N.C. Medicaid Reform: Dual Eligibles and what is broken

One of the most difficult aspects of reforming Medicaid in any state is answering the question, “what about the dual eligibles?” These are people who are eligible for Medicare due to their age (65+) and Medicaid due to being low income. The dual eligibles constitute about 1 in 10 Medicaid beneficiaries in North Carolina, but consume about one-fourth of the program costs.

Following are three interviews I conducted (in October 2011) with Marsha Gold, a researcher at Mathematica Policy Research, and one of the nation’s foremost experts on the dual eligibles:

• Interview part 1, 10/28/11
• Interview part 2, 10/28/11
• Interview part 3, 10/28/11

The most important thing to remember when discussing Medicaid, is that it is not one, homogenous program in terms of who is covered. For example, the per capita Medicaid expenditures by Medicaid on dual eligible beneficiaries was around $10,600 in 2009; for the far more numerous children covered by the program, it was $2,800, in large part owing the cost of nursing home and other long term care services for the duals. And the number of dual eligibles will inevitably grow due to the movement of baby boomers into eligibility for Medicare. Keep in mind that most of the persons who would be covered by a Medicaid expansion under the ACA in North Carolina are childless and low income adults, not the more complicated (medically) groups of dual eligibles and the long term disabled.

Further, regarding the language used by the Governor to describe Medicaid as broken–and then using administrative costs as the prime example–the figures on administrative costs described in the in the N.C. Audit have been called into question. As noted in the post, some of the administrative costs in other Medicaid programs are contained in the amounts of dollars spent by managed care companies. So, the much discussed N.C. audit did not provide a complete picture of what proportion of other states Medicaid program was spent on administration. This is important only because this administrative “brokenness” was the logic provided by the Governor for not expanding Medicaid. Not only was this not the case, but the expansion would add people who are on average, much better health risks than the anecdotal examples of problems that have been provided in the debate–mostly of problems with dual eligible beneficiaries and the long term disabled (and there are many problems and difficulties, first and foremost about the health of these individuals).

What is broken in Medicaid are many of the beneficiaries, particularly the dual eligibles described above. These are elderly individuals, many living in Nursing Homes, often because they are widows or widowers, and who have many complicated acute and long term care needs. Medicaid provides care for “the least of these” and that will always be very hard and expensive.

N.C. Medicaid bill

Here is the text of the bill to create Gov. McCrory’s Partnership for a Healthy North Carolina (his proposed comprehensive Medicaid reform). It is only two pages long and mostly sets up time lines (final roll out of new system by 2018) and general outlines of the aspirations of the reform effort only. The bill envisions a 1115 Medicaid waiver of some sort (“or other federal authority”), but there are so few details that this is mostly an aspirational document…though the goal seems to be to provide 2-4 “entities” through which beneficiaries would get all of their services, including nursing home coverage for the dual eligibles. It is difficult to evaluate this definitively with so few details.

Reinhart/Rogoff and holy crap!

I don’t consider myself a deficit scold, but did write a book called Balancing the Budget is a Progressive Priority and worry about things like the Debt:GDP ratio more than most who would self identify as progressives. When asked at myriad speeches, presentations and the like the past 3 years how much debt:GDP is too much, I have many times said something like “no one knows for sure, but when you are getting around 100% of public debt:GDP you will harm economic growth.” This diddy was based largely on an influential paper by Carmen Rinehart and Kenneth Rogoff that showed that nations’ whose debt:GDP was above 90% had average economic growth of -0.1% annually. It appears this widely cited (this is an understatement of how influential it has been) conclusion was based on a coding error and the correct rate of growth with the code corrected should be 2.2% GDP growth according to a new paper. As Matt Ygelesias says, this will almost certainly change nothing about the policy debate because most people are so locked into their ideological positions at this point (there were also so questionable exclusions of data for certain countries; the original study is a cross-national look at debt:GDP and economic growth).

My first thought is WOW, what a big error. As several have said on twitter today, it also gives me a pit in my stomach…..making a mistake like this in a published paper is the professor/analyst version of having the dream in which you have to take the final exam but you never went to the class.

The data and the facts are important. I am sure there will be more post-mortems, but this looks to be a huge case of a false fact having a big impact on an important debate.

update: fixed a typo

Marathon

Obviously a terrible tragedy yesterday in Boston. It is all the more sinister because of what the finish line of a Marathon typically represents: a supportive, celebratory place of individual achievement.

I have finished two Marathons in my life, the 2004 Richmond and 2005 Marine Corps races. For me, these races were culminations of my losing about 60 pounds that I gained during graduate school (a decidedly unhealthy time for me in many ways) and the birth of my kids (my wife lost weight after childbirth, I just kept going!). One of the most beautiful moments of my life was making the left turn at around the 26 mile mark of the Richmond Marathon and seeing the finish line: I knew that I would finish. I began to weep as people shouted Go Don Go, you did it! (I had my name printed on my race bib) and the crowd roared, even for someone like me who finished in the 4 hour 40 something minute time range.

That is the point of the finish line at a Marathon. Long after the race winner has had a meal and a massage, normal people do extraordinary things, cheered on sometimes by family, but always by loving, supportive strangers. The finish line of a Marathon is quite an experience, and one that cannot be ceded to the acts of yesterday.

Interview with Sec Wos and Director Steckel

Rose Hoban interviews N.C. Health and Human Services Secretary Wos and State Medicaid Director Steckely. There is a very revealing, 15 page transcript of the entire interview embedded in the story. More later on this, but quick thoughts:

• The Governor clearly said we could not expand Medicaid because it was broken. Administrative overruns were cited as the main way the system was broken.
• The degree to which NC Medicaid has unusual administrative costs is in some doubt; especially states using more managed care don’t call some of the admin costs admin (more on that next week)
• Medicaid is a counter cyclical program whose beneficiaries rise when the economy is bad; it is impossible to precisely estimate the number of beneficiaries. Medicaid is surely a difficult item for all states to budget for due to this, but at least some of the budget overruns in N.C. the past few years have been related to fighting between a Democratic Governor and a Republican General Assembly. We don’t have that issue now.
• I agree that coordination of care for complicated patients, especially those with mental health and long term care needs leads a lot to be desired. I am ready to cheer on efforts to improve these issues in N.C. Medicaid…but the Medicaid expansion would mostly not add such folks to the eligibility roles, but instead add mostly childless adults, who do not now qualify based on disability.

DSH cut delay surprise in POTUS budget

Sarah Kliff notes the surprising proposal in the President’s budget to delay the scheduled cuts to Disproportionate Share (DSH) payments that Medicare makes to hospitals based on how many uninsured patients they treat. The logic of cutting them in the ACA was that the number of uninsured would decline due to private insurance purchased in exchanges and Medicaid expansions. Of course, the Supreme Court made the Medicaid expansion voluntary and a good number of states are balking. The looming DSH cuts are one of the biggest realpolitik reasons for a skeptical (or downright hostile) state to expand Medicaid. If they don’t, they are essentially voluntarily redistributing money to other states under the default ACA.

The President’s budget proposes delaying these cuts, presumably to lessen the blow on hospitals in states who would otherwise have cuts to DSH payments without reductions in the uninsured.

This is a big surprise in that it it would give away political leverage to expand coverage. Of course, everyone is saying the budget is DOA, but I think there are nuggets of a potential White House/Senate deal in the President’s budget that could result in something passing the Senate that would pressure the House to vote on it. And something has to be done to raise the debt limit.

This surprise move (at least to me) implies to me that it is part of something that has already been discussed in the nascient White House/Senate negotiations and that along with chained CPI and more means-tested Medicare being put forth by the President in his budget, this item makes me think there is a chance of a ‘mini grand bargain’ of sorts. And I would think a whole lotta Republicans would love to vote for this, as they could then say ‘see we delayed Obamacare.’ The Speaker will say lets do it now and of course the President will say no, it is part of a bigger deal only.

Bottom line, I think there is a reasonable chance that between now and Labor Day that House Republicans come to regret pushing the Senate back into “normal order” and saying they no longer wanted to deal with the President directly.

Quick budget note

The President has released his budget which as all Presidential budgets is dead on arrival per se (or dead before arrival as Stan Collender says). However, I think this budget is likely to be more consequential than most, because I think it contains the seeds of a ‘mini grand bargain’ of sorts that is likely to emerge between the White House and the Senate, and which has been emerging based on White House/Senate discussions. As I wrote on Jan 18, 2013 when talking about a return to ‘normal order’ (why it went away)

My guess is that they pop something out of the Senate with ~70 votes and then we see what happens in the House and they have a conference committee and the various committees get to work on the policy details. It is a big moment for the Senate, and a chance for them to be the grown ups. We will see if they can take the opportunity.

The chained CPI, increased means testing for Medicare, and a place holder for new revenue via tax reform are ideas around which a yea vote of about 65-70 Senators could take place as part of the debt limit lift coming up for the Summer. Much like the 88 yea votes in favor of the New Year’s Day fiscal cliff deal forced Speaker Boehner to break the Hastert rule (don’t bring up something without the majority of the majority being in favor), I am betting this level of support will lead to the same outcome again, meaning Boehner allows it to be voted on and the Dems have to carry most of the water. A whip operation to behold for sure….

Thinking long term, deficits are already coming down and the debt-to-GDP ratio stabilizes in the short run, but starts back up in the second decade due to health care costs. The key for long run sustainable budgets are the next steps on health reform, building on/modifying the ACA. I don’t believe the needed deal on health reform (reform needs to go back burner politically a bit, so we can implement; its hard enough without every new study or finding being a partisan bicker match) can occur until elected Republicans actually embrace a proposal, mark it up in the Commerce committee in the House, get a CBO score, etc. Conservative public intellectuals have started getting more serious about health reform plans, but as of yet, not elected ones.