"Analysis of President Bush's Medicaid Proposals"

The following press release comes from Bob Williams and
Claypool of AIMMM directors@aimmm.org  :

"Bush's New Freedom for State Medicaid Programs Would Not
Free People with Disabilities"

Upon taking office, President George W. Bush pledged that
he would usher in an era of New Freedom in which "all
Americans with disabilities, whether young or old, can
participate more fully in the life of their communities and
of our country." The President also said that he would
devote the full resources of the federal government to
ensure that States carry out the 1999 U.S. Supreme Court
Olmstead decision. 

Court ruled that the ADA requires States to take every
reasonable step to avoid the needless institutionalization
of people with disabilities by offering them services in
their own homes and communities. A State must, therefore,
use its Medicaid to support people with disabilities to
live in the community rather than in nursing homes or other
institutions to the maximum extent possible.  Two years
later, however, the President's so-called "Medicaid
modernization" plan is threatening to undermine the very
right and ability of people with disabilities of all ages
to realize this most fundamental of human and civil rights.  

TWO DIFFERENT POLICY GOALS: The Bush Administration claims
that its "Medicaid modernization" proposal would help
States increase the availability and quality of community
living services. But there is substantial reason to believe
that it would:

  1. Force States to further reduce the already limited
     services available to the over 5 million children,
     adults and older persons on Medicaid today who need
     daily help to live in their own homes and communities;

  2. Make it impossible for States to expand such vital
     services to two groups of people with significant
     disabilities -- those who are needlessly
     institutionalized and want to move back homes and
     those with unmet needs who are living in the community
     but at imminent risk of inappropriate

In fact, the Court said in Olmstead that States' legal duty
to meet even the most basic needs and rights of people with
disabilities lessen considerably during times of severe
economic hardship.   

THE BUSH PLAN: The Bush proposal would offer cash strapped
States the option of receiving some temporary relief
beginning October 1. But, the Administration proposal would
force States to choose between two untenable "either/or"

  1. A State could continue current Medicaid programs
     without any additional federal financial assistance;

  2. It could turn its Medicaid and Children's Health
     Insurance Programs into one capped block grant.

States that choose the first option would be denied federal
fiscal relief in this time of growing budget deficits.  
These States would then be forced to gut or eliminate vital
services, including those that enable children, adults and
older persons to live at homes rather than be needlessly

Collectively, those States that elect to take the block
grant would receive a "federal loan" of $3.25 billion in
FY2004 and $12.7 billion over 7 years.  But to receive even
these monies a State would first have to both commit to
repay the loan to the federal government and accept an
overall cap on federal Medicaid spending over 10 years
starting next year.   

claims that the block grant would enable States to focus,
among other things, on "encouraging home and community
care, and preventing or delaying inappropriate
institutional care." This would be done by eliminating the
need for States to seek any federal approval before either
increasing or decreasing community living services to
people with significant disabilities, including older

POSSIBLE UPSIDE: Arguably, this approach might be
sufficient to create and/or sustain momentum in at least a
small handful of States -- maybe as many as 10 to 20 at
most -- in respect to increasing the availability and
quality of community living services.  

PROBABLE DOWNSIDE: But the approach would not be sufficient
to reverse Medicaid's institutional bias. Nor would it
guarantee people with disabilities, including those who are
seniors, a real choice between getting the services and
supports they need to live at home and being forced to be
in a nursing home or another institution.  

Because the Bush plan would give each State the "increased
flexibility" (i.e., the federally unfettered discretion) to
decide both what and how much services, including community
living services, that it will and will not cover. This will
only exacerbate an untenable status quo. A small number of
States (5 to 10) that already have demonstrated the
political will to increase community living supports may be
able to find ways to continue to do so even under the
severe budget restraints the block grant would impose. But
the majority of States would find no real political or
fiscal incentive in the President's plan to begin to do so.   

progress has been made in the last 20 years in expanding
community living services. In 1982 only about 2 percent of
Medicaid long-term care dollars were spent on home and
community based services; by 1997 it was almost 25 percent.
But most States devote 70%-90% of their Medicaid long-term
care dollars to pay for nursing homes and other
institutions. In 1997, 10 states spent between 85% and 96%
of their Medicaid long term care budgets entirely on
nursing homes. 

Moreover, Medicaid now pays for 48 percent and Medicare for
another 12 percent or a combined total of 60 percent of all
nursing home costs in the U.S. And States will come under
ever increasingly intense political pressure by the nursing
home industry to have Medicaid pick up more of these costs.
This will become increasingly true as those with the means
to avoid unnecessary institutionalization do so altogether.

Given this situation the nursing home industry would use
the "increased flexibility" of the Bush plan to lobby
Governors and State legislators even harder to retain a
strong institutional bias in their Medicaid programs;
businesses would continue to receive far more than their
fair share of what promises to be a far smaller allocation
of Medicaid long term services funding.  

AIMMM -- Advancing Independence:
Modernizing Medicare and Medicaid

A program of HalfthePlanet Foundation

1875 Eye Street NW
Twelfth Floor
Washington DC 20006
202.429.6810 v
202.429.6813 f

For A Better Tomorrow

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