October 1, 2005
Lincoln Star Journal
Nancy Hicks

Lincoln, NE --Appleseed warns some options could limit health care for the needy.

A watchdog group for low-income Nebraskans warns that some Medicaid reform recommendations could mean less health care for poorer Nebraskans.

Under the current system, people who qualify for Medicaid - generally low-income families with children, seniors and adults with disabilities - are entitled to a range of medical benefits, including prescriptions.

But a Medicaid reform preliminary report released Monday recommends Nebraska eventually move to what is called a "defined contribution" system, where benefits are not assured.

Under that system, the state would use Medicaid dollars to buy private health insurance for Medicaid-eligible Nebraskans or to fund Medicaid accounts that would be used by recipients to purchase medical care or insurance. Several states already are moving toward such systems.

Under the defined contribution system, the state would determine ahead of time how much it would provide toward health care needs, said Becky Gould, staff attorney with the Nebraska Appleseed Center for Law in the Public Interest.

But trying to predict health care needs for a low-income population, which tends to be sicker than a high-income population, will not work, she said. Generally, she predicted, the health care will come up short.

The center would like to maintain the current entitlement approach, where doctors determine needs and people get those needs met, she said.

The defined contribution structure is a major change, with no study to determine whether it would be effective and where the gaps are, Gould said.

"It is taking a big risk without knowing that it is going to produce the savings the state hopes it will," she said.

The defined contribution system is one of two paths that can be used to curb Medicaid's relentlessly growing costs, according to a preliminary Medicaid reform report released this week.

The state could control costs by tinkering with the current system or by developing a completely new system, the report said.

The dozens of recommendations for money-saving changes within the current program range from participating in a multistate drug-purchasing pool to creating a separate health insurance program for children now in the Children's Health Insurance Program.

The report lays out both approaches and suggests the state could tinker in the short term and revamp the system in the future.

The report also recommends changes that might help make insurance and health care more available to Nebraskans who aren't poor enough to qualify for Medicaid.

The state must make some changes to Medicaid, said Omaha Sen. Jim Jensen, chairman of the Legislature's Health and Human Services Committee.

"What we are doing is not sustainable," Jensen said about Medicaid's growth in costs that have consistently outpaced the growth in state tax revenues.

The report, he said, "lays out some well-founded and well-thought-out" ideas."

"There are some options we should look at very closely," he said.

The growth in Medicaid spending will have to average no more than about 1.9 percent a year in order to avoid seriously jeopardizing the state budget over the next two decades, according to the report.

Medicaid's highest-cost populations include adults with disabilities, seniors and children with disabilities. Prescription costs are also growing and consume $237 million a year, about 17 percent of the costs of the total program, funded by federal and state tax dollars. consume $237 million a year, about 17 percent of the costs of the total program, funded by federal and state tax dollars.

The report, authored by Jeff Santema, attorney for the Legislature's Health and Human Services Committee, and Richard Nelson, a director with the Health and Human Services System, also includes suggestions from a Medicaid-related state employee group and more than a dozen private Medicaid-related agencies and advocacy groups, as well as input from an appointed Medicaid Reform Advisory Council.

Senators, concerned about rapidly rising Medicaid costs, created the reform process through LB709 last year.

It calls for reform bills to be introduced in the 2006 legislative session. Those bills will likely be a combination of short-term changes within Medicaid and a long-term strategy for change, Santema said.

This is a comprehensive report and there will be a statewide discussion, said Sen. Philip Erdman of Bayard, sponsor of the reform bill.

"I think they have gone above and beyond what they were asked to do," he said.

The public will have several chances to discuss the proposal and recommendations, he said.