X International Conference on AIDS Education

Plenary Session - 10:15 AM November 11, 1996

"The Challenge of Medicaid and Welfare Reform in the United States"

Remarks by Randy Allgaier

Director, HIV Advocacy Network, San Francisco AIDS Foundation

Introduction

I will keep my remarks primarily focused to the impact of Welfare reform on Medicaid recipients and the future possibilities of Medicaid reform and the ensuing implications.

First, it is important to understand that during the 104th Congress- there was a strong desire in Washington to reform Medicaid.  Additionally, the governors of many states were pushing for reform.  As with the Personal Responsibility and Work Opportunity and Reconciliation Act of 1996,  otherwise known as Welfare Reform, there was a strong push to change the entitlement status of Medicaid. 

I believe that the federal government is zeroing in on entitlement programs for a couple of reasons.  First, is the desire to balance the budget and these entitlement programs are very expensive and therefore a likely target by many legislators. The second reason, which is tied to the issue of balancing the budget, alters depending on your mind set.  If you are cynical you might say that these programs support most of the disenfranchised in this country and therefore are expendable.  If you want to be charitable to our legislators you might point to the fact as Senator John Chafee of Rode Island indicated recently about Medicaid, that the states and the federal government have seen record increases in the program's costs and that the changes that have occurred in Congress' makeup have resulted to a push to allow states more flexibility in managing federal programs. 

Whatever the case is, these entitlement programs are under fire.  We were fortunate that President Clinton did hold strong to his line in the sand regarding Medicaid, and we were able to stave off any overarching changes to this program...for the time being.

The Impact of Welfare Reform on Medicaid Recipients

However, Welfare Reform has already eliminated the entitlement status of one program that has served as a safety net for the neediest folks living in the United States and has implications for some individuals accessing Medicaid.  This is significant for people living with AIDS in the United States because Medicaid supplies the healthcare for nearly 50% of people living with AIDS in the United States.

Welfare reform does not create a Medicaid block grant and generally speaking, states must continue to provide Medicaid to families that would be eligible for cash assistance grants through the former welfare program-- Aid to Families with Dependent Children or AFDC-- under the terms that applied before welfare reform was implemented.  This includes the rules for determining income and resources.

Therefore, families that would have qualified for AFDC under old guidelines but lose cash because of new rules -- such as the 5 year limit or lower eligibility guidelines -- will at least be able to continue receiving Medicaid.    Actually the new welfare act not only maintains Medicaid eligibility for those families currently eligible for Medicaid through AFDC, but prohibits states from lowering income and resource eligibility for Medicaid in the future.  Also, Medicaid, under the terms of the new welfare act- cannot be terminated for children or pregnant women.  Additionally, the transition periods for individuals who find employment remain the same as before.

However, states may deny Medicaid to adults who lose cash aid because they do not meet work requirements, and access to Medicaid by legal immigrants is dramatically restricted. 

The new welfare act denies Medicaid coverage, outside of emergency services,  to many legal immigrants. 

By in large, immigrants entering the country after the date that the Welfare Reform Act was signed will be ineligible for Medicaid for 5 years.  States have the opportunity, if they wish, to extend this ban for a longer period should they so desire. 

Conversely, Refugees, asylees and persons granted withholding of deportation can only receive Medicaid benefits for the first 5 years.  After that, they are barred from all non-emergency Medicaid care.

Explicitly exempted from both the five year limitation and the five year bar effecting eligibility are Cubans and Haitians.  Currently these folks are treated as refugees for benefits purposes.

A small group of immigrants will enjoy Medicaid eligibility protection.

1.  Veterans and active duty service members residing in the US legally as well as their spouses and unmarried dependents. 

2.  Legal immigrants who have worked in the US for 10 years or at least 40 quarters.

States have the option of either continuing or denying Medicaid to legal immigrants already in the US and to other legal immigrants after the 5-year exclusion with the exception of the exempted groups that I have mentioned. 

There is no protection for legal immigrants who become disabled and impoverished while living here, so these provisions will apply to legal immigrants and their dependents living with HIV.  As a matter of fact, the Act explicitly denies Medicaid payment for the testing and treatment of communicable diseases.  Legal immigrants will be allowed to get these services through other state and federal programs, but no new funding is authorized under this Act to finance services for these people. 

Currently an individual entering the United States legally that is unable to support him or herself must enlist a relative to sponsor him or her.  Primarily these are the folks who are coming into the country to join family already residing here.  If this individual does not have a sponsor  he or she will be excluded from immigrating because this individual is likely to be a public charge.  The sponsor must submit an application of support showing that the total family income of the sponsor is above federal poverty guidelines for the family size. Before welfare reform, this family income was "deemed" available to the immigrant individual but had no baring on the immigrant's eligibility for Medicaid.  Not only are deeming provisions now much more stringent, but it affects the immigrants eligibility for all federal means-tested programs...including Medicaid.

Therefore, currently the Welfare Reform bill negatively impacts Medicaid access for most legal immigrants.  In a letter that President Clinton wrote to the Coalition for Emergency Action on Medicaid Funding, he wrote:

"I know that this legislation is far from perfect, and it includes some provisions I deplore and am determined to fix.  Unfortunately, the congressional leadership insisted on using welfare reform to target other, unrelated programs.  For example, the law cuts deeper than it should into nutritional assistance, especially for working families with children and its cuts off assistance to legal immigrants.  These provisions, which are never could have passed on their own, are misguided, and I am committed to fixing them."

I hope that the President does go back and try to fix these problems in the Welfare Reform bill, however it is questionable whether the Congressional leadership will give him this opportunity and whether or not the President is willing to expend any political capital on this issue. 

This is a nutshell of how Medicaid recipients are impacted by Welfare Reform.  But what about future Medicaid reform?

Medicaid Reform

It is likely that this issue will come back in the 105th Congress.  But there are a few points that are crucial to remember, especially for those of us who advocate on HIV/AIDS issues. 

As I mentioned earlier, Medicaid provides health coverage for nearly 50% of people with HIV/AIDS nationally, including over 90% of pediatric AIDS cases.  Medicaid is the largest insurer of people with HIV/AIDS and has become increasingly so through every year of the epidemic.  The growth trend in Medicaid coverage of HIV/AIDS health care is astounding.  Between 1991 and 1995 alone, the Health Care Financing Administration estimates that Medicaid HIV/AIDS care costs more than doubled. 

This being said, any attempt to reform Medicaid needs to have vigilant attention paid to it by those of us advocating for people living with HIV. 

First, funding cuts to the program will result in many people living with HIV/AIDS loosing some or all of their desperately needed Medicaid health services with the obvious result being increased illness and premature death.

Second,  block granting of Medicaid, similar to what has occurred with welfare, will only compound problems for people living with HIV due to the loss of federal guidelines that now protect vulnerable populations and mandate a broad benefits package. 

The inevitable end effect of block granting would be the loss of essential services.  Although responsible block grants may help cut administrative costs, they would not achieve massive program savings.  Also, block grants are unable to respond well to changes in demand for health services, and do not reflect shifts in epidemiological patterns or the economy.  Enhanced state flexibility-- a promise of block grants-- may prove wise if accomplished through thoughtful program evaluation.  However, attempts to block grant Medicaid, with few federal guidelines--such as is the case with the new welfare programs, does not accomplish such a thoughtful re-evaluation. 

A possible alternative to block granting would be for a per-capita cap approach to Medicaid reform.  This is not an ideal alternative, in my mind, but this concept should be kept alive as an alternative should a push for block granting gain momentum.  Rather than allotting states a fixed pot of money, regardless of how many people are eligible for Medicaid coverage-- as would be the case with a block grant-- a per-capita cap would provide them with a set amount of funds for each individual who is eligible.  Thus, if states suffer an economic downturn and see an increase in Medicaid-eligible individuals, they would, in turn, see a corresponding increase in federal funding.

However a per capita cap approach to funding Medicaid could easily result in capping yearly Medicaid outlays for individuals and this has some serious problems.  Although capping provides a means of limiting how many services an individual may access, it does not take into consideration the individual characteristics of life-threatening diseases such as HIV/AIDS. 

Individuals living with HIV/AIDS are often faced with recurring symptoms from various opportunistic infections that, unless treated, could seriously affect their health and, in some cases, the public health.  Capping the amount of medication, or health services that an individual may receive will only lead to more serious illness in the future.  Individuals who are worried about reaching their cap limits may even avoid seeking health care until their condition has worsened, thereby dramatically decreasing their quality of life.

Third is the option of moving Medicaid to managed care programs.  The first problem here is that without adequate funding and guidelines, Medicaid managed care will also likely result in decreased access to care and a lower level of care than is appropriate for HIV/AIDS and other serious, chronic or life-threatening diseases.  Managed care is not an instant solution to problems concerning access to care and rising costs for the Medicaid population.

The move to managed care is an attempt to establish a network of primary care providers for Medicaid beneficiaries, but the success of managed care depends in large part on the future adequacy of the capitation rates and the ability to maintain access to care. 

Broadened use of managed care is unlikely to accomplish big overall savings for Medicaid.  Acute care services for low-income children and adults, the target of most managed care initiatives, only account for one-quarter of program spending whereas 60% of all Medicaid spending is for the elderly and the disabled-- including people living with HIV/AIDS.  Even if managed care can achieve savings of 5 to 10% over fee-for-service, overall savings of more than 5% of total Medicaid spending are unlikely without the aggressive implementation of managed care for the low income elderly and disabled populations. 

Typically managed care programs restrict access to services, particularly specialty care, as a means of cutting costs.  Managed care models often result in disincentives-- sometimes insurmountable ones-- to care for individuals with high cost conditions, such as HIV/AIDS.  Thus, if Medicaid reform were to move towards mandating managed care, which seems to be a very real option, it will be imperative that reform in this area must contain protections to ensure access to medically necessary care and appropriate grievance procedures for patients. 

Changes in the delivery system towards managed care can be made to accomplish savings but, in order to be effective and preserve access to needed services, these changes will require time to implement, the development of an adequate infrastructure to deliver care, oversight of program implementation and more experience with enrolling the elderly and the disabled.  Ensuring that plans have provider networks in place, educating both providers and beneficiaries about managed care, and responding to the unique needs of the Medicaid population will require increased effort.

The AIDS epidemic has spawned a health care dilemma that no one federal or state program can hope to solve.  Cuts to the Medicaid system cannot be covered by services provided through the Ryan White CARE Act which includes the AIDS Drug Assistance Program, other federal HIV/AIDS programs, or state and local health budgets.  Ryan White has never been adequately funded and cannot begin to replace Medicaid as the fundamental health care safety net for low-income Americans living with HIV disease.  Many AIDS service providers offer comprehensive services to people with HIV disease in their area through funding from both the Medicaid and CARE programs.  These programs are complimentary but no one can replace the other. 

It is widely accepted that the Medicaid system is in need of reform.  However, funding cuts, the elimination of the entitlement status of Medicaid through block grants, and blanket managed care models are not the way to achieve this goal. 

Conclusions

In conclusion, we have seen that Welfare reform has had an impact on accessing Medicaid for certain populations-- most specifically, for legal immigrants in this country.  Although President Clinton has indicated that he wants to fix these more heinous aspects of the welfare reform bill, it remains to be seen whether or not he will do so.  We should be vigilant about this an insist that he does what he can do to rid welfare reform of these particular elements.

As for as Medicaid reform, it is a good bet that we will see proposals in the 105th Congress to reform this vital medical safety net for America's most vulnerable.  It is up to us to insist that whatever reform occurs is done thoughtfully and in no way reduces quality of care nor access to care and treatment.  Congress should set reasonable targets for savings and enhanced state control which can reduce Medicaid's cost and bureaucracy without cutting access to essential medical care nor eliminating this programs entitlement status.

Slipshod and careless Medicaid reform in conjunction with the draconian measures of welfare reform would do nothing but further erode the public health and likely cause early death for people living with HIV in the United States.