WASHINGTON, April 25 (UPI) -- A new study shows that a Bush administration initiative launched in 2001 to get more people covered under Medicaid hasn't had its intended effect.
The plan allowed states to expand Medicaid coverage to more people by reducing existing benefits and requiring cost-sharing from some beneficiaries.
However, since the start of the administration's Health Insurance Flexibility and Accountability demonstration initiative, eight of the ten state Medicaid programs studied expanded coverage, but failed to make changes to existing benefits, according to a study by the Urban Institute appearing Tuesday on the website of the journal Health Affairs.
That result has implications for further state Medicaid experiments, especially in light of recent changes that will make it easier for states to undertake them.
The study also found that, despite the success of some states, so far the program has only extended coverage to 300,000 people, falling far short of its 820,000-person goal.
"In the states we looked at, there really wasn't the political will to limit or cut benefits," Teresa Coughlin, a researcher at the Urban Institute and one of the study's authors, told United Press International. "The states felt strongly they wanted to expand coverage."
Waivers under the program allow states to decrease benefits and increase the amount beneficiaries are expected to contribute for individuals who are already part of a state's Medicaid and State Children's Health Insurance Programs (SCHIPs). For those individuals, states still must adhere to a minimum federal benefit package, keep contributions low for populations they are federally required to cover and keep cost-sharing below 5 percent of family income for children. For individuals covered under the expansion, only primary coverage must be offered.
In exchange, states must demonstrate that they have reduced their state's uninsured population.
Supporters of the program have argued it will free states from costly benefit requirements, allowing them to cover groups like the working poor with incomes too high for Medicaid and adults without children. The program also included a provision to facilitate state subsidies for insurance plan premiums.
Opponents feared that states would use the prerogative to eliminate important benefits like mental health and dental coverage for low-income individuals.
For individuals already covered by Medicaid and SCHIP, however, only two of the states studied reduced benefits or introduced cost-sharing, the study found.
New Jersey eliminated optional services like dental care and put limits on mental health and substance abuse services.
Oregon made the largest changes, relying heavily on cost-sharing instead of outright elimination of services. The co-payments for hospital treatment, for example, increased from a nominal amount to $250 for inpatient treatment and $50 for emergency room visits, and for the first time, hospitals were allowed to turn away Medicaid patients who could not afford to pay.
Then, as the state's budget tightened, it moved to a strategy of providing non-mandatory enrollees with primary and preventative care, but limited additional benefits. A federal lawsuit later determined that co-payments were not allowed for some groups, but premiums could remain in place.
"Those decisions were really determined by the state's political and fiscal situation," Coughlin said.
For the other eight states, either there was no funding shortfall requiring such changes, or the political will was lacking and the program was focused mainly on expanding benefits. States used the leeway granted in the initiative to add childless adults to their enrollment and increase the income ceiling for children and their parents.
Some states have had success in expanding their coverage, notably Illinois which, as of the end of last year, added almost 115,000 new beneficiaries. Other states like Arizona and Michigan have decreased their state uninsured rolls by tens of thousand of individuals.
But the fact that states were not able to use the flexibility in the program to keep costs down doomed programs in other states. California enacted a plan, but never tried to implement it, while Maine was forced to scale back after its program launch because of budget concerns.
And just because thus far, such waivers have resulted mainly in expansion of coverage, does not mean that states will not feel the need to tighten their programs' belts in the future, Jay Nawrocki, a health care law analyst at the CCH consulting firm, told UPI.
"The program is an attempt to expand coverage by making more money available for more people," he said. "If there's money available to spend, you won't see waiver (benefit) reductions. But if budgets get tight, you will start to see those kind of reductions."
