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What’s at Stake in the Candidates’ Different Visions for Medicaid

October 1, 2012 at 12:00 AM EDT
The firestorm over how to make Medicare more sustainable has consumed the health care debate this election season, but Medicaid, its counterpart for low-income, disabled and elderly Americans, actually covers more people. Hari Sreenivasan looks at how the candidates' two drastically different proposals offer reform.
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JEFFREY BROWN: And now, from the state of the race to one of the key issues. Hari Sreenivasan looks at what’s at stake for one of the largest parts of the American health system: Medicaid.

MAN: Another deep breath.

HARI SREENIVASAN: When many Americans think of costly government programs, they often think of Medicare. But Medicaid, the nation’s health insurance for low-income Americans, actually covers more people. It covers children, the disabled and the elderly.

Here’s how Matt Salo, who heads the National Association of Medicaid Directors, explains it.

MATT SALO, National Association of Medicaid Directors: It’s incredibly important. We cover — Medicaid covers 62 million Americans.

We cover 40 percent of the births in this country. We cover the majority of long — publicly funded long-term care services.

It’s not Medicare. We cover the majority of HIV/AIDS treatment, the majority of mental health treatment. Anywhere you look for a safety net, Medicaid is generally there.

HARI SREENIVASAN: Medicaid is run by the state through rules set by Washington. And although it varies from state to state, the federal government, on average, pays nearly 60 percent of the cost. The states pay the rest.

Those costs, along with its prominent role in the federal health care reform law, has inserted Medicaid firmly into the middle of the presidential campaign.

PRESIDENT BARACK OBAMA: I put forward a detailed plan that would reform and strengthen Medicare and Medicaid.

MITT ROMNEY (R): I would rather let the legislators and the governors of the respective states decide what’s the best way to provide care for those who need the care.

HARI SREENIVASAN: One of the most costly ways that assistance is delivered is for long-term care. Roughly two-thirds of Medicaid spending goes to the elderly or disabled, many in long-term care.

MATT SALO: The issue for a lot of folks who wind up on Medicaid is that they end up doing what we call spending down.

They end up in a nursing home or they end up with other types of very high medical bills that essentially exhaust all of their savings, all of their resources relatively quickly.

And then, at that point, Medicaid steps in and picks up the rest of their care essentially for the rest of their lives.

HARI SREENIVASAN: There are people like Matthew and Georgiana Podniesinski. Today, they live in a nursing home in Maryland just outside of Washington, D.C. The couple were married on Memorial Day 1954 and have rarely missed a day of each other’s company since.

Matthew, now 81, was a school system superintendent in New York State and an Army veteran. Georgia, now 79, kept busy raising the couple’s seven children. They were always savers and planners.

They put the kids through college, all the while setting aside enough money, they thought, to see them comfortably through retirement.

MATTHEW PODNIESINSKI, retiree: I was in education in New York State. They have a pretty good retirement program, which I had, of course.

So I had a good retirement, Social Security, and a compensation check from the veterans, a small one, but smaller. So I was pretty well set financially to take care of myself.

HARI SREENIVASAN: Then the couple suffered a string of devastating medical problems. Georgiana was the first to have to live full-time at the nursing home, but she fought it tooth and nail.

GEORGIANA PODNIESINSKI, retiree: I really had a breakdown when they told me I was staying, because my heart was set on being better. And I tried and tried and tried.

And one day, we had a meeting. We met with, you know, everyone that was involved. And they convinced me that I was — number one, it was very hard to take that I would never walk again. And I can’t even stand up completely.

HARI SREENIVASAN: Their daughter, Mary Ellen, became their primary caregiver. She remembers well the stress she was under when a series of serious medical conditions nearly took her dad down.

MARY ELLEN AMTOWER, daughter: There were countless trips in and out of Johns Hopkins. And while I’m taking care of him, I’m also still taking my mom to and from her doctors’ appointments. In the meantime, in many respects, it felt like dad just wasn’t getting better, but I couldn’t admit it.

HARI SREENIVASAN: Today, Georgiana’s care is paid for by both Medicaid and Medicare. Matthew’s Medicaid application is pending, but both of them have had to spend just about everything they saved to be poor enough to qualify for Medicaid.

After paying for prescriptions and other medical expenses each month, they keep just $74 of the check they get from Social Security and veterans and retirement benefits. The rest goes to the nursing home.

MATTHEW PODNIESINSKI: I had to dump all my stock. And I had to dump my life insurance policy. Her life insurance policy had to be dumped.

We — they kept money out which we could to arrange for our funeral, headstone, grave site, funeral director, the whole bit.

And the rest of the money, we turned over. I’m not complaining. That’s the way the game is. But now we’re totally dependent on Medicaid.

HARI SREENIVASAN: The Podniesinskis’ story is all too familiar, according to Matt Salo.

MATT SALO: Any one of us at an advanced age really is just one fall away from a broken hip and then a spiraling out of conditions that could end you up in a nursing home or some other kind of, you know, life-altering decision.

HARI SREENIVASAN: For most states, Medicaid is one of the single biggest costs in their budgets.

Costs and coverage are two of the principal reasons that President Obama and Republican nominee Mitt Romney have laid out very different visions for Medicaid.

For the president, the program is a critical component of expanded coverage under the health reform law. Beginning in 2014, Medicaid would grow to cover as many as 16 million more people. Many of the new beneficiaries would include childless adults who don’t qualify under current law.

The federal government would spend about $440 billion more to cover these people for the first five years of the program.

At first, the federal government will foot 100 percent of the bill, but that drops to 93 percent by 2019, leaving the states with a $21 billion tab collectively.

But Romney wants to revoke the health care law and says its Medicaid expansion is the wrong approach.

Instead, Romney wants to give states a set amount of money, effectively a block grant that would be more limited than what states receive today. States would be granted more flexibility.

MITT ROMNEY: I would take a program like Medicaid, which, by the way, is a program for poor — for poor individuals that need health care, provides health care services to the poor.

I would take that hundreds of billions of dollars, and I would cut it state by state based on the shares they’re getting this year and send it to Colorado to say, you care for your own poor’s health care in the way you think best.

DR. MARK MCCLELLAN, Brookings Institution: We can’t stay with the status quo now.

HARI SREENIVASAN: Dr. Mark McClellan was the Medicare-Medicaid chief under President George W. Bush. He now heads the Health Policy Center at the Brookings Institution and sees merit in Romney’s ideas.

DR. MARK MCCLELLAN: They could move towards innovative ways of delivering care, like doing more to provide nursing home type services at home, like doing more to prevent the complications of conditions like asthma, by sending nurses to patients’ homes and helping them modify the home to prevent the emergency room visit.

HARI SREENIVASAN: But Gov. Romney has not spelled out whether he would allow local officials to deny Medicaid to some current patients altogether or restrict health benefits they now receive.

Romney also says he wouldn’t have Medicaid spending keep pace with projected health care inflation.

In all likelihood, a Romney administration also wouldn’t provide additional funds to cover more recipients during a recession, in contrast to how the law currently works.

President Obama argues that Romney’s proposal would cut coverage and services to the needy, including seniors.

BARACK OBAMA: And here’s the deal the states would be getting. They would have to be running these programs in the face of the largest cut to Medicaid that has ever been proposed, a cut that, according to one nonpartisan group, would take away health care for about 19 million Americans — 19 million.

HARI SREENIVASAN: Bob Greenstein is the founder and president of the Center on Budget and Policy Priorities. He says Gov. Romney’s block grant proposal would hurt many patients.

ROBERT GREENSTEIN, Center on Budget and Policy Priorities: The biggest changes would be for the elderly and the disabled. The elderly and disabled are one-quarter of Medicaid beneficiaries, but two-thirds of the cost.

That will rise as the population ages. And there is no way you can extract savings of this magnitude without dramatic reductions in health care for low-income people who are seniors or who have disabilities.

HARI SREENIVASAN: Greenstein also says the health reform law would help pay for the Medicaid expansion with billions of dollars in reductions that would theoretically save money throughout the health care system.

While it’s too early to say the extent to which the Podniesinskis couple be impacted by either candidates’ plans, they have been following this debate from their nursing home, along with their daughter.

MARY ELLEN AMTOWER: My parents didn’t start out to be here. They didn’t choose to be here. They didn’t say, hey, I’m not going to take care of myself. I’m not going to deal with my finances because I know the government will take care of me. They did not go like that.

And I can tell you, many of the other residents here are exactly the same. And I don’t really hear anything about Medicaid. And I think they really need to think about the fact that most people in this country are in our situation.

HARI SREENIVASAN: Whoever wins in November is going to have to grapple with the growing pressures of financing the program. But it seems clear the two candidates have very different visions for it.

JEFFREY BROWN: Online, our partners at Kaiser Health News answer some frequently asked questions about the campaigns’ approaches to Medicaid.

And, on Wednesday, well host a live video chat on the issue. You can find out more and submit your own queries on our Health page.