By Patrick Gauthier, Senior Consultant, Managed Behavioral Healthcare

On the one hand, I’m excited by the prospect that Medicaid eligibility rules might be reformed to cover people at up to 150% of poverty levels, swelling the ranks of Medicaid and ballooning the number of people in Medicaid managed care plans with Parity-compliant behavioral health benefits. On the other hand, a famous line keeps playing over and over in my head: “Show me the money."

Medicaid and Recessions: Sad, Strange Bedfellows

This recession is a particularly striking example of an untenable illogical dynamic in our system: Home prices fell, state revenues on property taxes tanked; people lost their jobs, unemployment insurance kicked in and states lost income tax revenues; state budgets sank to frightening lows just as millions of people – by virtue of their unemployment and nouveau poverty status reached out to enroll in Medicaid. Medicaid enrollment skyrockets at precisely the same time that states are least able to afford it.

This structural dynamic and flaw leaves state lawmakers threatening and making program cuts, Congress scrambling to find crisis funds to prevent a melt-down, and advocates urging a real transformation in the way Medicaid is funded. Unfortunately, none of the reform proposals being considered at the moment addresses this underlying problem.

Last November Senate Finance Committee Chairman Max Baucus (D-Mont.) proposed a “trigger” that would increase the federal share of Medicaid funding when states could demonstrate that their fiscal picture proved inadequate. Medicaid must find a solution to the sustainability problems baked into it presently if it’s ever going to become a reliable and viable source of health insurance for the people during individual and collective economic downturns.

Congress has stepped in before with crisis funding to help states and avoid dropping Medicaid recipients. Most recently, the American Recovery and Reinvestment Act (Stimulus) increased federal Medicaid funding to those states with the highest unemployment rates. Sadly, that extra funding expires at the end of 2010, leaving advocates deeply concerned, especially in states like California where Medicaid enrollment swells, state revenues are dwindling and health care program cuts have already been deep.

Medicaid: Cheap yet Unattractive to Providers

According to survey conducted by the Center for Studying Health System Change, only 40 percent of physicians accept all new Medicaid patients. What is the long-term value of a program and source of coverage that so few providers accept? 60 million Americans are currently enrolled in Medicaid and CHIP and they represent a population with higher prevalence of behavioral health disorders, more chronic conditions, fewer personal resources, and the greatest risk of being dropped altogether – putting more pressure on state and federal funding for the care of the indigent. Unfortunately, when that funding and when those programs are not highly coordinated behavioral health safety net, people wind up homeless and die unnecessarily.

California: More Cuts Ahead

Only four months after California legislators managed to agree on a flimsy budget, new reports indicate a deficit of $21 billion is imminent and growing rapidly. The deficit will force the state to make more across-the-board cuts in programs including Medicaid. The past two years have been terrible for mental health programs in California as the State and its county carve-out programs struggle to make sweeping MHSA changes while their budgets are pulled out from under their feet. Supplantation rules exacerbate the problem.

Transformation: The Old Gives Way to the New

If we are to sustain any kind of momentum in making ambitious reforms and institutionalizing our vision of a transformed system, we will have to address sustainability and viability issues such as those that Medicaid represents. We have to find the will to integrate the funding streams and systems of care that have been unwisely fragmented; agree to quality and performance standards that apply uniformly to everyone; eliminate wasteful administrative practices (involving far too much paper and “unique” business processes); and commit to paying for outcomes instead of encounters. Real transformations – like birth – hurt like hell and result in the shedding of that which is no longer necessary. Are we really ready to make sacrifices of this magnitude?
 

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