period of the Partnership Plan waiver. New York also operates a Medicaid UPL program, which is targeted to the state’s nursing homes. The program consisted of approximately $1 billion in Medicaid funds (federal and state) in 2000. According to respondents, as much as $950 million of the $1 billion program is potentially in jeopardy with the passage of the federal Beneficiary Information and Protection Act of 2000. It is unclear how the state will respond if nursing homes lose UPL funds. Another important acute care issue relates to prescription drug coverage. With pharmaceuticals one of the fastest growing costs in Medicaid, the governor has proposed establishing an independent Pharmacy and Therapeutics Committee to make recommendations regarding drug formularies, utilization policies, and options to achieve price discounts on drugs. In response to the impact of rising prescription drug costs on New York’s senior citizens, policymakers expanded the state-sponsored prescription drug coverage program for low-income seniors, called Elderly Pharma- ceutical Insurance Coverage (EPIC) program. EPIC is a cost-sharing program for senior citizens over age 65 who are not enrolled in Medicaid. Initially, program eligibility was limited to individuals with annual incomes up to $18,500 or married couples with annual incomes up to $24,400. As part of HCRA, EPIC was expanded to include singles with annual incomes up to $35,000 and couples with combined incomes of up to $50,000. It is expected that the expansion will boost enrollment from approximately 120,000 to roughly 200,000 seniors.

Long-Term Care

New York’s commitment to a strong health care system extends to the provision of long-term care. In 1998, the state spent more than $12 billion on Medicaid long- term care—accounting for nearly 45 percent of the state’s total Medicaid spending. On a per-enrollee basis, New York’s spending for elderly, blind, and disabled beneficiaries is double the national average. New York’s high long-term care costs are related to the state’s comprehensive benefits, innovative programs, a prevalence of Medicaid estate planning attorneys that guide elderly in how to divest their assets, and a system that is fragmented and difficult to regulate.5 As part of a strategy to curtail long-term care costs, the governor has attempted to reduce nursing home spending. In his 2001 State of the State address, the gover- nor proposed several provisions to cut state Medicaid funding for nursing homes by a total of approximately $330 million (federal, state, and local). However, both the assembly and senate budget resolutions restored these proposed cuts because of con-

cerns about the impact on quality of care as well as labor shortage issues in the nurs- 54 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 55

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rate by the federal government. government. federal the by rate

cigarette taxes, and a yet-to-be-approved increase in New York’s Medicaid matching Medicaid York’s New in increase yet-to-be-approved a and taxes, cigarette

conversion of Empire Blue Cross Blue Shield into a for-profit entity, an increase in increase an entity, for-profit a into Shield Blue Cross Blue Empire of conversion

The package, estimated to cost $3.5 billion over three years, will be financed by the by financed be will years, three over billion $3.5 cost to estimated package, The

ther streamlines Medicaid and CHPlus enrollment and redetermination processes. redetermination and enrollment CHPlus and Medicaid streamlines ther

recruitment and retention, expands Medicaid eligibility for disabled workers, and fur- and workers, disabled for eligibility Medicaid expands retention, and recruitment

package in January 2002 that includes funding for hospital and nursing home worker home nursing and hospital for funding includes that 2002 January in package

health care cuts in the FY 2002–03 budget, the legislature passed a major health care health major a passed legislature the budget, 2002–03 FY the in cuts care health

1995 to 2000. Although the economic downturn could have resulted in significant in resulted have could downturn economic the Although 2000. to 1995

increase 6 percent, about three times the annual growth rate over the period from period the over rate growth annual the times three about percent, 6 increase

increases in Medicaid spending: In 2001, Medicaid expenditures were expected to expected were expenditures Medicaid 2001, In spending: Medicaid in increases

rorist attacks of September 11 and the national recession, coupled with projected with coupled recession, national the and 11 September of attacks rorist

als in 1999). At the same time, the state is facing revenue losses attributed to the ter- the to attributed losses revenue facing is state the time, same the At 1999). in als

sizable uninsured population (estimated at more than 2 million nonelderly individu- nonelderly million 2 than more at (estimated population uninsured sizable

ment goals, New York and its providers will continue to confront the pressures of a of pressures the confront to continue will providers its and York New goals, ment

the new insurance coverage programs. If the new programs do not meet their enroll- their meet not do programs new the If programs. coverage insurance new the

faced with the important challenge of enrolling and retaining eligible populations in populations eligible retaining and enrolling of challenge important the with faced

the many new initiatives into successful programs. In particular, the state will be will state the particular, In programs. successful into initiatives new many the

health coverage to low-income residents. But considerable work is needed to turn to needed is work considerable But residents. low-income to coverage health

New York has continued its long-standing practice of providing comprehensive providing of practice long-standing its continued has York New

Conclusion

wide range of home- and community-based services to their residents. residents. their to services community-based and home- of range wide

taking new initiatives. State officials view New York as a national leader in offering a offering in leader national a as York New view officials State initiatives. new taking

care system to make sure it complies with the decision, they are not actively under- actively not are they decision, the with complies it sure make to system care

York officials are “aware of the decision” and are examining the state’s long-term state’s the examining are and decision” the of “aware are officials York

community-based care system in response to the the to response in system care community-based decision. Though New Though decision. Olmstead

fits, and innovative programs. New York has not made any major changes to its to changes major any made not has York New programs. innovative and fits,

community-based services, thanks to its extensive provider network, generous bene- generous network, provider extensive its to thanks services, community-based

Historically, New York has been considered a model in its provision of home- and home- of provision its in model a considered been has York New Historically,

home employees and increased fines for providers found to be noncompliant. noncompliant. be to found providers for fines increased and employees home

ity improvement measures, including criminal background checks for all nursing all for checks background criminal including measures, improvement ity

receiving a license. In 2001, Governor Pataki proposed further nursing home qual- home nursing further proposed Pataki Governor 2001, In license. a receiving

cant for licensure as a nursing home administrator to pass an examination before examination an pass to administrator home nursing a as licensure for cant

nursing home inspectors, and lawmakers enacted legislation that requires an appli- an requires that legislation enacted lawmakers and inspectors, home nursing

recent years. In 2000, additional funding was set aside to hire at least 80 additional 80 least at hire to aside set was funding additional 2000, In years. recent

Quality of care in New York’s long-term care system has been a key issue in issue key a been has system care long-term York’s New in care of Quality

the biggest health care issues New York currently faces. currently York New issues care health biggest the

market, is almost universally acknowledged among key stakeholders as being one of one being as stakeholders key among acknowledged universally almost is market, ing home sector. The shortage of health care workers, especially in the nursing home nursing the in especially workers, care health of shortage The sector. home ing

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icaid is the very large number of children who are eligible for the program but are but program the for eligible are who children of number large very the is icaid

costs, and provider efforts to increase payment rates. A major concern within Med- within concern major A rates. payment increase to efforts provider and costs,

sure on the Medicaid budget as a result of increasing enrollment, prescription drug prescription enrollment, increasing of result a as budget Medicaid the on sure

jected to continue to increase for the next several years. There is strong upward pres- upward strong is There years. several next the for increase to continue to jected

the late 1990s, especially for nondisabled adults, although it is rising again and is pro- is and again rising is it although adults, nondisabled for especially 1990s, late the

Because of the strong economy and welfare reform, Medicaid enrollment fell during fell enrollment Medicaid reform, welfare and economy strong the of Because

fairly limited in terms of covered services and eligibility for nondisabled adults. nondisabled for eligibility and services covered of terms in limited fairly

state with a large gap to fill with public programs. The Texas Medicaid program is program Medicaid Texas The programs. public with fill to gap large a with state

a low rate of private insurance coverage and a large poverty population, leaving the leaving population, poverty large a and coverage insurance private of rate low a

Texas has one of the highest rates of uninsurance in the country, largely because of because largely country, the in uninsurance of rates highest the of one has Texas

Coverage Expansions Coverage

projections. projections.

tail further expansions. So far, however, expenditures and revenues are close to close are revenues and expenditures however, far, So expansions. further tail

which has been exacerbated by the terrorist attacks of September 11, 2001, may cur- may 2001, 11, September of attacks terrorist the by exacerbated been has which

sons with disabilities (although no funding was provided). The declining economy, declining The provided). was funding no (although disabilities with sons

school teachers and a pharmaceutical assistance program for older people and per- and people older for program assistance pharmaceutical a and teachers school

nursing homes, and establishment of a new system of health insurance for public for insurance health of system new a of establishment and homes, nursing

gibility simplification for children, funding for SCHIP, increased reimbursement for reimbursement increased SCHIP, for funding children, for simplification gibility

islature in the spring included several health care initiatives, including Medicaid eli- Medicaid including initiatives, care health several included spring the in islature

into a substantial budget deficit. Despite this, the two-year budget passed by the leg- the by passed budget two-year the this, Despite deficit. budget substantial a into

late 1990s, the state’s economy deteriorated in 2001, and a modest surplus turned surplus modest a and 2001, in deteriorated economy state’s the 1990s, late

tive Republican, whose main interests lie outside of health care. After booming in the in booming After care. health of outside lie interests main whose Republican, tive

become president of the United States, the new governor is Rick Perry, a conserva- a Perry, Rick is governor new the States, United the of president become

from that in the late 1990s. With the departure of Governor George W. Bush to Bush W. George Governor of departure the With 1990s. late the in that from

Texas has new political leadership and is facing a very different fiscal environment fiscal different very a facing is and leadership political new has Texas

Political and Fiscal Circumstances Fiscal and Political

incremental costs. incremental

gibility if the state can afford it or if it can get the federal government to pay the pay to government federal the get can it if or it afford can state the if gibility

but health care is viewed more favorably, and there is some interest in expanding eli- expanding in interest some is there and favorably, more viewed is care health but

available for health and human service programs. Cash welfare is highly unpopular, highly is welfare Cash programs. service human and health for available

required to draw down a federal match. Taxes are low, limiting the funds that are that funds the limiting low, are Taxes match. federal a down draw to required

conservative, with fairly minimal health and welfare programs beyond what is what beyond programs welfare and health minimal fairly with conservative,

surance, and many foreign-born residents, largely from Mexico. Politically, it is very is it Politically, Mexico. from largely residents, foreign-born many and surance,

Texas is a big, diverse state with a large low-income population, high levels of unin- of levels high population, low-income large a with state diverse big, a is Texas

Joshua M. Wiener and Niall Brennan Niall and Wiener M. Joshua Texas not enrolled. In 2001, the legislature enacted an initiative to address this issue by funding outreach and simplifying the application process. The state is not actively pursuing existing federal legislative mechanisms to expand eligibility for adults. The legislature did pass a bill in 2001 that would have sought federal Medicaid waivers for the expansion of eligibility for adults using local funds as the federal match, but the governor vetoed this bill. Smaller pilot projects are being explored. The Texas SCHIP had a slow start, but it has now enrolled more than 400,000 children and is projected to continue to grow. The program is very politically popular, and the success of SCHIP inspired the Medicaid eligibility changes for children that were enacted in 2001. The state has made the SCHIP application process very simple and invested in outreach. SCHIP eligibility is family income up to 200 percent of FPL. Texas SCHIP is primarily a non-Medicaid program that uses MCOs. In part because there are so many uninsured children in the state, Texas has not pur- sued using SCHIP funds to provide health insurance for adults. For budgetary reasons, the state is examining options to slow expenditure growth.

Acute Care

Texas Medicaid and SCHIP depend heavily on managed care for children and nondisabled adults. Medicaid managed care is in all of the major urban areas, and all SCHIP enrollees are in some form of managed care. Although older people and people with disabilities are not required to join MCOs, the state is operating an innovative demonstration in Houston that integrates some acute and long-term care services. State officials believe that managed care has the potential to provide a “medical home” for enrollees, improve quality, and contain costs. Many providers, however, have never liked managed care and find the system to be very administra- tively complicated and burdensome. Medicaid has primarily contracted with commercial HMOs; though some health plans have dropped out of the program, the withdrawals have largely been limited to specific markets. Responding to concerns by consumers and providers, in 1999 the legislature imposed a moratorium on expansion of Medicaid managed care, which has now been lifted. Despite the ambivalence in the legislature and elsewhere about managed care, the 2001 budget includes its expansion as one possible strategy of saving money. Many of the Medicaid managed care concerns are mirrored in the commercial market and in the state’s insurance regulations. Overall, commercial managed care has had a difficult time in Texas, with many HMOs losing money throughout much of the 1990s, leading to some mergers and consolidations. Texas has been a leader in state regulation of MCOs, with laws providing a patients’ bill of rights that includes the ability to sue HMOs. A major source of health care for the low-income population in Texas is public hospitals, which compensate in part for the low Medicaid eligibility levels for adults. Though mostly supported by local property tax assessments, hospitals providing health care to the Medicaid and uninsured populations benefit from the Medicaid

DSH payment adjustment. Expenditures for these payments are quite large in Texas, 58 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 59

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from which public hospitals and consumer advocates have strongly dissented. strongly have advocates consumer and hospitals public which from

law without new authorization, which has not occurred in Texas, an interpretation an Texas, in occurred not has which authorization, new without law

nonemergency health services to undocumented immigrants is illegal under federal under illegal is immigrants undocumented to services health nonemergency

highly controversial opinion, the state’s attorney general argued that the provision of provision the that argued general attorney state’s the opinion, controversial highly

Texas policymakers have recently addressed three other health care issues. First, in a in First, issues. care health other three addressed recently have policymakers Texas

Other Developments Other

tem that were part of the BBA. the of part were that tem

adversely affected by the changes to the Medicare home health reimbursement sys- reimbursement health home Medicare the to changes the by affected adversely

actively engaging in a planning process. Texas home health agencies were very were agencies health home Texas process. planning a in engaging actively

services. The state has responded to the Supreme Court’s Court’s Supreme the to responded has state The services. decision by decision Olmstead

community-based services, although there are large waiting lists for Medicaid waiver Medicaid for lists waiting large are there although services, community-based

Through its Medicaid program, Texas provides a range of home- and home- of range a provides Texas program, Medicaid its Through

pool.

for-profit nursing homes to participate in the state-run high-risk medical liability medical high-risk state-run the in participate to homes nursing for-profit

addressed these issues with a significant rate increase and with an initiative to allow to initiative an with and increase rate significant a with issues these addressed

it difficult for them to provide high-quality care. The 2001 legislature partially legislature 2001 The care. high-quality provide to them for difficult it

dropped coverage. The nursing home industry contends that the cost pressures make pressures cost the that contends industry home nursing The coverage. dropped

In addition, liability insurance costs have skyrocketed, and many facilities have facilities many and skyrocketed, have costs insurance liability addition, In

Medicare skilled nursing facility reimbursement enacted as part of the federal BBA. federal the of part as enacted reimbursement facility nursing skilled Medicare

nursing homes, and many facilities were adversely affected by the changes to changes the by affected adversely were facilities many and homes, nursing

of workers. The state has historically set low levels of Medicaid reimbursement for reimbursement Medicaid of levels low set historically has state The workers. of

Both nursing homes and noninstitutional providers have been affected by a shortage a by affected been have providers noninstitutional and homes nursing Both

Long-term care, especially nursing homes, is under substantial pressure in Texas. in pressure substantial under is homes, nursing especially care, Long-term

Long-Term Care Long-Term

these are yet to be implemented. implemented. be to yet are these

retail program and created a bulk purchasing arrangement for state programs, but programs, state for arrangement purchasing bulk a created and program retail

lary and encourage the use of generic drugs. The state also established a discount a established also state The drugs. generic of use the encourage and lary

state finances permit. The program, which is not an entitlement, will have a formu- a have will entitlement, an not is which program, The permit. finances state

costs. The goal is to get the program started and to expand eligibility over time, as time, over eligibility expand to and started program the get to is goal The costs.

limit for eligibility is to be determined after a more thorough analysis of projected of analysis thorough more a after determined be to is eligibility for limit

elderly and disabled persons but did not provide funding for it. The upper-income The it. for funding provide not did but persons disabled and elderly

sumers. In 2001, the state created a small prescription drug program for low-income for program drug prescription small a created state the 2001, In sumers.

The costs of prescription drugs have been increasing for both Medicaid and con- and Medicaid both for increasing been have drugs prescription of costs The

Medicaid rates, using local government funds for the state match. state the for funds government local using rates, Medicaid

UPL programs––which are designed to provide facilities with higher-than-normal with facilities provide to designed are programs––which UPL

The state is now pursuing similar strategies––supplemental payment or so-called or payment strategies––supplemental similar pursuing now is state The

eral law has mandated some cuts, the program has not changed much in recent years. recent in much changed not has program the cuts, some mandated has law eral accounting for about 14 percent of total Medicaid spending in 1998. Though fed- Though 1998. in spending Medicaid total of percent 14 about for accounting Second, the state has started a small initiative to improve health and human services in the colonias, which are areas without basic infrastructure, such as potable water or sewage systems. Third, not all public school teachers in Texas have access to employer-sponsored health insurance, a problem that was largely remedied by the legislature in 2001.

Conclusion

Texas has a very large number of uninsured and an aging population, and the large number of immigrants complicates policymaking. Public programs to meet these needs are limited, in part because tax revenues are low and there is strong resistance to public programs. Nonetheless, over the past few years, the state has implemented a number of health policy initiatives including funding for SCHIP, increased reimbursement for nursing homes, and establishment of a new system of health insurance for public school teachers and a pharmaceutical assistance program for older people and persons with disabilities. As Texas looks to the future, it faces four challenges. First, as with many other states, Texas’s fiscal condition deteriorated over the course of 2001, placing strong pressures on the state budget. If the economy does not improve, the state may face having to raise taxes or cut programs in the future. Second, the Texas Health and Human Services Commission is required to achieve Medicaid savings, which could have major impacts on the future of the program. Third, the state is considering expanding enrollment in Medicaid managed care, despite resistance from providers. Finally, the state’s long-term care system, especially nursing homes, is very much in flux. Nursing homes are in financial difficulty for a variety of reasons, and quality of care is a major concern. The state has invested a lot in planning home- and community-based services, in part to comply with the Olmstead decision, but wait-

ing lists remain large. 60 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 61

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haps more. Medicaid spending was expected to grow by about 10 percent per year per percent 10 about by grow to expected was spending Medicaid more. haps

nium by 12 percent to 14 percent per year and the BHP costs by 10 percent and per- and percent 10 by costs BHP the and year per percent 14 to percent 12 by nium

lems. State and employee health benefits were expected to increase in the next bien- next the in increase to expected were benefits health employee and State lems.

Rising health care costs played a major role in the state’s serious budget prob- budget serious state’s the in role major a played costs care health Rising

reduced revenues. revenues. reduced

quake. These setbacks have led to increases in emergency spending together with together spending emergency in increases to led have setbacks These quake.

economy, water supply reduction due to a drought, an energy crisis, and an earth- an and crisis, energy an drought, a to due reduction supply water economy,

highly vulnerable to economic fluctuations. In 2001 the state faced a downturn in its in downturn a faced state the 2001 In fluctuations. economic to vulnerable highly

taxes and sales and business taxes for its general revenues, making the state’s revenues state’s the making revenues, general its for taxes business and sales and taxes

shortfalls. The state does not have a personal income tax; rather, it relies on property on relies it rather, tax; income personal a have not does state The shortfalls.

The 2002–03 problems were tied to the cap but were also precipitated by revenue by precipitated also were but cap the to tied were problems 2002–03 The

fund spending growth to a three-year average of inflation and population growth. population and inflation of average three-year a to growth spending fund

from the stringent expenditure cap enacted as I-601 in 1994, which limits general limits which 1994, in I-601 as enacted cap expenditure stringent the from

attempts to enact its biennium operating budgets. The perennial budget crises stem crises budget perennial The budgets. operating biennium its enact to attempts

the United States. Nonetheless, the state is consistently faced with budget crises as it as crises budget with faced consistently is state the Nonetheless, States. United the

capita income grew by 16.4 percent between 1995 and 1999 versus 10.8 percent for percent 10.8 versus 1999 and 1995 between percent 16.4 by grew income capita

The state has had a strong economy throughout the 1990s. For example, per example, For 1990s. the throughout economy strong a had has state The

instead has focused on education, crime, transportation, water, and energy. and water, transportation, crime, education, on focused has instead

little mention of it in his 2000, 2001, and 2002 State of the State addresses, and addresses, State the of State 2002 and 2001, 2000, his in it of mention little

retiring Mike Lowry in 1996. Governor Locke has not emphasized health, making health, emphasized not has Locke Governor 1996. in Lowry Mike retiring

governor, Gary Locke, who won reelection to his second term last year, replaced the replaced year, last term second his to reelection won who Locke, Gary governor,

caused at least in part by political gridlock. The Democratic The gridlock. political by part in least at caused back special sessions, special back

mid-July 2001, the legislature ended a historically long session, with three back-to- three with session, long historically a ended legislature the 2001, mid-July

the house is split 49D-49R, with shared control of the rules and chairmanships. In chairmanships. and rules the of control shared with 49D-49R, split is house the

Control in Washington’s senate is narrowly in the Democrats’ hands, 25D–24R, and 25D–24R, hands, Democrats’ the in narrowly is senate Washington’s in Control

Political and Fiscal Circumstances Fiscal and Political

early 1990s. 1990s. early

is struggling to maintain several of the advances in health coverage it made in the in made it coverage health in advances the of several maintain to struggling is

ulation increases, less than the rate of growth in per capita income. Today the state the Today income. capita per in growth of rate the than less increases, ulation

a ballot initiative, I-601, that constrains state spending growth to inflation plus pop- plus inflation to growth spending state constrains that I-601, initiative, ballot a

ilies. In subsequent years, the state repealed several of these measures. It also enacted also It measures. these of several repealed state the years, subsequent In ilies.

in its Basic Health Plan (BHP), an insurance program for low-income working fam- working low-income for program insurance an (BHP), Plan Health Basic its in

its individual and small-group insurance markets. The state also expanded enrollment expanded also state The markets. insurance small-group and individual its

community-based coverage for the elderly and disabled, and a major effort to reform to effort major a and disabled, and elderly the for coverage community-based

an expansion of Medicaid coverage for low-income children and home- and home- and children low-income for coverage Medicaid of expansion an

leader in health reform with legislation in 1993 that included an employer mandate, employer an included that 1993 in legislation with reform health in leader

Washington is a state with a strong history of progressive social policy. It has been a been has It policy. social progressive of history strong a with state a is Washington

John Holahan and Mary Beth Pohl Beth Mary and Holahan John Washington because of increases in managed care rates and rising fee-for-service expenditures for the disabled, principally prescription drugs. Caseload growth is forecasted to be about 3 percent per year and per capita expenditures 7 percent per year. Because of increased spending and declining revenues, the state faced a serious budget crisis, which required three special legislative sessions before it was resolved. Several cuts in Medicaid, BHP, and the state employees’ health plan were proposed, but opposition to most proposals was intense. The solution to Washington’s 2002–03 budget dilemma came when state officials discovered a way to expand the UPL, ProShare, program. The state’s ProShare payments were made to 14 government-owned nursing homes. The state had been calculating the difference in Medicaid and Medicare UPLs for all 267 nursing homes and used this sum to determine the amount of the enhanced payments that could be made to the 14 nursing homes, which returned about half the money to the state.4 In the midst of the budget deadlock, the state discovered that if it used the Resource Utilization Group System to calculate what the Medicare UPL would have been, the limit could be increased. With the new methodology, the state would receive more than $450 million of new federal money in 2002 and 2003 and retroactive payments for 2000 and 2001. These funds increased the amount of revenue in the Health Ser- vices Account (HSA), which, because of new provisions permitting HSA funds to be transferred to the general fund, allowed the state to solve its budget problem. In the budget that was passed, cuts in health care spending were quite limited compared with the proposals that had been considered. There was a small cut in BHP enrollment and small increases in BHP copayments for prescription drugs. In the second year of its biennium, Washington developed a $1.3 billion deficit out of an approximately $23 billion budget. The governor considered a range of options for reducing Medicaid spending. In the end, he proposed substantial cuts in reimbursement rates for both generic and brand name drugs and in nursing home reimbursement rates and elimination of interpreter services. In late 2001 Washington also submitted a waiver proposal to CMS, which if granted would reduce outlays and increase federal revenues. Under the waiver proposal the state would impose premiums on children and pregnant women with incomes above 100 percent of FPL up to 5 percent of income, shift BHP parents into SCHIP, obtain the higher SCHIP match, and use the state’s SCHIP allotment. The state has asked for authority to impose cost sharing on optional services for all mandatory eligibles and on all nonpreventive services for optional groups, as well as authority to cap enrollment for all optional eligibility groups. It appears unlikely that CMS will approve this waiver in its current form.

Coverage Expansions

The aftershocks of Washington’s efforts to provide statewide universal health insurance in the early 1990s continue to affect health care policymaking eight years later. Although many of the most ambitious 1993 Health Services Act reforms, including

the employer mandate, were repealed several years later, other reforms––such as the 62 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 63

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TANF families and other nondisabled adults and children are in Medicaid managed Medicaid in are children and adults nondisabled other and families TANF

cent per year. Per enrollee costs are expected to increase 8 percent per year. Only year. per percent 8 increase to expected are costs enrollee Per year. per cent

2000 and were expected to rise to $876.7 million in 2003, an increase of 11.5 per- 11.5 of increase an 2003, in million $876.7 to rise to expected were and 2000

of Medicaid enrollees. Premiums paid to managed care plans were $630.1 million in million $630.1 were plans care managed to paid Premiums enrollees. Medicaid of

ington’s Medicaid managed care program. This number represents about 60 percent 60 about represents number This program. care managed Medicaid ington’s

As of June 2000 there were 430,000 enrollees in the Healthy Options plan, Wash- plan, Options Healthy the in enrollees 430,000 were there 2000 June of As

Acute Care Acute

maintained BHP enrollment funded through other HSA revenues at 125,000. at revenues HSA other through funded enrollment BHP maintained

tax and use the proceeds to fund additional slots in the BHP, provided that the state the that provided BHP, the in slots additional fund to proceeds the use and tax

In November a ballot initiative passed, allowing the state to increase its tobacco its increase to state the allowing passed, initiative ballot a November In

ical coverage to noncitizen children in households below 100 percent of FPL. of percent 100 below households in children noncitizen to coverage ical

growth in its wholly state-funded Children’s Health Program, which provides med- provides which Program, Health Children’s state-funded wholly its in growth

being determined eligible for Medicaid. Washington also has seen a significant a seen has also Washington Medicaid. for eligible determined being

large Medicaid spillover effect with 70 to 75 percent of those applying for SCHIP for applying those of percent 75 to 70 with effect spillover Medicaid large

Along with already high Medicaid eligibility levels, these measures have resulted in a in resulted have measures these levels, eligibility Medicaid high already with Along

the same income counting methods, and an in-person interview is not required. not is interview in-person an and methods, counting income same the

mechanisms to ensure coverage of eligible individuals who apply. Both programs use programs Both apply. who individuals eligible of coverage ensure to mechanisms

The state has incorporated innovative incorporated has state The application with self-declaration of income. of self-declaration with application

Medical Assistance Administration (DSHS-MAA), have a joint Medicaid-SCHIP joint a have (DSHS-MAA), Administration Assistance Medical

and SCHIP, both administered under the Department of Social and Health Sciences Health and Social of Department the under administered both SCHIP, and

Medicaid 200 percent of FPL because they were already covered under Medicaid. under covered already were they because FPL of percent 200

in SCHIP stemmed from its inability to obtain enhanced match for children below children for match enhanced obtain to inability its from stemmed SCHIP in

tion occurred in 2000, later than in most states. The state’s reluctance to participate to reluctance state’s The states. most in than later 2000, in occurred tion

children between 200 and 250 percent of FPL. Washington’s SCHIP implementa- SCHIP Washington’s FPL. of percent 250 and 200 between children

Washington established a separate SCHIP program, for non-Medicaid-eligible for program, SCHIP separate a established Washington

nation at that time. time. that at nation

age for children up to 200 percent of FPL, which was one of the highest levels in the in levels highest the of one was which FPL, of percent 200 to up children for age

aid eligibility threshold. Beginning in 1994, Washington extended Medicaid cover- Medicaid extended Washington 1994, in Beginning threshold. eligibility aid

increase coverage of Washington’s poor, a third health reform expanded the Medic- the expanded reform health third a poor, Washington’s of coverage increase

2001, about 130,000 people received coverage through the BHP. To further To BHP. the through coverage received people 130,000 about 2001,

who could enroll without a subsidy but would bear the full cost of coverage. In coverage. of cost full the bear would but subsidy a without enroll could who

BHP availability to families and individuals earning more than 200 percent of FPL, of percent 200 than more earning individuals and families to availability BHP

premiums starting as low as $10 per month. In addition, the 1993 reforms extended reforms 1993 the addition, In month. per $10 as low as starting premiums

to families and individuals earning less than 200 percent of FPL, with sliding-scale with FPL, of percent 200 than less earning individuals and families to

ered 60,000 individuals statewide by the end of 1995. The BHP provides a subsidy a provides BHP The 1995. of end the by statewide individuals 60,000 ered

funded health insurance program, from a small pilot project to a program that cov- that program a to project pilot small a from program, insurance health funded

sponsored coverage. To accomplish this, the reforms expanded the BHP, a state-only a BHP, the expanded reforms the this, accomplish To coverage. sponsored

to the state’s working poor residents, who often do not have access to employer- to access have not do often who residents, poor working state’s the to

One major goal of the 1993 reforms was to adequately provide health insurance health provide adequately to was reforms 1993 the of goal major One

erage issues. issues. erage

Medicaid eligibility threshold––significantly influence today’s health insurance cov- insurance health today’s influence threshold––significantly eligibility Medicaid expansion of the BHP, small-group and individual market reforms, and the increased the and reforms, market individual and small-group BHP, the of expansion care. Washington had attempted to enroll the SSI population in managed care in the eastern part of the state. Managed care for the SSI population failed because of several factors, including a major withdrawal of health plans in eastern Washington, a consolidation of health carriers, and the fact that new enrollees entered with pent-up demand and the rates reportedly were not adequate.7 Washington’s hospital payment system is a DRG (diagnostic-related groups)- based system, and rates have been increasing by about 5 percent per year. Hospital expenditures are expected to increase by 9.8 percent per year between 2000 and 2003.8 Hospital margins are quite low in the state, and hospitals are concerned about rates of payment. The state has reduced the burden on hospitals through its medically indigent program (for the uninsured) and its General Assistance for the Unem- ployed program (a program for the temporarily disabled). Both pay hospital bills for people who are otherwise uninsured, though both programs pay hospitals less than their full costs. The state also has a relatively large DSH program. Though scaled back in recent years because of the BBA, it is targeted to those hospitals that provide a large amount of care through Medicaid. DSH payments are projected to fall from $240 billion in 2000 to $193.3 billion in 2003. Hospitals are greatly concerned about these reductions because they are on top of the larger pressures coming from Medicare and private payers. Prescription drug costs are high and increasing rapidly in the state. The MAA projects that drug spending will increase by 16.8 percent between 2000 and 2003. As part of the budget debate, Washington twice attempted to enact a joint purchasing program––Medicaid together with the state employees’ plan and BHP––to obtain discounts on top of those from the federal Medicaid rebate program. Physi- cians could opt to choose from a preferred drug list and avoid most requirements for prior authorization. Physicians not accepting the preferred drug list would face extensive prior authorization. These attempts were defeated in the legislature following heavy lobbying by the drug manufacturers. Instead, the legislature also directed MAA to achieve a 3 percent savings in program expenditures through various cost-containment and utilization initiatives. In response to the worsening budget environment, the MAA is now proposing to cut reimbursement rates. Washington has also sought to provide some relief to seniors paying increasingly high prescription drug costs. In August 2000, the governor established the AWARDS program, a prescription drug “buyer’s club” (similar in concept to Sam’s Club or Costco), whereby seniors pay $15 a year (or $25 per family) to purchase reduced-price drugs. However, a group, mostly representing pharmacists, filed a motion to stop the implementation of the AWARDS rules, claiming that any “savings” seniors see would come solely from reducing pharmacists’ revenues. On May 25, a state court judge agreed and struck down the program.

Long-Term Care

Washington has been known as a leader and innovator in long-term care services

because of policy initiatives to shift Medicaid recipients out of nursing homes and 64 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 65

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maintain its existing coverage programs. programs. coverage existing its maintain

has gone from being a leader among states in health reform to a state struggling to struggling state a to reform health in states among leader a being from gone has

to enact further coverage expansions absent any new federal legislation. Washington legislation. federal new any absent expansions coverage further enact to

cuts in the BHP; it may not be able to do so in the future. The state also is not likely not is also state The future. the in so do to able be not may it BHP; the in cuts

ardy because of CMS concerns. In the past budget cycle the state avoided significant avoided state the cycle budget past the In concerns. CMS of because ardy

the future to enhance state revenues; even the current UPL program is in some jeop- some in is program UPL current the even revenues; state enhance to future the

revenues and increased use of UPL mechanisms. Neither of these will be available in available be will these of Neither mechanisms. UPL of use increased and revenues

two budget cycles the state solved its fiscal problems through tobacco settlement tobacco through problems fiscal its solved state the cycles budget two

enues, which in turn are dependent on the growth in the state’s economy. In the past the In economy. state’s the in growth the on dependent are turn in which enues,

new revenue sources. Thus state spending is also limited by the growth in state rev- state in growth the by limited also is spending state Thus sources. revenue new

sources to alleviate the I-601 constraints. But in the future these transfers will require will transfers these future the in But constraints. I-601 the alleviate to sources

601, although the state has recently found ways of transferring funds from other from funds transferring of ways found recently has state the although 601,

will place ongoing pressure on the state budget. State spending will be limited by I- by limited be will spending State budget. state the on pressure ongoing place will

that health care spending through the state employees’ plan, Medicaid, and the BHP the and Medicaid, plan, employees’ state the through spending care health that

Washington will confront many difficult issues in the near future. It seems inevitable seems It future. near the in issues difficult many confront will Washington

Conclusion

could exacerbate the worker shortage problem. problem. shortage worker the exacerbate could

fully accept these proposals, but nonetheless rates are expected to be cut, which cut, be to expected are rates nonetheless but proposals, these accept fully

now proposing substantial cuts in nursing home rates. The legislature is not likely to likely not is legislature The rates. home nursing in cuts substantial proposing now

cant adjustments. In fact, in response to recent budget problems, the governor is governor the problems, budget recent to response in fact, In adjustments. cant

current nursing home rates, and the legislature has been unwilling to make signifi- make to unwilling been has legislature the and rates, home nursing current

were concerns that the problem of the shortage of aides could not be solved with solved be not could aides of shortage the of problem the that concerns were

ficult, attracting lower-skilled aides has been an even more acute problem. There problem. acute more even an been has aides lower-skilled attracting ficult,

Though a general shortage of registered nurses has made recruiting skilled staff dif- staff skilled recruiting made has nurses registered of shortage general a Though

unemployment rates combined with the low wages these workers typically receive. typically workers these wages low the with combined rates unemployment

ber of positions available for long-term care providers resulting from a period of low of period a from resulting providers care long-term for available positions of ber

Washington, like the rest of the country, has struggled to fill the increasing num- increasing the fill to struggled has country, the of rest the like Washington,

training standards and wage levels for aides working in community-based facilities. community-based in working aides for levels wage and standards training

ensure quality. In addition to regulation of facilities, concerns have been raised about raised been have concerns facilities, of regulation to addition In quality. ensure

the quality of care given in these facilities and the level of regulation necessary to necessary regulation of level the and facilities these in given care of quality the

homes, take on a larger share of long-term care recipients, concern has grown about grown has concern recipients, care long-term of share larger a on take homes,

settings, such as adult family homes, assisted living facilities, and board and care and board and facilities, living assisted homes, family adult as such settings,

based settings to the extent possible, will have a major impact. However, as new care new as However, impact. major a have will possible, extent the to settings based

decision, which requires states to move individuals to community- to individuals move to states requires which decision, Olmstead the

its substantial expansion of long-term care services, the state does not anticipate that anticipate not does state the services, care long-term of expansion substantial its

nesses and developmental disabilities and younger people with disabilities. Because of Because disabilities. with people younger and disabilities developmental and nesses

tinue to support and expand these shifts for the elderly and persons with mental ill- mental with persons and elderly the for shifts these expand and support to tinue expanded care options in community-based settings. Leaders in Washington con- Washington in Leaders settings. community-based in options care expanded

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ments for prescription drugs as its principal cost-containment initiative. cost-containment principal its as drugs prescription for ments

upward pressure on the Medicaid budget. In 2001, the legislature cut Medicaid pay- Medicaid cut legislature the 2001, In budget. Medicaid the on pressure upward

prescription drug costs, and provider pressure for increased rates have placed strong placed have rates increased for pressure provider and costs, drug prescription

during the late 1990s, though it is beginning to rise again. Increasing enrollment, Increasing again. rise to beginning is it though 1990s, late the during

fare reform initiative (Wisconsin Works, or W-2), Medicaid enrollment fell sharply fell enrollment Medicaid W-2), or Works, (Wisconsin initiative reform fare

than 14 percent of the state budget. Because of the strong economy and a strict wel- strict a and economy strong the of Because budget. state the of percent 14 than

try’s most extensive in terms of covered benefits and eligibility, although it is less is it although eligibility, and benefits covered of terms in extensive most try’s

to fill with public programs. The Wisconsin Medicaid program is one of the coun- the of one is program Medicaid Wisconsin The programs. public with fill to

of a very high rate of private insurance coverage, leaving the state with a smaller gap smaller a with state the leaving coverage, insurance private of rate high very a of

Wisconsin has one of the lowest rates of uninsurance in the country, mainly because mainly country, the in uninsurance of rates lowest the of one has Wisconsin

Coverage Expansions Coverage

tance program for senior citizens. senior for program tance

passed in 2001, and new funds were found to create a new prescription drug assis- drug prescription new a create to found were funds new and 2001, in passed

Medicaid and other health programs were cut only very slightly in the budget that budget the in slightly very only cut were programs health other and Medicaid

its Medicaid intergovernmental transfer program. Despite the financial pressures, financial the Despite program. transfer intergovernmental Medicaid its

relying on a creative repackaging of tobacco settlement funds and vastly expanding vastly and funds settlement tobacco of repackaging creative a on relying

and created substantial financial pressures, which the state has solved temporarily by temporarily solved has state the which pressures, financial substantial created and

education. The economic slowdown has exacerbated a large structural budget deficit budget structural large a exacerbated has slowdown economic The education.

Scott McCallum, a conservative Republican whose priorities are tax reduction and reduction tax are priorities whose Republican conservative a McCallum, Scott

to head the U.S. Department of Health and Human Services, the new governor is governor new the Services, Human and Health of Department U.S. the head to

ment from that during the late 1990s. With the departure of Governor Thompson Governor of departure the With 1990s. late the during that from ment

Wisconsin has new political leadership and is facing a very different fiscal environ- fiscal different very a facing is and leadership political new has Wisconsin

Political and Fiscal Circumstances Fiscal and Political

dates funding for long-term care through use of care management organizations. management care of use through care long-term for funding dates

community-based services. The latest major initiative is Family Care, which consoli- which Care, Family is initiative major latest The services. community-based

national leader in long-term care, especially in the development of flexible home- and home- flexible of development the in especially care, long-term in leader national

as a model for other states seeking to expand coverage. Wisconsin also has been a been has also Wisconsin coverage. expand to seeking states other for model a as

low-income families with incomes too high to qualify for Medicaid, often is touted is often Medicaid, for qualify to high too incomes with families low-income

in the late 1990s. BadgerCare, the state’s publicly subsidized health program for program health subsidized publicly state’s the BadgerCare, 1990s. late the in

top priority of the state, Wisconsin implemented some major health care initiatives care health major some implemented Wisconsin state, the of priority top

pioning policies that favored work and self-reliance. Although health care was not a not was care health Although self-reliance. and work favored that policies pioning

Tommy Thompson was a motivating force for change throughout the 1990s, cham- 1990s, the throughout change for force motivating a was Thompson Tommy

Then-Governor Wisconsin is one of America’s leading “laboratories of reform.” of “laboratories leading America’s of one is Wisconsin

Brian K. Bruen and Joshua M. Wiener M. Joshua and Bruen K. Brian Wisconsin A major innovation in Wisconsin has been the implementation of BadgerCare, which is funded through a combination of a Medicaid research and demonstration waiver and an SCHIP waiver. In these waivers, the state proposed to cover parents as well as children through SCHIP rather than Medicaid (and receive the higher federal match), arguing that it would make enrollment of children easier because parents could benefit as well. Although the waivers were ultimately granted by the U.S. Department of Health and Human Services, the process of obtaining the waivers was politically contentious and difficult. Families with dependent children qualify for coverage under BadgerCare if their incomes are at or below 185 percent of FPL and they are not eligible for Medicaid. Once enrolled, a family’s income may increase to 200 percent of FPL before the family is no longer eligible. There is no financial asset limit for eligibility. Participants with family incomes above 150 percent of FPL are required to pay a premium for coverage, a requirement that consumer advocates argue discourages enrollment. In addition, families with employer-provided and heavily subsidized health insurance are ineligible. Enrollment has grown quickly, exceeding projections, and was 83,000 individuals as of May 2001. Unlike Medicaid, BadgerCare is not an entitlement, though if the state chooses to reduce eligibility levels, the federal SCHIP waiver is automatically terminated and BadgerCare reverts to a Medicaid waiver, which has a much lower federal match rate. Covered services are identical to Medicaid’s. Most BadgerCare enrollees are in MCOs, which also are required to participate in Medic- aid, easing the transition between the two programs.

Acute Care

Wisconsin has a well-established Medicaid and commercial managed care market. Enrollment in MCOs that participate in Medicaid or BadgerCare is mandatory for nondisabled adults and children who live in ZIP Codes with two or more participating MCOs. The state and MCOs have wrangled over rates, with managed care plans winning substantial increases in 2000. Medicaid and BadgerCare MCOs are commercial plans, with most of the state’s MCOs participating. The number of MCOs serving public beneficiaries has been relatively stable, though a few plans have dropped out. Though the market is highly competitive, commercial managed care in Wiscon- sin has not experienced the turmoil that has characterized the market in much of the rest of the country. Penetration rates for MCOs have been relatively stable at about a third of the state’s population. Though two MCOs are national for-profit organizations, most of the state’s MCOs are Wisconsin-based, and nonprofit, provider- based organizations play a major role. State regulation of managed care is extensive and includes a patients’ bill of rights. Financially, HMOs had small losses in 1997 and 1998 and relatively large losses in 1999. In response, the HMOs raised premiums and turned a small profit in 2000. Overall, Wisconsin hospitals are operating at a profit, though margins are down.

Thanks to the low numbers of uninsured, hospital expenditures for uncompensated 68 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 69

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Though the impact of the repeal of federal minimum standards for Medicaid reim- Medicaid for standards minimum federal of repeal the of impact the Though

low Medicaid reimbursement for its problems and has lobbied hard for rate increases. rate for hard lobbied has and problems its for reimbursement Medicaid low

lem, and quality-of-care concerns are increasing. The nursing home industry blames industry home nursing The increasing. are concerns quality-of-care and lem,

beds being taken out of service. Recruitment and retention of staff is a major prob- major a is staff of retention and Recruitment service. of out taken being beds

facilities in bankruptcy proceedings, falling occupancy rates, facilities closing, and closing, facilities rates, occupancy falling proceedings, bankruptcy in facilities

The state’s nursing home industry is under substantial stress, with a number of number a with stress, substantial under is industry home nursing state’s The

state long-term care expenditures. care long-term state

incentives for increased use of home- and community-based services by capitating all capitating by services community-based and home- of use increased for incentives

immune from legal problems. The state’s Family Care demonstration seeks to create to seeks demonstration Care Family state’s The problems. legal from immune

believe that the state’s substantial home- and community-based programs make them make programs community-based and home- substantial state’s the that believe

decision. Most observers, however, observers, Most decision. Olmstead Court’s Supreme the from resulting

been politically controversial and make the state potentially vulnerable to lawsuits to vulnerable potentially state the make and controversial politically been

including payment of family members. COP has very long waiting lists, which have which lists, waiting long very has COP members. family of payment including

residential facilities, such as assisted living, and allows consumer direction of services, of direction consumer allows and living, assisted as such facilities, residential

Community Options Program (COP). The program funds services in nonmedical in services funds program The (COP). Program Options Community

a national reputation for flexible home- and community-based services through its through services community-based and home- flexible for reputation national a

the fact that a majority of Medicaid expenditures are for these services. The state has state The services. these for are expenditures Medicaid of majority a that fact the

Long-term care has a high political and policy profile in Wisconsin, partly reflecting partly Wisconsin, in profile policy and political high a has care Long-term

Long-Term Care Long-Term

funded by a $0.18 increase in the cigarette tax. cigarette the in increase $0.18 a by funded

try, covering older people with incomes up to 240 percent of FPL. The program is program The FPL. of percent 240 to up incomes with people older covering try,

legislature enacted a new program that will be one of the most generous in the coun- the in generous most the of one be will that program new a enacted legislature

consumer advocates and the legislature. After considerable political wrangling, the wrangling, political considerable After legislature. the and advocates consumer

McCallum’s proposal lacked specific funding and was viewed as too restrictive by restrictive too as viewed was and funding specific lacked proposal McCallum’s

intense pressure to provide prescription drug coverage for older people. Governor people. older for coverage drug prescription provide to pressure intense

Going into the 2001–2003 budget process, Wisconsin policymakers faced policymakers Wisconsin process, budget 2001–2003 the into Going

(see below). (see

tice commonly referred to as the state’s intergovernmental transfer (IGT) program (IGT) transfer intergovernmental state’s the as to referred commonly tice

publicly owned nursing facilities as the state match for federal Medicaid funds, a prac- a funds, Medicaid federal for match state the as facilities nursing owned publicly

programs. In these programs, Wisconsin claims the unreimbursed expenditures of expenditures unreimbursed the claims Wisconsin programs, these In programs.

developed Medicaid supplemental payment programs that operate like some DSH some like operate that programs payment supplemental Medicaid developed

pensated care. Though Wisconsin did not aggressively use DSH payments, the state the payments, DSH use aggressively not did Wisconsin Though care. pensated

increase federal revenues or to provide aid to hospitals with large amounts of uncom- of amounts large with hospitals to aid provide to or revenues federal increase

The Medicaid program has made little use of the DSH payment requirements to requirements payment DSH the of use little made has program Medicaid The

increase their market share. market their increase

reportedly because they do not believe that signing contracts with HMOs will HMOs with contracts signing that believe not do they because reportedly

bargaining position with HMOs and have recently refused to give large discounts, large give to refused recently have and HMOs with position bargaining

few closings. Many hospitals are part of a health system. Hospitals are in a strong a in are Hospitals system. health a of part are hospitals Many closings. few

and two public hospitals. Over the past few years, there have been some mergers, but mergers, some been have there years, few past the Over hospitals. public two and

overwhelmingly private, nonprofit facilities; there is only one investor-owned facility investor-owned one only is there facilities; nonprofit private, overwhelmingly care are a small percentage of gross patient revenue. Hospitals in Wisconsin are Wisconsin in Hospitals revenue. patient gross of percentage small a are care bursement of nursing homes is unclear, the state has clearly tightened reimbursement over the past few years. To provide the funds for rate increases, the nursing home industry proposed and the governor and legislature agreed to a major restructuring of the state’s Medicaid IGT program. Under the approved plan, three counties borrow funds from a financial institution and transfer them to the state, which then returns the funds to the counties and certifies the returned funds as Medicaid expenditures for nursing facilities, enabling the state to claim federal matching funds equal to about 60 percent of the amount initially transferred. This new plan could potentially bring $604 million in federal funds to Wisconsin during the 2001–2003 biennium. A significant portion of these funds is slated to be used to increase payments to nursing facilities, particularly facilities that are run by counties. The IGT program is controversial, but even critics of the IGT approach admit that the state does not have any other politically viable options to generate the same level of funding for nursing facilities that the IGT affords.

Conclusion

Wisconsin provides an extensive range of services to the low-income population through Medicaid and BadgerCare. The state is also an innovator in long-term care, in both its COP and its Family Care demonstration. As Wisconsin looks to the future, it faces four major challenges. First, the state’s fiscal condition has deteriorated, placing strong pressures on the state’s budget. Creative financing with the state’s tobacco settlement funds and manipulation of intergovernmental transfers in Medicaid helped to prevent major health care program cutbacks in 2001. But if revenues continue to decline, the state may face having to raise taxes or cut programs in the future. Second, Medicaid and BadgerCare are under fiscal pressures to be more efficient while also maintaining a broad set of benefits and eligibility. Third, the state must implement its major new prescription drug program for older people. Enrolling large numbers of persons and controlling expenditures in the face of continued escalation in prescription drug costs may be difficult. Finally, in the area of long-term care, the state faces a number of challenges, including long waiting lists for home- and community-based services, labor shortages, and a fiscally unstable nursing home industry. The Medicaid rate increases this year may help stabilize the nursing home industry, but it is unclear whether the state will be able to get all of the federal Med- icaid funds on which future rate increases depend. Furthermore, the state must decide whether Family Care is a success and should be expanded to the rest of the

state. 70 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 71

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4. Given the Medi-Cal matching rate, net federal payments under 1255 were about 50 percent of these levels. these of percent 50 about were 1255 under payments federal net rate, matching Medi-Cal the Given 4.

sage of the Beneficiary and Improvement Act of 1999. of Act Improvement and Beneficiary the of sage

made the 175 percent rule permanent for all public hospitals, not just those in California, with the pas- the with California, in those just not hospitals, public all for permanent rule percent 175 the made

3. This approach offers an ongoing solution to the conflict among hospitals because the federal government federal the because hospitals among conflict the to solution ongoing an offers approach This 3.

ments to hospitals. to ments

Medi-Cal DSH, less than half of this represents federal revenues that are available as supplemental pay- supplemental as available are that revenues federal represents this of half than less DSH, Medi-Cal

2. Given the state’s matching rate and its reliance on intergovernmental transfers to finance the state share of share state the finance to transfers intergovernmental on reliance its and rate matching state’s the Given 2.

mit an amendment to expand eligibility to 250 percent of FPL. of percent 250 to eligibility expand to amendment an mit

bility threshold for children. When the state’s current proposal is federally approved, the state plans to sub- to plans state the approved, federally is proposal current state’s the When children. for threshold bility

1. In summer 2001, the legislature raised the income eligibility to 250 percent of FPL—mirroring the eligi- the FPL—mirroring of percent 250 to eligibility income the raised legislature the 2001, summer In 1.

California

(Washington, D.C.: GPO, 2001), A-04-00-02171. 2001), GPO, D.C.: (Washington, 2000 to 1997 Years Fiscal

Review of Alabama State Medicaid Agency Enhanced Payments to Public Hospitals for Hospitals Public to Payments Enhanced Agency Medicaid State Alabama of Review General, Inspector

ington, D.C.: GPO, 2001), A-04-00-02169; Department of Health and Human Services, Office of Office Services, Human and Health of Department A-04-00-02169; 2001), GPO, D.C.: ington,

pital Providers and the Use of Intergovernmental Transfers by the Alabama State Medicaid Agency Medicaid State Alabama the by Transfers Intergovernmental of Use the and Providers pital , Wash- ,

Review of Medicaid Enhanced Payments to Public Hos- Public to Payments Enhanced Medicaid of Review General, Inspector of Office Services, Human and

(Washington, D.C.: Government Printing Office, 2001), A-04-00-02165; Department of Health of Department A-04-00-02165; 2001), Office, Printing Government D.C.: (Washington, Agency

Payments to Public Providers and the Use of Intergovernmental Transfers by the Alabama State Medicaid State Alabama the by Transfers Intergovernmental of Use the and Providers Public to Payments

3. Department of Health and Human Services, Office of Inspector General, General, Inspector of Office Services, Human and Health of Department 3. Review of Medicaid Enhanced Medicaid of Review

these transfers are made through the Public Hospital Transfers and Alabama Health Care Trust Fund. Trust Care Health Alabama and Transfers Hospital Public the through made are transfers these

some portion of the payment back from the hospitals through intergovernmental transfers. In Alabama In transfers. intergovernmental through hospitals the from back payment the of portion some

2. Alabama, like many other states, makes DSH and UPL payments to public hospitals and then receives then and hospitals public to payments UPL and DSH makes states, other many like Alabama, 2.

ber 28, 1998. 28, ber

1. “Politics & Policy—Health Care Politics: Democrats Stress Health Care,” Care,” Health Stress Democrats Politics: Care Policy—Health & “Politics 1. Octo- Line, Health American

Alabama

a web exclusive on the Health Affairs web site, http://www.healthaffairs.org, in May/June 2002. May/June in http://www.healthaffairs.org, site, web Affairs Health the on exclusive web a

Lutzky, “Health Policy for Low-Income People: State Responses to New Challenges,” will be available as available be will Challenges,” New to Responses State People: Low-Income for Policy “Health Lutzky,

. A companion paper by John Holahan, Joshua M. Wiener, and Amy Westpfahl Amy and Wiener, M. Joshua Holahan, John by paper companion A . Wisconsin in People Income

Recent Changes in Health Policy for Low- for Policy Health in Changes Recent Wiener, M. Joshua and Bruen K. Brian and ; Washington in ple

Recent Changes in Health Policy for Low-Income Peo- Low-Income for Policy Health in Changes Recent Pohl, Beth Mary and Holahan John ; Texas in People

Recent Changes in Health Policy for Low-Income for Policy Health in Changes Recent Brennan, Niall and Wiener M. Joshua ; York New in People

Recent Changes in Health Policy for Low-Income for Policy Health in Changes Recent Lutzky, Westpfahl Amy and Coughlin A. Teresa ; Jersey

Recent Changes in Health Policy for Low-Income People in New in People Low-Income for Policy Health in Changes Recent Ullman, C. Frank and Bovbjerg R. Randall

Recent Changes in Health Policy for Low-Income People in Mississippi in People Low-Income for Policy Health in Changes Recent Ullman, C. Frank and Ormond bara ;

K. Long and Stephanie Kendall, Kendall, Stephanie and Long K. Recent Changes in Health Policy for Low-Income People in Minnesota in People Low-Income for Policy Health in Changes Recent ; Bar- ;

Recent Changes in Health Policy for Low-Income People in Michigan in People Low-Income for Policy Health in Changes Recent Chesky, Julie and Ullman, C. ; Sharon ;

Recent Changes in Health Policy for Low-Income People in Massachusetts in People Low-Income for Policy Health in Changes Recent Ullman, C. Frank ; Jane Tilly, Frank Tilly, Jane ;

Recent Changes in Health Policy for Low-Income People in Florida in People Low-Income for Policy Health in Changes Recent Hill, Ian and ; Randall R. Bovbjerg and Bovbjerg R. Randall ;

Recent Changes in Health Policy for Low-Income People in Colorado in People Low-Income for Policy Health in Changes Recent Chesky, Julie and ; Alshadye Yemane Alshadye ;

Recent Changes in Health Policy for Low-Income People in California in People Low-Income for Policy Health in Changes Recent Zuckerman, Stephen and ; Jane Tilly Jane ;

Recent Changes in Health Policy for Low-Income People in Alabama in People Low-Income for Policy Health in Changes Recent Wigton, Alyssa ; Amy Westpfahl Lutzky Westpfahl Amy ;

1. All of these reports are available from The Urban Institute, Washington, D.C.: Barbara Ormond and Ormond Barbara D.C.: Washington, Institute, Urban The from available are reports these of All 1.

Introduction Notes 5. The Council consists of the directors of the Departments of Aging, Developmental Services, Health Ser- vices, Mental Health, Rehabilitation, Social Services, and Veteran Affairs and the Office of Statewide Health Planning and Development. 6. IHSS helps to pay for personal care and chore services for elderly individuals and people with disabilities who need assistance to remain in their own homes.

Colorado 1. State of Colorado Joint Budget Committee, “Fiscal Year 2001-02 Figure Setting for Department of Health Care Policy and Financing and Department of Higher Education, Commission on Family Medi- cine,” http://www.state.co.us/gov_dir/leg_dir/jbc/figuresetting01-02.htm, accessed September 17, 2001. 2. Child Health Plan Plus, http://www.cchp.org, accessed July 19, 2001. 3. Colorado Office of the State Auditor, Children Basic Heath Plan Department of Health Care Policy and Financing Performance Audit (Denver, July 2000). 4. Colorado Benefits Management System, “CBMS Project Goals,” http://www.chcpf.state.co.us/ cbms,cbmsgoals, accessed January 30, 2001. 5. State of Colorado Joint Budget Committe, “Fiscal Year 2001-02 Appropriations Report,” http://www. state.co.us/gov_dir/leg_dir/jbc/apprept.pdf, accessed September 2001. 6. “Statelines-Colorado: Reaches Agreement with Rocky Mountain HMO,” American Health Line, Novem- ber 15, 2000. 7. “Statelines-Colorado: Second HMO Sues State over Medicaid Payments,” American Health Line, Octo- ber 5, 2000. 8. P. Johnson, Issue Brief on Medicaid Provider Reimbursement, National Conference of State Legislatures, December 2000, http://www.hpts.org/hpts97/issueb2001.nsf, accessed January 30, 2001. 9. Health Policy Tracking Services, January 18, 2001.

Florida 1. States are allowed to develop formularies that restrict access to prescription drugs as long as they adhere to certain federal rules that require, for example, the creation of a prior authorization program to allow access to drugs excluded from the state’s formulary. 2. Florida State Legislature, Office of the Senate Secretary, 2001 Special Session “C”: Summary of Legislation Passed (Tallahassee, December 2001). 3. All cuts will be restored until July 1, 2002, with nonrecurring general revenue funds. Cost savings from the implementation of these cuts, therefore, pertain to the FY 2002–03 budget. 4. Florida State Legislature, 2001 Special Session “C”: Summary of Legislation Passed. 5. The Department of Children and Families handles Medicaid eligibility and Healthy Kids handles SCHIP eligibility.

Massachusetts 1. Steve Leblanc, “Swift Unveils $150 Million Tax Cut Plan,” Boston Globe, June 27, 2001. 2. Steven Syre and Charles Stein, “Tax Cut’s ‘Difficult Reality’,” Boston Globe, September 9, 2001; Steve Bai- ley, “Freeze the Tax Cut,” Boston Globe, October 3, 2001; State revenues have slowed nationwide. National Association of State Budget Officers. October 4, 2001. “State Budget Shortfalls Mounting Sub- stantially,” http://www.nasbo.org/, accessed October 9, 2001. 3. Also covered are disabled persons with federal QDWI status (qualified disabled and working individual), those who have lost their Medicare Part A benefits owing to their return to work. CommonHealth covers

them up to 200 percent of FPL, with an asset test of double the limit for SSI eligibility. 72 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 73

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were returned to fee-for-services Medicaid. Almost 15 years later, the state moved forward with the with forward moved state the later, years 15 Almost Medicaid. fee-for-services to returned were

in 1985. After one year the major participating health plan dropped the program, and disabled enrollees disabled and program, the dropped plan health participating major the year one After 1985. in

care programs. Blind and disabled individuals were included in the first three counties to implement PMAP implement to counties three first the in included were individuals disabled and Blind programs. care

15. MnDHO is Minnesota’s third attempt to enroll disabled Medicaid enrollees under age 65 into managed into 65 age under enrollees Medicaid disabled enroll to attempt third Minnesota’s is MnDHO 15.

4 Ibid. 14.

submitted to HCFA April 6, 2001. 2001. 6, April HCFA to submitted

, Request Extension Waiver Demonstration Payment Medicare Services, Human of Department Minnesota 13.

be enrolled in or applying for Medicare supplement programs. supplement Medicare for applying or in enrolled be

in a nursing home, must not have had drug coverage from other sources in the past four months, and must and months, four past the in sources other from coverage drug had have not must home, nursing a in

12. In addition, an eligible applicant must have been a Minnesota resident for six months, must not be living be not must months, six for resident Minnesota a been have must applicant eligible an addition, In 12.

Funding,” Fact Sheet, DHS/HC/ca, May 21, 1999. 21, May DHS/HC/ca, Sheet, Fact Funding,”

11. Minnesota Department of Human Services, “Restoring the Federal Cut to Minnesota’s Medicaid DSH Medicaid Minnesota’s to Cut Federal the “Restoring Services, Human of Department Minnesota 11.

20287L 4/00. 4/00. 20287L

ment of Human Services, Fact Sheet, “Medical Assistance for Employed Persons with Disabilities,” DHS- Disabilities,” with Persons Employed for Assistance “Medical Sheet, Fact Services, Human of ment

or Disabled: Raising the Income Standard and Supporting Work,” March 21, 2001; Minnesota Depart- Minnesota 2001; 21, March Work,” Supporting and Standard Income the Raising Disabled: or

10. Minnesota Department of Human Services, Fact Sheet, “MA Initiatives for People Who Are Elderly, Blind Elderly, Are Who People for Initiatives “MA Sheet, Fact Services, Human of Department Minnesota 10.

age that includes copayments for prescription drugs and other services. other and drugs prescription for copayments includes that age

9. Parents and caretakers for whom the state receives matching funds receive a slightly reduced benefit pack- benefit reduced slightly a receive funds matching receives state the whom for caretakers and Parents 9.

FPL in MinnesotaCare since 1995. since MinnesotaCare in FPL

8. Minnesota had been receiving Medicaid matching funds for children with incomes up to 275 percent of percent 275 to up incomes with children for funds matching Medicaid receiving been had Minnesota 8.

ing QWDIs to use Medicaid to pay Medicare Part A premiums. A Part Medicare pay to Medicaid use to QWDIs ing

7. Although it is not an expansion in Medicaid coverage, Minnesota has also implemented a program allow- program a implemented also has Minnesota coverage, Medicaid in expansion an not is it Although 7.

an individual and $17 for a family of two. two. of family a for $17 and individual an

6. The increase raised income base standards by 3 percent, increasing allowable monthly income by $14 for $14 by income monthly allowable increasing percent, 3 by standards base income raised increase The 6.

5. “Minnesota: HHS Oks CHIP Waivers, Certain Parents Eligible,” Eligible,” Parents Certain Waivers, CHIP Oks HHS “Minnesota: 5. , June 15, 2001. 15, June , Line Health American

Insurance Program (SCHIP),” MS-1798, February 2001. 2001. February MS-1798, (SCHIP),” Program Insurance

4. Minnesota Department of Human Services, Fact Sheet, “MinnesotaCare and the State Children’s Health Children’s State the and “MinnesotaCare Sheet, Fact Services, Human of Department Minnesota 4.

health insurance programs that were grandfathered into SCHIP. SCHIP. into grandfathered were that programs insurance health

in place, with the exception of three states (Florida, New York, and Pennsylvania) with existing children’s existing with Pennsylvania) and York, New (Florida, states three of exception the with place, in

3. The legislation required that funds be used on new programs rather than supplementing programs already programs supplementing than rather programs new on used be funds that required legislation The 3.

in Medicaid or MinnesotaCare. or Medicaid in

2. The state receives Medicaid matching funds for these populations, regardless of whether they are enrolled are they whether of regardless populations, these for funds matching Medicaid receives state The 2.

(St. Paul, 2001). Paul, (St. Forecast 2001 February Finance, of Department Minnesota 1.

Minnesota

(Lansing, February 2001). February (Lansing, Organizations Care Managed

3. S. Angelotti and J.S. Walker, Michigan Senate Fiscal Agency, Agency, Fiscal Senate Michigan Walker, J.S. and Angelotti S. 3. Update on the Financial Status of Michigan of Status Financial the on Update

18, 2001. 18,

June 2000,” January 2001, http://www.kff.org/content/2001/2224/2224.pdf, accessed September accessed http://www.kff.org/content/2001/2224/2224.pdf, 2001, January 2000,” June

2. Vernon K. Smith, The Kaiser Commission on Medicaid and the Uninsured, “CHIP Program Enrollment: Program “CHIP Uninsured, the and Medicaid on Commission Kaiser The Smith, K. Vernon 2.

ance Estimates, FY 2000-01 and FY 2001-02 FY and 2000-01 FY Estimates, ance (Lansing, May 11, 2001), table 3. table 2001), 11, May (Lansing,

Budget Status Report Issue 2000-1, Economic, Revenue, and Year-End Bal- Year-End and Revenue, Economic, 2000-1, Issue Report Status Budget Agency, Fiscal Senate Michigan

Balance. http://www.senate.state.mi.us/sfa/budgview/budstab.html, accessed September 20, 2001; 20, September accessed http://www.senate.state.mi.us/sfa/budgview/budstab.html, Balance.

1. Michigan Senate Fiscal Agency, “Economic and Budget Stabilization Fund: Transfers, Earnings and Fund and Earnings Transfers, Fund: Stabilization Budget and “Economic Agency, Fiscal Senate Michigan 1.

Michigan

nation/Market_slide_cuts_into_state_revenues+.shtml, accessed February 17, 2002. 17, February accessed nation/Market_slide_cuts_into_state_revenues+.shtml,

into State Revenues,” Revenues,” State into , February 17, 2002. http://www.boston.com/dailyglobe2/048/ 2002. 17, February , Globe Boston 4. Since the report was written, the fiscal picture has worsened. Scott Bernard Nelson, “Market Slide Cuts Slide “Market Nelson, Bernard Scott worsened. has picture fiscal the written, was report the Since 4. Demonstration Project for People with Disabilities (DPPD), under which counties were to operate their own mandatory managed care system for the disabled. Although enrollment was scheduled to begin in 2000, the project was put on hold after two of the four participating counties ended their participation because of concerns about the program’s impacts on the disabled population and county providers. 16. Minnesota Department of Human Services, Office of Continuing Care, “Home Care HCBS Waivers Briefing Book,” http://www.dhs.state.mn.us/contcare/waivers/current_programs.htm, accessed April 2001. 17. “Minnesota: Long Term Care Worker Salary Hike Considered,” American Health Line, March 7, 2001.

Mississippi 1. Vernon Smith, CHIP Enrollment: June 2000 (Lansing, Mich.: Health Management Associates, 2000), pre- pared for the Kaiser Commission on Medicaid and the Uninsured. 2. Letter to all MBES/CBES Users from Bill Lasowski, Director of Financial Management, Department of Health and Human Services Health Care Financing Administration, February 22, 2001. 3. Mississippi Division of Medicaid, Office of the Governor Division of Medicaid, Governor Ronnie Mus- grove and Executive Director Rica Lewis-Payton. “Fiscal Year 2000 Web Edition, July 1, 1999–June 30, 2000,” http://www.dom.state.ms.us/ar2000.pdf, accessed November 2, 2001. 4. Lynne Wilbanks Jeter, “Challenges Aplenty for Rural Providers,” Mississippi Business Journal, July 6, 1998.

New Jersey 1. The early budget was balanced, but only by a variety of one-time stopgaps. Governor Christine Todd Whitman, “Fiscal Year 2002 Budget,” http://www.state.nj.us/treasury/omb, accessed January 23, 2001. See New Jersey state report card published in Governing, February 2001, 78, http://www.governing.com/gpp/gp1nj.htm, accessed June 2001. 2. “New Jersey: Gov. Whitman Outlines New Health Plan,” American Health Line, December 12, 1999. 3. After September 1, only single adults and childless couples eligible for WorkFirst/General Assistance will be able to enroll in NJ FamilyCare. Thus, childless couples earning more than $2,600 per year are no longer eligible. See http://www.njfamilycare.org/. 4. One source says New Jersey ranked 15th in the country on an average per diem basis for 1998 rates. Joshua M. Wiener and David G. Stevenson, “Repeal of the ‘Boren Amendment’: Implications for Quality of Care in Nursing Homes,” Assessing the New Federalism Policy Brief A-30 (Washington, D.C.: The Urban Institute, December 1998), table 1. On a per-patient basis, the rank was second, according to Jason Method, “Nursing Homes Troubled by Proposed State Medicaid Cuts,” Asbury Park Press, June 25, 1998. 5. Jason Method, “Nursing homes troubled by proposed state Medicaid cuts,” Nursing Home News, May 1998. 6. Following common usage, we often refer to “insurers” to include other health plans such as HMOs and hospital service corporations. The total number of HMOs statewide decreased as well as those on Medicaid.

New York 1. Vernon Smith, CHIP Enrollment: June 2000 (Lansing, Mich.: Health Management Associates, 2000), pre- pared for the Kaiser Commission on Medicaid and the Uninsured. 2. Melinda Dutton, Kimberly Chin, and Chery Hunter-Grant, Creating a Seamless Health Insurance System for New York’s Children (New York: The Commonwealth Fund, February 2001). 3. Initially, parents with incomes up to 133 percent of FPL will qualify. Then, beginning in October 2002, eligibility rules will be expanded to 150 percent of FPL. 4. This figure represents total managed care enrollment—both voluntary and mandatory. Considering just mandatory enrollment, the number of enrollees totaled 363,000 individuals as of December 2000 (New

York State Coalition of Prepaid Health Services Plans, December 2000). 74 L HEALTH POLICY FOR LOW-INCOME PEOPLE: PROFILES OF 13 STATES 75

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Journal Group, 1999), 1726. 1999), Group, Journal

(Washington, D.C.: National D.C.: (Washington, 2000 Politics, American of Almanac The Ujifusa, Grant and Barone Michael 1.

Wisconsin

8. Data provided by the state of Washington Medical Assistance Administration. Assistance Medical Washington of state the by provided Data 8.

7. Interview with Health Care Authority officials, June 5, 2001. 5, June officials, Authority Care Health with Interview 7.

October 2000), http://www.kff.org/content/2000/2166/hjksmall.pdf, accessed July 16, 2001. 16, July accessed http://www.kff.org/content/2000/2166/hjksmall.pdf, 2000), October

(Washington, D.C.: Center on Budget and Policy Priorities, Policy and Budget on Center D.C.: (Washington, Procedures Enrollment and Guidelines ity

Making It Simple: Medicaid for Children and CHIP Income Eligibil- Income CHIP and Children for Medicaid Simple: It Making Cox, Laura and Ross Cohen Donna 6.

project. Federalism New the Assessing

5. Based on a site visit conducted on October 11, 2000, as part of the Urban Institute’s SCHIP Evaluation, SCHIP Institute’s Urban the of part as 2000, 11, October on conducted visit site a on Based 5.

three-year transition period so eventually the use of this mechanism will be phased out. phased be will mechanism this of use the eventually so period transition three-year

a transition to the lower limits depending on how long the state had used the program; Washington has a has Washington program; the used had state the long how on depending limits lower the to transition a

to calculate the difference between the Medicaid and Medicare UPLs for just the 14 hospitals. There was There hospitals. 14 the just for UPLs Medicare and Medicaid the between difference the calculate to

4. The Beneficiary Improvement and Protection Act, enacted by the U.S. Congress in 2000, required states required 2000, in Congress U.S. the by enacted Act, Protection and Improvement Beneficiary The 4.

Center, University of Washington, January 2000). January Washington, of University Center,

The Noose Tighten: Washington State’s Looming Fical Crisis Fical Looming State’s Washington Tighten: Noose The Haugen, Christopher J. 3. (Seattle: Fiscal Policy Fiscal (Seattle:

9d200710111?OpenDocument, accessed May 22, 2001. 22, May accessed 9d200710111?OpenDocument,

hpts.org/hpts97/NFTS2001.nsf/2b9bj8a662962da34852563160055785b/da97d0c196584e9c85256

2. National Conference of State Legislatures, Health Policy Tracking Service, http://www. Service, Tracking Policy Health Legislatures, State of Conference National 2.

1. Washington State Legislature, http://www.leg.wa.gov, accessed September 5, 2001. 5, September accessed http://www.leg.wa.gov, Legislature, State Washington 1.

Washington

(New York: The Commonwealth Fund, 1999). 1999). Fund, Commonwealth The York: (New People abled

5. Susan Raetzman and Susan Joseph, Joseph, Susan and Raetzman Susan 5. Long-Term Care in New York: Innovation in Care for Elderly and Dis- and Elderly for Care in Innovation York: New in Care Long-Term

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and end-of-life care. end-of-life and

home- and community-based services, consumer-directed home care, and Medicaid and care, home consumer-directed services, community-based and home-

project, Medicaid project, Federalism New the Assessing Institute’s Urban the workforce, care

Medicaid, and long-term care. His recent projects include research on the long-term the on research include projects recent His care. long-term and Medicaid,

Health Policy Center, where he specializes in research on health care for the elderly, the for care health on research in specializes he where Center, Policy Health

is a principal research associate at the Urban Institute’s Urban the at associate research principal a is Joshua M. Wiener M. Joshua

containment. containment.

reform, changes in health insurance coverage, physician payment, and hospital cost hospital and payment, physician coverage, insurance health in changes reform,

cost to federal and state governments. Other research interests include health system health include interests research Other governments. state and federal to cost

research on the effects of expanding Medicaid on the number of uninsured and the and uninsured of number the on Medicaid expanding of effects the on research

has authored several publications on the Medicaid program. He has also published also has He program. Medicaid the on publications several authored has

is director of the Health Policy Center at the Urban Institute. He Institute. Urban the at Center Policy Health the of director is John Holahan John

Urban Institute, Ms. Lutzky served as an analyst for the Lewin Group. Lewin the for analyst an as served Lutzky Ms. Institute, Urban

project. Before joining the joining Before project. Federalism New the Assessing Institute’s the of part as

Medicaid DSH funding, and health care developments in California and New York New and California in developments care health and funding, DSH Medicaid

has also studied the financing and organization of safety net ambulatory care systems, care ambulatory net safety of organization and financing the studied also has

mentation of the State Children’s Health Insurance Program (SCHIP). Ms. Lutzky Ms. (SCHIP). Program Insurance Health Children’s State the of mentation

Policy Center, where her work currently focuses on issues surrounding the imple- the surrounding issues on focuses currently work her where Center, Policy

is a research associate with the Urban Institute’s Health Institute’s Urban the with associate research a is Amy Westpfahl Lutzky Westpfahl Amy About the Editors the About Nonproﬁt Org. U.S. Postage PAID Permit No. 8098 The Urban Mt. Airy, MD Institute 2100 M Street, N.W. Washington, D.C. 20037

Phone: 202.833.7200 Fax: 202.429.0687 E-Mail: [email protected] http://www.urban.org Occasional Paper