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ACP Releases Position Paper on Redesigning Medicaid During a Time of Budget Deficits

April 28, 2005

(Washington, DC): Reform of the Medicaid program should preserve the existing safety net for poor but include major redesigns to allow for expansion of coverage for more uninsured persons, more stable federal funding, and increased state flexibility, according to a new position paper released today by the American College of Physicians. The paper, "Redesigning Medicaid During a Time of Budget Deficits," examines current proposals to reform Medicaid and offers analysis and recommendations on the best way to proceed.

The nation faces a massive federal budget deficit which over the next decade, from 2005 to 2014, the Congressional Budget Office (CBO) estimates will total $2.3 trillion. As the federal government attempts to reduce the size of the deficit, it is almost certain that entitlement programs, such as Medicaid and Medicare, will be the first to be targeted for cuts, says the paper.

"In evaluating old policies and formulating new ones, ACP made sure to balance proposed reforms against the critical role Medicaid plays in the nation's increasingly stressed healthcare system, said ACP President Andy Hedberg, MD, FACP. "Medicaid now meets the health and long-term care needs of one in ten Americans, including people with low-incomes, children, the elderly, and the disabled. This success cannot be ignored when assessing reforms that would force states to drop coverage for the poor or erode coverage to those currently covered by Medicaid."

ACP made a number of key recommendations including:

  • To the extent that federal budget constraints do not allow for Medicaid expansions at this time, then Congress should at least "do no harm" by refraining from enacting policy changes that would result in vulnerable persons being dropped from Medicaid coverage.

  • The federal government should recognize the benefit of gradually eliminating the use of categorical eligibility in the Medicaid program so that health coverage eventually could be extended to all low-income populations, including couples without children and single adults.

  • Medicaid eligibility standards should be uniform on a national basis.

  • Individuals with long-term care needs should be allowed to supplement Medicaid coverage with private policies. Also, Medicaid beneficiaries should be offered more flexibility to choose among alternatives to nursing home care, such as community or home health care.

  • States should be granted more flexibility over how to structure their Medicaid programs to assure effective delivery of services to those in need, but such flexibility must be within a framework consistent with a federal definition of essential benefits and reasonable cost sharing for eligible people.

  • Under a system of enhanced state flexibility, states must continue to be subject to federal standards regarding payments to providers to both ensure that enrollees have access to services and protect the program's fiscal integrity.

  • Congress should establish a counter-cyclical funding mechanism for Medicaid, similar to the funding mechanism for unemployment insurance, increasing federal dollars during economic downturns.

  • The prevention of fraud, abuse and waste under the Medicaid program should be intensified as a way to maximize administrative efficiencies.

  • Efforts to limit prescription drug costs under Medicaid should target proven overpayments for prescription drugs rather than limits on beneficiary access to prescription drugs.

"The Medicaid program has a proven track record in providing coverage to our most vulnerable populations, but its effectiveness has been limited by eligibility restrictions and funding constraints," said Dr. Hedberg. "To reform the program without disrupting what it already succeeds at doing, it is necessary that the program continue to guarantee that individuals who qualify for the program receive benefits and that states willing to commit resources to provide covered services receive matching federal dollars."

The American College of Physicians is the largest medical specialty organization and the second-largest physician group in the United States. ACP members include more than 116,000 internal medicine physicians (internists), related subspecialists, and medical students. Internists specialize in the prevention, detection and treatment of illness in adults.

Contact: Jack Pope, (202) 261-4556, jpope@acponline.org
Jacquelyn Blaser, (202) 261-4572, jblaser@acponline.org

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