September 19, 2010

Paterson’s No. 2 Calls for Medicaid Overhaul

By ANEMONA HARTOCOLLIS

Describing Medicaid as a “massive program” whose growth threatens the state’s finances, Lt. Gov. Richard Ravitch is calling for significant changes in New York’s health care benefits for the poor and disabled, lobbing a volatile issue in the midst of the campaign for a new governor.
In a report to be released on Monday, Mr. Ravitch says the state should remove control of the rate-setting process for Medicaid, the joint state and federal health insurance program for the poor, from the Legislature to reduce the influence of politics.
He also calls for limits on medical malpractice awards and for the re-examination of rules that allow middle-class families to shelter assets so they can qualify for coverage.
Although the report does not suggest a cut in benefits, it notes that New York has among the most liberal definitions of eligibility.
While Medicaid began as a program mainly for people on welfare, the report says, the state program now covers many of the working poor, including childless adults, as well as long-term care for the disabled that includes visiting nurses, and help with bathing, cooking and housekeeping.
Almost one in four New Yorkers now receive Medicaid, the report said, making it the largest purchaser of health care in the state and consuming a third of all the money the state spends every year.
“We have been extremely generous in expanding the eligibility of care, and we have a long-term care program that nobody else does,” Mr. Ravitch said in an interview on Sunday. “The rate of growth is critical to trying to deal with the enormous deficit the state faces.”
Mr. Ravitch is seeking to address a crisis that many states have been grappling with. In a report released in June, the National Governors Association said that starting in 2014, the federal health care overhaul will add 16 million people to the 60 million already enrolled in Medicaid, and warned that changes in the way the benefits are delivered “will be crucial to contain program spending.”
New York State has wrestled for years with the growth of Medicaid, which now costs more than $50 billion a year, more than double the spending in 1995. With stimulus spending, the federal government covers about $30 billion, more than the 50 percent share it has historically covered in New York.
But when that extra money runs out in June, New York and other states will “fall off a cliff,” Mr. Ravitch said, just as they are trying to claw out of deficits and recession.
“The assumption was that by 2011 the economy would have recovered, and in the meantime the federal government was helping the states through a difficult period,” Mr. Ravitch said. “But we’re not out of the recession, poverty’s increased in the U.S., we’re still at roughly the same level of unemployment, and the states aren’t out of the woods.”
It is unclear how much weight Mr. Ravitch’s recommendations will carry, since he is not running for re-election and the State Legislature is notoriously protective of its own power. But in releasing his report now, he is putting a sensitive issue out for public consideration in the middle of a governor’s campaign, one of many national races in which the role and the responsibility of government are being debated.
Michael Caputo, the campaign manager for Carl P. Paladino, the Republican candidate for governor, said that the Paladino campaign had not seen Mr. Ravitch’s report, but that Mr. Paladino believed that “gold-plated Medicaid options” were debilitating the state’s economy.
“Since $20 billion of savings that he’s counting on removing from state government are dependent on Medicaid,” Mr. Caputo said of Mr. Paladino, “my guess is that Mr. Ravitch is running down the same track Carl Paladino is.”
Mr. Caputo said Mr. Paladino believed that up to 60 percent of the cost of long-term care could be reduced by training and paying family members to take care of patients. He said Andrew M. Cuomo, the Democratic nominee for governor, had offered only vague cost-cutting proposals, adding, “This will be a major issue in the governor’s campaign, I can promise you, because Andrew refuses to answer how he’s going to cut Medicaid.”
Marissa Shorenstein, a spokeswoman for the Cuomo campaign, pointed to part of Mr. Cuomo’s campaign policy document that appeared to echo Mr. Ravitch’s report. It calls for shifting authority for setting Medicaid reimbursement rates “from the current politicized system, in which the Legislature micromanages rate changes, to a nonpolitical administrative system managed by the Department of Health.”
The Ravitch report contains a number of suggestions on how the bureaucracy of Medicaid could be streamlined. It says the power to set rate formulas and reimbursement policies should be removed from the Legislature and given to the Medicaid director in the State Health Department. The director would be advised by an independent rate-setting panel similar to one the federal government has for Medicare.
The report also calls for replacing the current Medicaid administration, which the state shares with New York City and 57 counties, with a centralized system. Planning for such a reorganization has already begun under a new state law.
Mr. Ravitch said the current fragmented system lent itself to abuse and corruption, particularly in long-term care. “If your Aunt Tillie needs home care and you want 24-hour care and you know the local county executive, Aunt Tillie will get it,” Mr. Ravitch said. “The lower the level of government, the more political the decision-making matrix is.”
Mr. Ravitch said he proposed changes to Medicaid because of its increasing gravitational pull on the state budget. The report was not commissioned by Gov. David A. Paterson.
Assemblyman Richard N. Gottfried, chairman of the Assembly Health Committee, said that “anything Richard Ravitch puts on the table deserves and will receive a lot of careful attention.” But he said that even though some legislators might agree that New York was spending too much money on long-term care, “they will revolt against any proposal to cut it back.” He added, “In my memory, we have never cut back on eligibility for Medicaid, and I would not expect that to be a viable concept.”
Mr. Gottfried also said the Legislature would be unwilling to give up control over the rules that determine rate-setting for hospitals, nursing homes and home care. “I think the Legislature would be very reluctant to hand over policy-making of this importance to appointed officials,” he said.
In the report’s most far-reaching recommendations, Mr. Ravitch takes on programs and constituencies with strong public or legislative support. He is not, for example, the first person to call for caps on medical malpractice awards, which drive up health costs.
Since it was founded in the mid-1960s, Medicaid has evolved from a program for the very poor to one that has aspects of a politically untouchable “entitlement” program for the working poor and the middle class, covering more categories of people than virtually any other state, the report says.
But Mr. Ravitch does not spare the blame. “The increase of Medicaid in New York has been gubernatorial, legislative and bipartisan,” he said.
“California and Illinois, the two other states that get the lowest share of federal aid and which have a substantial number of poor people, spend dramatically less than New York spends on Medicaid,” he said.
Many New Yorkers receive both Medicare, which is for the elderly and disabled and is covered wholly by the federal government, and Medicaid. Those so-called dual eligibles account for 40 percent of Medicaid spending, the report said. It suggested saving money by moving those people into managed-care programs rather than letting them choose their doctors. But this would require a change in federal law, Mr. Ravitch said.
The report also took aim at a policy called “spousal refusal,” which permits families that meet the standards to afford long-term care for an ailing spouse to shift assets so that Medicaid will pay the cost.
The doctrine of spousal refusal, the report says, is “vulnerable to abuses that divert resources from Medicaid’s legitimate purpose — serving as a safety net for the needy — and turn the program into an entitlement for the less needy.”
Mr. Ravitch said that by pointing out how large the program had become, “I’m not trying to suggest we should cut people off the rolls.”
He said he favored addressing underlying costs with better preventive medicine and by lobbying the federal government to pick up a greater share of New York’s Medicaid burden. But he said, “I’m begging the question of whether eligibility requirements should be changed.”