1. Goldfield, Norbert MD, Editor

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The Crisis Confronting Medicaid

There are currently approximately 45 million Americans who have no health insurance; another 100 million are underinsured (IOM, 2003). The completely uninsured amount to almost 20% of the U.S. population. This year, millions more will be added to the rolls of the uninsured. According to a recent article in the New York Times (and as many of the articles in this issue of the journal detail): "Millions of low-income Americans face the loss of health insurance or sharp cuts in benefits, like coverage for prescription drugs and dental care, under proposals now moving through state legislatures around the country. State officials and health policy experts say the cuts will increase the number of uninsured, threaten recent progress in covering children, and impose severe strains on hospitals, doctors, and nursing homes" (Toner & Pear, 2003). This introduction will:


* Introduce the articles in this issue of the Journal of Ambulatory Care Management


* Briefly highlight the history of the Medicaid program


* Summarize the research literature documenting the impact of lack of health insurance coverage on various measures of health


* Provide a sense as to what the current and proposed cuts in Medicaid will mean in terms of the health of America's population


* Conclude with comments characterizing the Bush administration's proposals and possible responses




The articles in this issue of JACM deal with the impact that the cuts in Medicaid are having on low-income populations and how different constituencies are responding to the crisis. It is always important to keep the ultimate customer in mind. Typically, we do that by statistically documenting the effect of cuts on the health status, mortality, or some other outcome of low-income populations. This method is also employed within this and other articles in this issue. However, it is easy to be unaware or unfocused on the personal or emotional side of the impact that the loss of Medicaid has on specific individuals. Thus, there are a number of personal stories providing poignant witnesses to the impact that the loss of Medicaid has had on people's lives.


As Dan Hawkins, from the National Association of Community Health Centers, highlights, community health centers have not only been the bedrock providers for Medicaid recipients throughout the country, but they have also provided many other benefits-including employment for many low-income individuals. Sarah Rosenbaum, from George Washington University, and Michael Miller, from Community Catalyst, detail the policy and political challenges that confront Medicaid at both the federal and state levels. Celia Larson, from the MetroHealth Department in Nashville, Tennessee, reviews TennCare, the program that was touted in the mid-1990s as the Medicaid program of the future. While many segments of the health care economy have contributed to the rise in Medicaid costs, pharmaceutical cost increases have been dramatic. Community Catalyst, a national organization representing consumer health care activists, has addressed the issue in an innovative manner by filing 16 lawsuits targeting drug industry practices that illegally inflate the prices of pharmaceuticals beyond the reach of many Americans, particularly the poor. 1


Jeffrey Lerner and colleagues from ECRI focus on medical technology, the other aspect of the health care economy whose costs have risen dramatically. Medical technology costs have risen for both industry-specific reasons and because of the dramatic development of technology impacting ambulatory services. Dr. Lerner and his colleagues detail an approach to the evaluation of health care technologies that policy makers need to examine as we continue to be overwhelmed with advances in new equipment.


Policy makers frequently target physician payment in an effort to cut Medicaid costs. Andrew Bindman and colleagues, from the University of California San Francisco, discuss the results of a survey of physician practices and how physicians have responded to the expansion of Medicaid that occurred in the midto late 1990s. While physician participation did not increase significantly under this expansion, it is virtually certain that participation will decrease as Medicaid programs cut physician payment rates.


How are we responding to the crisis confronting Medicaid services? Both Miller and Rosenbaum highlight some of the political and consumer responses that are currently under way. Certainly organizations at a national level, such as Families USA, Community Catalyst, and The Center on Budget and Policy Priorities, are playing a critical role at the federal policy level. 2 Jack Hughes, from Yale University School of Medicine, provides a summary of the remarkable role that the Veterans Administration (VA) plays as a key part of the safety net for the uninsured and underinsured. I am certain that readers will be surprised to read how the VA delivers these crucial services for those American veterans at greatest risk. Providers that are at greatest risk are also trying to mitigate the challenges. Collins and colleagues, from the American Hospital Association and the Hospital Association of Pennsylvania, provide us with an understanding of the responses of hospitals both at a local and national level.


Master and Simon, of the Commonwealth Care Alliance (CCA), detail a response that providers need to, over time, model throughout the country. It is a response to the Medicaid crisis that appreciates the need to pay closer attention to individual consumer needs, in combination with a care system that integrates the many complexities of today's technologically intensive and administratively bewildering health care system. In the absence of these models, there is still a need at the local level to provide care in whatever way possible to the uninsured. Sonia Bouvier, working together with the Cooley Dickinson Hospital in Northampton, Massachusetts, and Mark Holt, of Lewisville, Texas, briefly describes PediPlace, which was created as a local response to the continuing and rising number of uninsured. John McDonough, executive director for Health Care for All, one of the largest consumer organizations trying to guarantee access and health insurance for all Americans, provides concluding comments from an American perspective.


It is always pertinent and uplifting to see where we could be headed, to put our struggles into an international context. Azeem Majeed, from University College in the United Kingdom, and Giovanni Apolone, from Instituto Mario Negri, with a colleague from Italy, provide us with that context. Reading these articles from international colleagues discouraged me, as an American, as I struggle-so far unsuccessfully-to get care for an uninsured patient of mine who has neurological dysfunction secondary to several ruptured discs in his back. But, hopefully this issue of the journal will, in a small way, highlight such challenges and opportunities.



In many ways the real fight that eventually led to the passage of Medicaid began in the 1930s with the federal committee empanelled by Herbert Hoover, the Committee on the Costs of Medical Care (CCMC). That committee came out with a multivolume assessment of health care in the United States. Several of them dealt with the challenges facing low-income Americans in their efforts to obtain health care (health insurance for any American did not appear until the late 1930s) (see also Goldfield, 2000, ch. 10).


Prior to the passage of Medicaid in 1965, an unanticipated-at least in President Lyndon Johnson's opinion-companion to Medicare, a patchwork of poorly funded programs, existed for the poor. One of the largest was the Kerr-Mills program. Championed by Representative Wilbur Mills (D-Ark.) and Senator Robert Kerr (D-Okla.), the Kerr-Mills legislation of the late 1950s represented the least politically offensive mechanism of expanding health care to the elderly. The key elements of Kerr-Mills are worth summarizing, as the central tenets became the foundations for the Medicaid program. The same problems afflicting Kerr-Mills almost immediately haunted the Medical Assistance to the Aged (MAA). MAA provided federal matching support to states providing services to elderly individuals in need but not poor enough to qualify for cash assistance. The MAA program let the states decide on the following:


* control of costs


* specification of program upper limits


* definition of poverty-the level at which cash assistance became deserved



In 1965, the most liberal Congress since the New Deal replaced the MAA program with Medicare for the elderly and created Medicaid for low-income people. Medicaid expanded the inadequate Kerr-Mills program to include the remaining federally funded welfare categories established by the Social Security Act of 1935: Aid to the Blind, Aid to the Permanently and Totally Disabled, and Aid to Families with Dependent Children. Even though President Johnson promised that, with the adoption of Medicaid, the poor would be able to enter mainstream medicine, the federal government was unwilling to pay the piper. From a care perspective, low-income patients were seen in hospital clinics before the passage of Medicaid. Except for a brief period immediately after passage of Medicaid, the situation has remained the same, with low-income populations still seeking treatment in hospital clinics. A recent review of the achievements of Medicaid provides a trenchant review of the thirty-year experience with the Medicaid program:


The Medicaid program is little understood and, often, even less liked. It has suffered from poor design, unintended cost increases, provider hostility, and the slings and arrows of political fortune. Nonetheless, it provides at least some coverage to 1 in 8 Americans and has been a hotbed of health policy experimentation-often for better, sometimes for worse. As it stands at yet another crossroads, its fate is uncertain, yet there does not seem to be anything that could replace it, save a level of social cruelty this nation is so far not ready to accept (Friedman, 1988).


It would appear that this country is facing the abyss of "social cruelty" that we have thus far been unwilling to accept. At the same time, we have come full circle in our unsuccessful efforts to enact legislation via impact of documentation. That is, the independent, federally funded, Institute of Medicine (IOM) has, in essence, updated the work of the Committee on the Costs of Medical Care (CCMC) and focused specifically on the health impacts of the uninsured. The IOM volumes are masterful in their command of detail and analysis of the problem. Similar to the CCMC assessment, the IOM work presents thousands of pages documenting the plight of the uninsured. We can only hope that these IOM volumes will help in the effort to protect and expand Medicaid. The next section of this introduction draws on the work of the IOM on the uninsured, together with a summary of selected peer-reviewed articles.



Many researchers have achieved tenure in the United States documenting the negative impact of lack of health insurance. While researchers have published on this negative impact for decades, this summary of the research will largely concentrate on studies published in the past decade. One can divide these studies into several categories as follows:


* how the uninsured fared during the boom times of the 1990s


* variation in access to care for the uninsured


* groups at highest risk for not obtaining health insurance


* cost of diminished health and shorter life spans of Americans who lack health insurance


* impact of cuts in Medicaid and loss of health insurance on process and outcome measures of quality



How did the uninsured fare during the boom times of the 1990s?

Researchers from the Agency for Health Care Research and Quality analyzed and compared data from the 1987 and 1996 National Medical Expenditure Surveys. The rate of employer-sponsored insurance increased sharply, so that more people had employer coverage. However, these increases were offset by reductions in other forms of coverage, particularly Medicaid and state-sponsored insurance and private nongroup coverage, so the overall rate of uninsurance did not change (Holahan, 2002). According to Carrasquillo et al. (1999), from 1989 to 1993 the proportion covered by Medicaid increased by 3.6 percentage points while the proportion covered by private insurance declined by 4.2 percentage points. Since then, private coverage rates have stabilized and Medicaid coverage has decreased. Consequently, the number and percent uninsured continues to rise. Young adults age 18-39 had the largest increase in the proportion uninsured, and rates among children have also risen steeply since 1992. While blacks had the largest increase in the percent uninsured, Hispanics accounted for 35.6 percent of the increase. Low-income families constituted more than half of the increase in the number uninsured, but since 1993 the middle-income group had the largest increase in the percent uninsured (Carrasquillo et al., 1999).


Variation in access to care for the uninsured

A sample of this type of study examines access to care for significant medical problems, comparing the uninsured with the insured. Baker and colleagues (2000) interviewed individuals from the National Access to Care Survey to determine whether treatment for serious medical conditions varied by health insurance status. Typical among their findings, 45.4% of insured individuals received medical care for significant symptoms as contrasted to 24.3% of those who were uninsured (Baker et al., 2000).


As is true for virtually everything in health care, there is significant variation by geographic area in ability for the uninsured to access medical care. Cunningam and Kemper (1998) analyzed the 1996-1997 Community Tracking Study Household Survey that included approximately 60,000 individuals, of whom about 7,200 that were uninsured. The outcome measure they used was the percentage of individuals who did not receive and/or delayed obtaining needed medical services. The variation between communities with the highest and lowest percentage of uninsured obtaining care was more than two-fold, with virtually none of the variation explainable by difference in the health and/or sociodemographic characteristics of the uninsured population.


Groups at highest risk for not obtaining health insurance

The mentally ill are the most vulnerable group on a number of dimensions, including access to needed services. An article by Druss and Rosenheck (1998) in the American Journal of Psychiatry reported on data drawn from the National Health Interview Survey. In this sample of approximately 75,000 individuals, the authors studied the relationship between a mental health diagnosis and access to care/availability of health insurance. Druss and Rosenheck concluded that people with a mental health disorder reported significant barriers to health care access, including denial of insurance because of a pre-existing condition, and delayed seeking care due to cost considerations/inability to access care.


Cost of poorer health and shorter life spans of Americans who lack health insurance

The Institute of Medicine (2003) recently published a study entitled, "Hidden Costs, Value Lost," in which it estimated that the "annualized cost of the diminished health and shorter life spans of Americans who lack health insurance is between $65 and $130 billion for each year of health insurance foregone" (p. 4). These are the benefits that could be realized if extension of coverage reduced the morbidity and mortality of uninsured Americans to the levels for individuals who are comparable on measured characteristics and who have private health insurance.


Impact of cuts in Medicaid and loss of health insurance

There are many ways to document the impact that the loss of health insurance, in general, and Medicaid in particular has on an individual's health and/or access to services. The most time-honored method is to simply chronicle what happens to individuals when they lose their Medicaid coverage. Lurie and colleagues (1984) documented the impact on the health of individuals of the cuts in California. The legislation, enacted in 1982, eliminated coverage for the medically indigent, a group of individuals between the ages of 18-65 who were poor but not eligible for federal assistance programs. In April 2003, Massachusetts eliminated coverage for 70,000 individuals. Many of these individuals have diabetes or hypertension. Lurie confirmed the findings of the original RAND Health Insurance Experiment that documented that poor individuals with hypertension benefit from free care. In addition, she and her colleagues found that the health status of these individuals had deteriorated as compared to a control group of individuals with a similar health status.


Since 1982, many more studies have been done continuously documenting the impact of loss of health insurance on outcomes. A number of studies have examined the relationship between lack of insurance and receipt of preventive services. Devoe and colleagues (2003) analyzed the 1996 Medical Expenditure Panel Survey and found that "receipt of preventive services was strongly associated with insurance and a usual source of care" (p. 786).


The Institute of Medicine (2002), in one of its volumes on the impact of lack of health insurance on individual health, summarized as follows:


* Uninsured cancer patients generally are in poorer health and are more likely to die prematurely than persons with insurance, largely because of delayed diagnosis. This finding is supported by population-based studies of persons with breast, cervical, colorectal, and prostate cancer and melanoma.


* Uninsured adults living with chronic diseases are less likely to receive appropriate care to manage their health conditions than are those who have health insurance. For the five disease conditions that the committee examined (diabetes, cardiovascular disease, end-stage renal disease, HIV infection, and mental illness), uninsured patients consistently have worse clinical outcomes than insured patients.


* Uninsured patients who are hospitalized for a range of conditions are more likely to die in the hospital, to receive fewer services when admitted, and to experience substandard care and resultant injury than are insured patients.


* Longitudinal population-based studies of the mortality of uninsured and privately insured adults reveal a higher risk of dying prematurely for those were uninsured at the beginning of the study than for those who initially had private coverage (IOM, 2002).




Access to an excellent physician who is willing to accept an uninsured patient with little or no payment will mitigate the effect of lack of insurance. The problem with that philosophy is that, even if physicians and other health professionals could take on all comers (which they obviously cannot do in today's climate), many of the benefits of today's health care system (bypass grafts, new medication, a stress test, etc.) cannot just be given away gratis. Ayanian and colleagues (2000) recently summarized the unfortunate position that the United States finds itself in-as compared to the insured, the uninsured:


* have greater clinical problems, such as morbidity from untreated hypertension in uninsured adults


* report poorer health status (high proportions of individuals of long-term uninsured adults, identifying themselves in poor or fair health, report forgoing needed care)


* delay seeking medical care


* forego necessary care for potentially serious symptoms


* receive fewer screening services for cancer and cardiovascular risk factors


* present with later-stage diagnoses of cancer


* experience more avoidable hospitalizations


* have an increased risk of death, particularly when hospitalized with or diagnosed as having breast cancer


* have unmet needs if they have diabetes and/or hypertension



What kind of increased morbidity and mortality should we expect if, as is likely, the current round of cuts in Medicaid eligibility are largely not rescinded? According to the majority of the American population, the uninsured can obtain care that they need (IOM, 2001). Yet, we must ask ourselves: How many adults will not be able to return to work due to untreated medical conditions? How many children will have a life-long learning disability due to untreated lead poisoning or other medical problems? Is one individual for each of these questions too many or not enough to worry about?


Interest groups are responding in a variety of ways to the challenge of exploding Medicaid and health care costs. In a recent Boston Globe article (Debner, 2003), the reporter stated: "'Lobbyists also swarmed the governor's office and the Legislature over Medicaid issues in the last year,' according to Dr. Annette Hanson, Medicaid's medical director. 'While they made little headway with the administration,' she said, 'they have totally gotten to the House. The House budget totally guts my pharmacy management by allowing patients more access to expensive drugs.'" Thus, at a time of fiscal catastrophe, powerful trade groups like the pharmaceutical industry are answering the challenge of exploding Medicaid and health care costs by continuing to feed at the Medicaid trough.


In the final analysis, the appropriate response must be at a federal level. In the short term, advocates and many of the authors in this issue of the journal highlight the need for states to do what they can to shore up the Medicaid budget. However, I am equally convinced that, as documented in the brief review of the impact of Medicaid cuts on the health of the poor, the Bush administration's Medicaid proposals, if enacted into law, would increase the mortality rate of the most vulnerable and chronically ill poor in this country. American health care professionals, in particular, need to make the Bush administration and all Americans aware of the health care consequences of his proposals, which would turn the health care delivery clock back to the early 1930s.


The current Medicaid program is a financially shared program between federal and state dollars. There are mandatory and optional groups covered by the Medicaid program. In 2002, Medicaid provided essential health coverage and long-term care services to more than 50 million people, including more than 25 million children, 8 million people with disabilities, and nearly 5 million seniors (Park et al., 2003). It pays for about 40% of all births in the nation and is the single largest source of funding for nursing home care. Moreover, hospitals, doctors, community clinics, pharmacies, and other providers throughout the nation rely on Medicaid payments, which account for about 17% of all health care spending (Park et al., 2003). The Bush administration proposal allows states to eliminate services to the optional groups and to reduce services to the mandatory groups. According to the February 18, 2003, lead editorial in the Boston Globe: "If money ran low, the president's plan would allow states to reduce benefits, impose copayments, steer beneficiaries into private insurance plans with limited coverage, or put them on waiting lists" (Editorial, 2003).


Put differently, how can we as Americans live with ourselves and:


* charge patients with diabetes and congestive heart failure who are on a small, fixed budget several dollars per prescription or completely cancel any financial support whatsoever


* place children with a disability onto a waiting list


* demand that elderly poor Americans pay increased amounts, in the form of copayments, for each visit to the doctor


* accept the effective end of the state's Children's Health Insurance Program, a promise to provide states with dedicated funding to increase



I am certain that Americans, if they realized the full extent of the current Medicaid proposals, would reject these efforts. That is why advocates, friendly policy makers, and, yes, poor consumers need to face up to the challenge of convincing the general public and the current administration in Washington that an uninsured American leads to an unproductive and unhealthy American. I am even hopeful that many businesses would rethink their opposition to universal coverage if they internalized the most recent estimate of $35 billion as the value of uncompensated health care services provided to individuals who lack health insurance (IOM, 2003, 5). At the same time, we must offer positive proposals. Health professionals need to be creative and encourage the diffusion of innovative programs, such as Community Medical Alliance and its successor organization, the Commonwealth Care Alliance.


Despite the fact that some in Washington would like government to cut back its financing of health care programs to levels similar to those before the enactment of the New Deal, we must paint a more effective argument to Americans for spending the necessary money to truly reform Medicaid (see also Lemann, 2003). We are part of the way there. According to Managed Care Outlook (2003), a recent Wall Street Journal/Harris Interactive poll found that 60% of Americans would be willing to give up a tax cut if the money would be used to provide insurance coverage to people who do not have it now. Without a more convincing picture, federal tax cuts in combination with a dismal state financial picture will take us back to the early 1930s-a time when medical science had much less to offer and health insurance was just taking off. I hope this issue of the journal in a small way contributes to the effort to fund health services for poor Americans.


As health professionals, we need to forcefully address the Bush proposals as hard as we recently and successfully fought to increase Medicare physician payments. Consumer advocates need to fight on a national level as Health Care for All did at a state level in their successful fight in June 2003 to rollback some of the recently enacted cuts in Medicaid services.


While it is fine to support congressional proposals to provide short-term funding assistance to the states for Medicaid, it is time to stop shortchanging the poor with a Medicaid program that is cutting off millions of low-income Americans because of inadequate funding. We need to federalize the Medicaid program and provide it with the financial sustenance that America's poor and chronically ill deserve. We, as health care professionals, need to lead and work collaboratively with the general public to move toward a truly compassionate approach to funding health care services for America's poor.



1. For more details, see [Context Link]


2. For more information on these organizations, see Families USA Web site at; Community Catalyst Web site at; and The Center on Budget and Policy Priorities Web site at [Context Link]


3. For a more detailed history of Medicaid, see Goldfield (2000). [Context Link]




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