Tuesday, April 26, 2011

After Some Delay, the Positive Aspects of that Post on Medicaid I Mentioned the Other Day

So, while I had a negative reaction to Scott Walker's thoughts on the existence (or lack thereof) of sovereignty in the subordinate units in a federal state, I do think he does a very good job of pointing out some of the major flaws in the Medicaid program.  In particular I thought this bit was very perceptive of the problems with Medicaid, I run into these all the time at my job:

"In recent years Washington has taken an obsolete program, which covers health care for low-income Americans, and made it worse through restrictive rule-making that defies common sense. It is biased toward caring for people in nursing homes rather than in their own homes and neighborhoods. It lacks the flexibility to help patients who require some nursing services, but not round-the-clock care."

He is also quite correct in pointing out that:

Time and again states like Wisconsin have blazed the path in Medicaid — from giving individuals greater control over their care to expanding the use of electronic medical records — while the federal bureaucracy has lagged behind. Just now Washington is discovering accountable care organizations (networks of doctors and hospitals that share responsibility for caring for patients and receive incentives to keep costs down) and “medical homes” (a model in which one primary-care doctor takes the main responsibility for a patient).

He is also quite correct in pointing out that (there are a few other things in here I agree with, these are the big things):

We need to modernize not only Medicaid’s benefits and service delivery, but also its financing. In good times, the open-ended federal Medicaid match encourages states to overspend. Amazingly, the program is now viewed by some states as a form of economic development because each state can at least double its money for each dollar spent. That matching feature penalizes efficiency and thrift, since a reduction of $1 in state spending also means forfeiting at least one federal dollar, often more.

I am in complete agreement that these issues are two major flaws in the current Medicaid system.  Medicaid's bias towards institutional care is a major issue and something that comes up a lot in the disability field.  Institutional care is vastly more expensive than home care and the more we can go towards it the better.  I also see cost shifting all the time, the current Medicaid model has different cost share schemes for different services so in many cases the more expensive option is cheaper for the state administering the program.  I think most of this is handled well enough in the op-ed that I don't have to go into more detail (though I may pick it up in later posts, if I ever get around to looking at New York's Medicaid reform many of these issues will come up in more detail).

Where me and Governor Walker part ways is on the solution and this is due to different diagnoses of the problem.  I believe he is just trying to treat the symptoms while ignoring the underlying issues causing the disease.  Walker proposes Medicaid block grants as a way to solve these issues.  On the whole, I think I concur these would be better than the status quo.

However, I don't think Medicaid block grants address the actual problems with the program.  At the root of this, implied in the op-ed is the view that the program's flaws are rooted in its age and in the inability of the Federal government to adapt to change.  These things are true, but I see them as incomplete.

People have been saying for decades that institutional care is inefficient and should be phased out to the extent possible and that cost shifting in Medicaid is leading to inefficient services and should be changed.  Over these decades many elements of the way that the government delivers health care have changed, but these problems remain constant.  At the root of this problem, I believe, is the idea that we need to treat anyone that is truly in need, and preferably only those people.

And it is very hard to say that someone that needs 24 hour nursing care isn't truly in need.

The combination of the public pressure  to protect the most vulnerable and the interest group pressure of well organized institutional providers make me very sceptical that individual states could use block grants significantly more efficiently than they do current Medicaid spending.  The backstop of the federal provision of the most expensive care for the most vulnerable people is what allows the states to experiment with innovative programs like BadgerCare, while some states that have particularly effective health care systems may be able to resist the institutional bias I doubt this will be the case for many states.

This perception comes from a few different directions.  First of all, if anyone remembers when we were debating health care reform a few years ago some of the provisions that got canned were for these kind of in home services.  I can't remember if it was specific articles or embedded in longer reports, but many of those that opposed the bill opposed in home care particularly fiercely.  The charge was made that in home care was a major source of fraud and abuse in the system.

While I personally believe that on the whole in home care saves money and that the problems of fraud and abuse are surmountable, they are real obstacles and will be sufficient to tank these reforms in many states without federal pressure to work out the problems.  An example from New York, which on the whole has had great success with these programs, unlike some other states where problems have been rampant, involved 24 hour nursing care in New York City.  Federal audits revealed that nursing care was prescribed at a much higher rate in New York City than in the rest of the state and that city health officials didn't exert sufficient oversight of the funding (this kind of care is already paid for to a significant degree by state dollars so I'm not sure that block grants would do much to solve this).  Now, there were some reasons for this, in that 24 hour care was probably underprescribed in other parts of the state and that nursing home care is more expensive in New York City making the marginally efficient case for 24 hour in home nursing care rather more expensive in New York City than in, say, Buffalo.  The numbers involved however are just surreal, if I find where I put the data, I believe I sent it to my home computer from work, I may do a post on this (assuming this wasn't an internal state document, which I would never report on beyond details already publicly reported, which I know the general outline of this was, I think it was a forwarded news piece however).

One of the big problems with these services is that it takes highly specialized training to control them and prevent abuse and state bureaucracies are not always up to the task.  My agency is peculiar in receiving oversight from both the state and the feds, while I am fairly insulated from the details at my current level, I have seen enough to have realized that the differences in each level of government's ability to collect and analyze information are pretty significant.  Federal oversight is much stricter and the reporting requirements far more advanced than they are at the state level.  And New York, while a mess in many ways, does have a well developed and professional state bureaucracy, I can't even imagine what it is like in other states.  If the Feds are 10 years behind private sector best practice, states are 10 years behind that (as are many individual businesses to keep perspective).  While firm conclusions on this score would take more detailed knowledge than I possess, I would not be surprised if the problems with fraud and abuse in home health care services in some states is tied to the relatively underdeveloped state of their bureaucracies.

This is getting longer than intended so I will just very briefly cover my next issue.  The second issue I see comes from my experience in the disability field as well as the attention this has made me pay to things like comment sections on disability related news articles.  The federal and state bureaucracies realized quite long ago that institutional care was not only expensive and inefficient but tended to provide people with worse care.  Specific to the disability field, it was also realized that there were significant social and moral concerns regarding people that would be dependent on the provision of health care for long periods of time who ended up confined to institutions.  The movement has been going on for many years and it has long been recognized that institutions such as private non-profits provide the best care.

There are two problems that come from this.  First, attempts to privatize this in for profit institutions has been on the whole negative (with exceptions).  This could be its own post so you'll have to take my word for it now.  Also, attempts have been made to increase the number of effective non-profits but this has also run into quality concerns.  The problem being, its not really a case of private vs. state sector.  It's really about the mission and dedication of the people concerned.  So a non-profit founded by someone impacted in some way through family that has put the time into doing it right can deliver care more cheaply and effectively than anyone else, as often can institutions affiliated with a church or other organization.  Take this bit out and try to spur development with seed grant money or private profits though, and the results are more mixed and often worse than the state programs they are meant to replace.  So, while the state is an extremely poor substitute for committed staff the relatively high salaries and relatively high level of oversight provided by the state tends to be the second best option (which doesn't mean there is a huge gap in efficiency between the state and the effective non-profits, but there is also a pretty wide gap between state facilities and many private facilities).

The second big problem goes back to what I was saying about people wanting to pay only for those that really need it, and not anyone else.  While I'm in a policy position and don't have much direct contact, what I do have has shown me that people are fairly hostile to providing people with in home supports, there tends to be an attitude that people who get these kinds of services don't really need them.  If they needed them, they'd be in the hospital.  I also very rarely see opposition to providing care in the hospital, while I see negative comments on just about anything regarding in home care or supports in the community (many of which are provided by Medicaid and are very cost effective) I almost never see anything criticizing services being provided to people in institutions, and in fact see many, many posts by people saying there should be more and better funding for this kind of care.

While the feds have proven moderately resistant to this pressure and have created a number of waiver and grant programs to spur the development of medical options in the community as opposed to the institutional bias of the past, I am very sceptical that many states could independently resist these pressures.  Goes back to my favorite Federalist paper, #10.  When you get more interest groups most of them cancel each other out because of cross cutting cleavages.  The lower the level of government you go to, the less this happens.  At the state level it would be far harder for politicians to resist some of the organized interest groups that are large relative to individual states but small in the grand scheme of things at the national level, especially in comparison to the overall budget for medical services.

On the whole, I am very sceptical that block grants would lead towards the more efficient services Governor Walker is writing about, such as BadgerCare.  Rather, I think the institutional bias is due to factors involving the American people's beliefs about health care and that public pressure would result in these sort of services receiving larger shares of the Medicaid block grants while innovative programs get cut.  An example of this I've seen recently in New York were cuts that Health Families have received.  Healthy Families has been extensively reviewed with a number of studies that show many of its interventions result in kids that score somewhat higher overall on test scores later in school, and are much more likely not to fall into the lowest scoring groups, relative to peers that were denied services due to limited funding.  Despite these successes, which will likely reduce needs for public services such as incarceration down the line, Healthy Families was under the threat of receiving cuts (and may have received them, I've been meaning to check).  This is for predictable reasons.  It gave services to people that were "at risk" rather than obviously in need and the savings and additional growth were seen decades down the line.  These are the programs that in my experience are most under threat through reforms such as block grants and budgetary pressures.  Politicians need results NOW, and the Tea Party is demanding cuts NOW, not 20 years down the line.  The costs of a program such as Healthy Families are all today, while the benefits are far in the future.  The same goes for many of the services that are classified as in home supports.  These programs support a much larger number of people than does institutional care.  They save money by reducing the much higher costs of institutional care, but not all of the people that receive these services would have needed that care.  The only reason they save money is because of the high costs of intensive medical interventions.  As I've posted many times before, medical care has highly uneven costs, so it is far cheaper to provide many people with some care they don't need if it means providing a few people with care now that would otherwise need intensive services later.  But this care results in costs now as coverage is expanded while the savings are years down the line as utilization rates drop for intensive, shorter term services.  This dynamic is why I think Governor Walker is correct in pointing out many of the problems, but naive in thinking that there are not additional underlying structural issues that will result in block grants not leading to the results he advocates for.

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