‘Dual-Eligibles’ Require New Ideas, Not Cuts

Posted July 5, 2011 at 5:22pm

The public attention to negotiations between Congress and the White House over budget cuts has focused primarily on cuts in discretionary domestic programs, Medicare and Social Security. Almost lost in the shuffle has been Medicaid — in part because both parties and both branches have agreed that large cuts in Medicaid are needed and assumed that cuts that hit the poor are less politically dangerous than cuts that hit the middle class or elderly.

That assumption is dead wrong. The single largest component of Medicaid is long-term care for the elderly, followed by care for the seriously disabled. And the biggest chunk of all is care for what are called the “dual-eligibles,” those who qualify for both Medicare and Medicaid.

The long-term-care component has grown dramatically as Medicaid has become the de facto program for long-term care in the country. Of course, the recipients of it are poor as defined by the government — but most are middle-class elderly who have either diverted assets over time to their children and grandchildren to trigger Medicaid eligibility or depleted their savings on nursing home care. Also growing as a share of Medicaid spending is care for the seriously disabled, including a large share of those Americans with mental incapacities, ranging from Down syndrome to schizophrenia to Alzheimer’s disease, along with those with serious physical conditions such as quadriplegia.

Medicaid care includes providing assistance during the day so family members can work and provide for their families, including the disabled ones, while giving some quality of life to all concerned.

The 9.7 million dual-eligibles are the most important set of beneficiaries because they take up a huge share of both the Medicaid and Medicare budgets and because they represent the greatest challenge and the greatest opportunity when it comes to ballooning health care costs.

As Janet Adamy noted in the Wall Street Journal, the dual-eligibles make up 15 percent of the enrollees in Medicaid but account for 39 percent of Medicaid spending — and 27 percent of Medicare outlays.

These are the most chronically ill people in the society, and they account for a huge share of health care costs.

As Adamy pointed out, a large share of the cost problem arises from the lack of coordination between programs, leading to mismanagement of care and waste, with far more hospital days and higher nursing home and rehabilitation costs than should be the case given the problems.

The higher costs don’t mean better patient care; instead, patients are often shuffled around from place to place or put in limbo when the two programs argue over which one is responsible for treatment or kept in institutional facilities when it would be better for them — and less costly — to get care at home.

Some of the problems flow from the reality that Medicaid reimbursement rates are too low, leading providers to look for ways to shift the costs to Medicare, often in ways that are bad for treatment and disruptive for patients and their families.

Just as we never made a conscious policy decision to make Medicaid our long-term care mainstay, we never thought about the issues of dual eligibility. It is not at all clear that the negotiations over the budget are bringing any new thinking to the table — ways to reduce costs while improving the efficiency of care.

It is certainly not clear that the preferred response of Rep. Paul Ryan (R-Wis.) and his Republican allies, giving states less money for and more flexibility over Medicaid, will do anything to help dual-eligibles or create more effective programs for them or for others with serious mental and physical disabilities.

What is clear is that, as in so many cases, we are moving to cut spending without thinking through how to cut that spending or in what ways a short-term savings will result in longer-term burdens.

If Medicaid cuts out the opportunities for those caring for seriously disabled family members to work, that will mean hardship for the family — and a less productive workforce. Taking away day programs for the seriously disabled will take away from many their opportunity to work or contribute to society.

The same is true for the rest of the Medicaid population; a failure to provide prenatal care to pregnant women or to enable them to get their kids’ ear infections treated will mean more infant mortality, less healthy children and, ultimately, a less productive workforce.

There is no panacea here. One of the advantages that could accrue from the Patient Protection and Affordable Care Act’s commission overseeing Medicare is that it could find better ways of dealing with dual-eligibles — but the panel is under siege from conservatives.

Perversely, one way to improve care and reduce long-term costs — providing more realistic Medicaid rates for providers — is unlikely because the focus is on cutting now, not saving later.

There is little evidence from the states, especially those that have high Medicaid burdens such as Texas, that there is any spur to innovation that will lead to better treatments with lower outlays; governors such as Rick Perry will just cut the already-meager benefits.

We might end up with a bipartisan approach to budget and deficit cutting. What a shame that we can’t have a similar approach to finding a better and less expensive way to deal with the sickest among us.

Norman Ornstein is a resident scholar at the American Enterprise Institute.