[Congressional Record Volume 149, Number 21 (Wednesday, February 5, 2003)]
[Senate]
[Pages S1958-S1960]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            MEDICAID REFORM

  Mr. BINGAMAN. Mr. President, I want to speak for just a few minutes 
on the Senate floor about the proposal made last Friday by the Bush 
administration regarding Medicaid. The proposal was a disturbing one, 
in my view. It was to reform the Medicaid program by shifting to a 
block grant to the States. That is a recycled proposal, one we have 
seen before. It was touted, when described last Friday, as giving the 
States flexibility. It would give them flexibility.
  It would give them flexibility to drop benefits to low-income 
children, to drop benefits to pregnant women, to people with 
disabilities, and to the elderly. And it would give them flexibility to 
dramatically increase the cost sharing for those vulnerable 
populations. With over 41 million Americans who are currently 
uninsured, in my view, we should be trying to find ways to expand 
health coverage rather than finding new ways to reduce it.
  Unfortunately, the proposal allows States to continue Medicaid as it 
is or to convert the program into a block grant. This was tried in 1981 
and again in 1996. The administration would encourage States to take 
the latter option; that is, to move to receipt of a block grant by 
encouragement of being temporarily offered increased dollars. That 
would be coupled with this offer of added flexibility to be able to 
reduce the benefits for their Medicaid beneficiaries and increase the 
costs being charged to those low-income and vulnerable populations. 
Secretary Thompson notes the proposal would clearly save the States 
money. This would only happen if the States decided to do what would 
almost certainly occur; that is, to cut benefits and increase cost 
sharing.
  Also, this proposal takes the Federal Government off the hook for 
helping States address their uninsured problems because under the 
proposal there would be no additional Federal money available to States 
if they attempted to expand coverage in the future. In order to expand 
coverage, the only option States would have would be to essentially rob 
Peter to pay Paul. In

[[Page S1959]]

short, they could cut benefits or increase cost sharing for certain 
populations if they wanted to expand coverage to any others.
  The proposal is ostensibly based on the success of the State 
Children's Health Insurance Program, the S-CHIP Program. Secretary 
Thompson said in his press conference that the proposal works by 
``taking the principles of S-CHIP and applying them to Medicaid.''
  It is ironic that the proposal actually eliminates CHIP by wrapping 
it into this block grant with Medicaid and with the Disproportionate 
Share Hospital Program, the DSH Program. It is surprising and 
disappointing to me that the administration is proposing to radically 
transform the identity and the nature of the Children's Health 
Insurance Program while also praising that program. It is a program 
that just about everyone lauds as having been quite successful at 
reducing the number of uninsured children in our country.
  So this new proposal by the administration has strong elements of the 
old bait-and-switch ploy that all of us see from time to time. It 
advertises that there will be more money available to States--the exact 
amount is $12.7 billion during the first 7 years--but then, after that 
first 7 years, it yanks away all that money, starting in the year 2011.
  Secretary Thompson noted at the press conference that he is not 
planning to be around at the time the $12.7 billion in reductions 
occurs 8 years from now. And the plan, I would say, clearly also counts 
on the fact that most of our current group of Governors who would be 
asked to make these changes will not be around either. However, that is 
exactly the time, 2011, when our Nation's baby boomers hit retirement 
age in much larger numbers. The long-term care costs within Medicaid 
will increase significantly during that period. Therefore, the Federal 
Government, under this proposal, would be dramatically stepping away 
from its commitment to help States and to help with the Nation's health 
safety net at a time when the demand for those services will obviously 
be increasing.
  The proposal is counting on the fact that the Governors will jump at 
the $12.7 billion that is being offered during these initial years and 
will let future Governors deal with the problem later on. It is my hope 
and my belief that the Nation's Governors will see this nonoffer for 
what it is; and that is, a very shortsighted effort to limit the 
Federal Government's role in Medicaid that will lead to cuts in access 
to care for those most in need of that care.
  In fact, under the proposal, States are left with nothing less than a 
Hobson's choice of alternatives. Both of the choices they would have 
would substantially weaken health insurance for low-income Medicaid 
beneficiaries. Under the first option that States would have, they 
would be allowed to continue to operate Medicaid without any financial 
relief from the Federal Government to help them get through the current 
fiscal crisis. States would have no option but to make deep cuts in 
their Medicaid Program during the next few years, if they choose that 
option.
  Under the second option, the States would get a fixed amount of 
Federal money for the millions of people who States have voluntarily 
decided to cover under Medicaid, and, as a result, Federal funding 
would be limited and not responsive to those items that it is now 
responsive to, such as economic recessions, epidemics, terrorist 
attacks, population growth, changes in the State's health care 
environment, or the growth in our Nation's elderly that we expect in 
the next decade. Nor would it be available to States wishing to expand 
coverage, as I indicated before, States wishing to reduce the uninsured 
rate.
  Although the administration's proposal advertises improved health, 
just as one would expect with a bait-and-switch proposal, it fails the 
test when you look at the details. I ask, How does the health of 
Medicaid beneficiaries improve by eliminating their entitlement to 
coverage and by allowing States the dramatic ability to reduce benefits 
and increase the costs that are shifted to those vulnerable 
populations? I am talking here about 85-year-old widows with incomes of 
just $800 a month. I am talking about pregnant women with incomes of 
$15,000 per year, or an 8-year-old boy from a family of three with an 
income of $19,000 per year or less.

  According to Karen Davis, Cathy Schoen, Michelle Doty, and Katie 
Tenney--all from the Commonwealth Fund--the two main purposes of health 
insurance are, first, ``assuring access to needed health care services 
and,'' secondly, ``preventing financial burdens from medical bills.'' 
When you propose, as this proposal last Friday does, to reduce benefits 
and increase cost sharing on low-income beneficiaries, clearly you fail 
in trying to accomplish either of these two main purposes.
  Just over a week ago, it was discovered that the Bush administration 
was allowing States to limit the number of emergency room visits to 
Medicaid beneficiaries regardless of whether the care sought was an 
emergency. That proposal allowed States to establish arbitrary limits, 
such as three visits per year. There was a huge hue and cry and the 
administration reversed this policy shift, but it is back in full force 
under this proposal related to Medicaid, as benefits would decrease and 
cost sharing would dramatically increase for Medicaid beneficiaries.
  This is not to state that our Governors are malevolent in their 
intent. Their goal is to do the best they can for their citizens. It is 
only to say that many States are facing unprecedented fiscal crises 
that force them into impossible choices, choices between health care 
coverage and other needed services. In fact, the States already have 
substantial flexibility in the Medicaid Program. About 65 percent of 
spending in that program is for either optional populations or for 
optional benefits that they have chosen to pay for.
  Instead, for some Governors, it may not be the flexibility they are 
seeking to exploit but the proposal's other aspects that eliminate the 
limitations on how States spend their Medicaid dollars. On several 
occasions in recent years, certain States worked to ``game'' the 
Federal dollars through a variety of mechanisms, such as provider taxes 
and donations, excessive payments to certain health providers that 
would be returned to the State via intergovernmental transfers or other 
mechanisms. These mechanisms to which I am referring largely benefited 
the budgets of the individual States and did not benefit anyone's 
health.
  Both the first Bush administration and the Clinton administration and 
the current Bush administration should be applauded for working hard to 
deal with those problems in the Medicaid system. However, it was 
revealed at the press conference that those mechanisms would once again 
be allowed if this newly presented proposal is adopted.
  Via these mechanisms, the Medicaid Program can be rapidly turned into 
nothing more than a giant revenuesharing program. Again, it is hard to 
see how such so-called innovation would improve health coverage for 
low-income Americans.
  Instead, there is a better approach to the problem, on which I have 
been working with Congressman John Dingell; we are preparing 
legislation to introduce in the next few weeks. Our Medicaid reform 
proposal will be based on the knowledge that States are facing both 
short-term and long-term problems with their Medicaid programs, and 
those problems need to be addressed. As such, our initiative would have 
the Federal Government step up rather than shirk its commitment to the 
States.
  In exchange, it will ask the States not to reduce their commitment to 
the Nation's poorest and neediest citizens. It does several things. Let 
me briefly outline them.
  First, it will provide States with much needed short-term and long-
term fiscal relief.
  Secondly, it will increase Federal responsibility for Federal 
initiatives and for populations that are paid for by the Medicaid 
Program.
  Third, it will protect States against economic downturns and 
epidemics and health care inflation and demographic changes.
  Fourth, it will provide States with expanded coverage options, with 
real Federal fiscal support as opposed to this block grant proposal we 
have seen now from the administration.
  And, fifth, it will increase State flexibility in ways to improve the

[[Page S1960]]

health of Medicaid beneficiaries rather than options to weaken their 
health as under the administration's proposal.
  The administration's proposal will fail in each of these regards. Let 
me describe them in a little more detail.
  First, we will propose a package that will give States both short- 
and long-term fiscal relief. This is in sharp contrast to the 
administration's block grant proposal that would leave States with no 
additional Federal commitment or help during economic downturns. Block 
grants do not adjust to problems such as downturns and epidemics and 
natural disasters and demographic changes, and they do not adjust for 
the very substantial health care inflation that we have been 
experiencing.
  Second, our proposal takes significant steps to properly assume 
Federal responsibility for Federal initiatives and for populations that 
are paid for under the Medicaid Program. This includes assumption of 
100 percent of the cost for the premiums and cost sharing that the 
Medicaid Program provides for low-income Medicare beneficiaries. 
Medicare is a Federal responsibility, and these costs should be the 
Federal Government's responsibility.
  The same is true for a variety of other payments within Medicaid, 
including payments to urban Indian health organizations, to 
outstationed workers, to the breast and cervical cancer program, and 
payments to federally qualified health centers.
  Third, the administration claims its proposal gives States the 
ability to expand coverage to more people, including the mentally ill, 
chronically ill, those with HIV/AIDS, and those with substance abuse 
problems. The difficulty is the administration's proposal gives States 
the ability to do that but gives them no dollars with which to do it. 
States are given the ability to do this by robbing Peter to pay Paul.
  In sharp contrast, our proposal will give States new options to 
expand coverage and benefits in Medicare and CHIP, and States choosing 
to do so will have the Federal Government's commitment to participate 
with a financial commitment for more than half of those costs, as 
opposed to no commitment to participate under the administration's 
proposal.
  A fourth aspect of what we are going to propose is that we will grant 
States the flexibility they have been seeking to provide more efficient 
and improved health services for these low-income Medicaid 
beneficiaries. This includes allowing States to simplify eligibility, 
to emphasize home and community-based care rather than institutional 
care, and a number of other options. Our proposal specifically chooses 
not to take the course that the administration is pursuing in several 
areas.
  Unlike the administration, we do not grant States additional 
flexibility to cut benefits and eliminate quality protections and 
increase cost sharing on our Nation's most vulnerable populations. We 
do not propose to eliminate fiscal integrity standards such as those 
intended to ensure that Medicaid dollars are spent on health care and 
not on other purposes.
  And we do not, as the administration's proposal does, allow for the 
elimination of the CHIP program, the Children's Health Insurance 
Program, or the Disproportionate Share Hospital Program, the DSHP 
program.
  Finally, unlike the administration's efforts, our plan does not lock 
in interstate inequities and disparities on a permanent basis. In fact, 
the administration's proposal, as I understand it, as it was presented 
Friday, is particularly devastating to a State such as New Mexico. Our 
State currently has the highest rate of uninsured in the Nation. It is 
one of the fastest growing States in the country as well. It has per 
capita Medicaid expenditures that are well below the national average. 
The administration's proposal would therefore be a lose/lose/lose 
proposition for our State.
  First, it would prevent us from seeking additional Federal assistance 
for proposed expansions of coverage including the recently approved 
Federal waiver by the Federal Government to New Mexico that is so 
highly touted by the administration.
  Second, the block grant often fails to take into account differences 
in population growth, and we have a rapidly growing population.
  Finally, we would be forever locked in at an expenditure level way 
below the national average under this block grant proposal.
  During his State of the Union address this last week, the President 
said, ``Medicare is the binding commitment of a caring society.'' That 
is a noble concept. But I would suggest that just as Medicare is the 
binding commitment of a caring society, Medicaid is as well. For this 
reason, the Federal Government should not step away from it or abandon 
its commitment to States or to the 43 million vulnerable citizens 
currently served by the Medicaid Program.
  Particularly, the Federal Government should not do this at a time of 
growing numbers of uninsured and just before the Nation's baby boomers 
begin to retire in large numbers.
  In the name of increasing personal responsibility of our Nation's 
neediest and sickest citizens, the administration is proposing that we 
at the Federal level shirk our responsibility. Rather than abandoning 
the poor at this critical time, we should be reconsidering the proposed 
tax breaks that we have been sent intending to help our wealthiest 
citizens.
  We need to be sure our priorities are in line with the priorities of 
the American people. The proposal we have received from the 
administration to block grant Medicaid clearly does not reflect the 
priorities the American people have.

                          ____________________