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Volume 16, Issue 3
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Spring 2004 |
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| published quarterly by: The New Hampshire Challenge, Inc. P.O. Box 579, Dover, NH 03821-0579 |
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| In This Issue |
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It's difficult to answer both of those questions. Commissioner Stephen has not clearly outlined his plans (although word is that the application should be completed by November). And Medicaid block grants are something so new that it's difficult to know what the rules will be.
The Kaiser Commission released a study of block grants in January, 2004. The information in this article is taken from that study.
The key difference between present Medicaid funding and block grants is that federal Medicaid funding is provided to the state on an "as needed" basis. The state spends money on services and the Federal government reimburses the state a percentage of the cost. In New Hampshire, that's a 50% match. Funding, then, is based on actual need.
Federal block grants means that the funding is "capped." An amount determined by a formula is given to the state, which then must cover the cost of all services provided. There is no "match" so the state may or may not be required to spend state dollars in addition to the federal dollars it receives. Because there is no "match," there is no incentive to spend state dollars at the same level the state is presently spending. No matter what the state spends, it will receive the same amount of federal dollars.
A number of rules govern Medicaid programs now. There are certain services that are mandatory - the state must provide them. There are others that are optional. The state chooses which services it will provide. But once it chooses those services in its State Plan, it must offer those services to all those who are eligible.
The state has some flexibility in defining eligibility, but eligibility must ultimately be consistent with federal standards. And once an individual is deemed eligible, services must be provided at that time. Waiting lists are not allowed (except in waivers).
A federal block grant provides considerable flexibility to the state regarding both eligibility and coverage. The state may be able to choose which services are provided to which recipients. The state may be able to institute waiting periods, priority lists and even close down enrollment. There is presently no federal block grant program that guarantees services.
Also, because it is now an entitlement program, all Medicaid-eligible individuals are assured due process protections regarding services and eligibility. There may be no such due process rights under a block grant program.
Because the Federal government presently reimburses the state for actual costs, there is accountability built into the system. The Federal government knows exactly how the money is spent. (The exception is the Disproportionate Share Hospital funds - the loophole states have used to leverage federal dollars to balance state budgets.)
There is no such accountability in block grant funding. With no information on actual costs provided and no specific reporting requirements, support in Congress may erode over time as other needs compete for existing funds.
What adds to the unknown is the 1115 Medicaid waiver. Because Congress has not approved block grants for Medicaid, the only process by which the state can change its Medicaid funding is through an 1115 waiver.
According to the Kaiser Commission report, Medicaid and the Uninsured, "Section 1115 of the Social Security Act gives the Secretary of Health and Human Services the authority to waive aspects of the law to permit states to undertake 'research and demonstration' projects that further the purposes of Medicaid and SCHIP (State Children's Health Insurance Program)."
1115 waivers have been used to expand service or eligibility groups. Recently, however, the waivers have been used to "cap enrollment, reduce benefits, and increase cost sharing for some groups of existing Medicaid beneficiaries and to use savings from these changes to finance coverage for other people." (Kaiser Commission report)
Budget problems that are facing states impact waiver spending. Because benefits are not guaranteed in a waiver, some states have only partially implemented their waivers or not implemented them at all due to lack of state funding. Instead of expanding coverage, states end up reducing coverage - with no penalty.
Even though the goal of the 1115 waiver is to expand coverage, states are allowed to put limitations on or cap eligibility. They are also able to use the 1115 waiver to fund services that were previously funded with state dollars only. And states are allowed to provide different services to different groups of people in the state. Under present Medicaid rules, states must provide the same services to all eligible individuals.
The 1115 waiver is a mechanism New Hampshire could use to implement a block grant program with the approval of Secretary Thompson without clear Congressional approval. If the Governor approves a waiver and directs the Commissioner to apply, the entire process can happen without the Legislature ever getting involved. Without the legislative process, citizens are denied a real opportunity to have input and representation into the development of the waiver and the change in Medicaid policy.
Because the process is effectively closed to the public, information is limited. As a result, citizens may not know if New Hampshire has applied for a waiver or what its impact will be until after it has been approved. |
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Related Stories:
Medicaid block grants and DHHS reorganization
Medicaid Comparison Chart
Commissioner Stephen to hold hearings on the future of Medicaid
Proposed principles for the NH Medicaid program
Come to a Citizens' Hearing on the steps of the Capitol |
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