Living in a House of Cards
By: Source: AARP Bulletin Today Date Posted: 2005-03-29 11:56:22
A few years ago, Brenda Benedict slipped quietly out of the middle class after a devastating series of illnesses stripped her of everything: her marriage, her job as an employment counselor, her apartment, her car—"even," she says, "the pots and pans in my kitchen."
Today, Benedict, who at 55 is considered disabled because of her health problems, is beginning to put her life back together, mostly by working part time at Back on the Rack, a St. Louis shop that sells used designer clothes. It’s a small job in a small store for a small salary, but the work has made a huge difference in her life.
"When I walk through the door, it’s like being in Cheers—without the bar," she says, referring to the celebrated television series.
Benedict had been forced to move in with a friend. But with the $400 or so a month she makes at the shop and the $1,000 a month she receives in Social Security disability benefits, she can afford to live on her own again.
"I had lost hope," she says, "and then I found it."
But now Benedict’s tenuous hold on a new life is threatened. To make ends meet, she relies on Medicaid to pay for her vital prescription drugs, and Missouri is weighing proposals for deep cuts in that federal-state program, which provides health care for more than 53 million poor, older and disabled Americans. Coverage for people like Benedict, disabled but employed, has been targeted for elimination by the state’s new Republican governor, Matt Blunt, who says such cuts are needed to make Medicaid "sustainable and affordable for Missouri taxpayers."
In many ways, Benedict, hard-working and hopeful but vulnerable, represents the kind of people—from rural counties to big cities like St. Louis—who would be hurt by the cuts. And Missouri mirrors the nation’s 49 other states. The racial and ethnic makeup and income distribution of its 5.7 million residents reflect nationwide averages, according to Leighton Ku, a senior fellow at the Center on Budget and Policy Priorities in Washington. The state’s spending on Medicaid, Ku says, is neither high nor low.
And in Missouri, as in nearly every state, Medicaid is a hot-button issue. It heated up more when President Bush asked Congress for changes in the program that, he says, would save $60 billion over the next decade.
Medicaid was launched in 1965, the same year as Medicare, as part of President Lyndon Johnson’s Great Society. In the decades since, it has evolved from a basic health care program for people on welfare into a wide and highly efficient safety net for all kinds of Americans—from infants born into poverty to older retirees in nursing homes.
As coverage has expanded, so have costs. Total spending on Medicaid increased by a third from 2000 to 2003, and last year states began trying to reduce their share—by cutting programs and restricting eligibility. The nation’s total Medicaid bill topped $300 billion in 2004, making it more expensive than Medicare.
Medicaid costs started increasing dramatically, experts say, when the U.S. economy slumped in 2000, people lost their jobs, employers cut back on health insurance and more Americans were forced to use the program as their safety net for health care. At the same time, double-digit increases in prescription drug prices also pushed Medicaid costs upward.
"The problem is that the number of people increased and Medicaid costs increased at exactly the time when the states’ ability to afford the program diminished," says Vernon Smith, a Medicaid expert with Health Management Associates, a consulting firm based in Lansing, Mich. "That’s really what brought on the current financing crisis."
When state legislatures balance their budgets, Medicaid’s substantial share of total spending invariably makes the program a tempting target for cuts. In Missouri, Blunt aims to reduce or eliminate health care benefits for 122,000 of the state’s 1 million Medicaid recipients. His cuts would save $231 million in state funds, he says. Republican lawmakers, who control the state legislature, are lining up behind his plan.
Lost in the staggering numbers are the details: the way the cuts would affect the lives of the people on Medicaid. Under Blunt’s plan, for example, Brenda Benedict would no longer be able to have Medicaid pay for the $1,500 worth of prescription drugs she needs each month for her degenerative medical conditions: congestive heart failure, pulmonary edema, cardiomyopathy, thyroid disease and diabetes. She would have to spend $821 of her $1,400 monthly income on prescription drugs before she would dip below the poverty level and qualify for Medicaid drug coverage.
On that income, Benedict could not afford the old car she drives to work or her $390-a-month apartment.
"It would be hopeless," she says.
Kristen Alliegro, 32, is another St. Louis resident whose Medicaid benefits are on the line—as they are for many low-wage working parents across the country.
The single mother of two young children, Alliegro works two part-time jobs and is in training for a third. She also takes evening and online classes at the University of Missouri-St. Louis. A dean’s list student who has cobbled together a number of scholarships, Alliegro is working toward a degree in corporate psychology.
Interviewed in her tiny brick house amid the cheerful chaos of children’s toys, stacks of hefty college textbooks and piles of clean laundry, Alliegro says she depends on Medicaid for her health care because "there is no one I can call to help. That’s why staying healthy is so important to me and my kids."
Alliegro earns about $1,100 a month by working as a clerk for UPS and doing clerical work at Monsanto Co. It’s too little to afford private health insurance and—if Blunt gets what he wants—too much to qualify for Medicaid.
Blunt’s plan would eliminate health care for all low-income parents except those who make no more than 30 percent of the federal poverty level. That’s $4,700 a year for a family of three, or $390 per month. His proposed eligibility rules would mean that 60,700 parents like Alliegro would lose their coverage, though their children would not.
Alliegro, who grew up in St. Louis, was on her own and working at 17, when she parted ways with her family. She drifted through a number of low-paying jobs but grew more focused after the birth of her children.
"I won’t be on Medicaid forever," she says. "But now it’s helping me work toward my goals. It’s helping me stay on my feet."
Alliegro is terrified at the prospect of losing her Medicaid health care. "I’m living in a house of cards," she says, "and they’re knocking it over."
Some governors and members of Congress complain that Medicaid spending has been spiraling out of control. But Kathleen D. Gifford, Indiana’s former Medicaid director, says that the program’s rising cost is anything but extraordinary.
"There is no runaway spending," Gifford says. "Medicaid uses the same providers as everyone else and faces the same pressures. The difference is that Medicaid fills a role that no other health plan in this country does."
Experts also say that the increases in Medicaid spending tend to overshadow the fact that the program works efficiently. Its costs have actually been increasing at a slower rate than those of private or employer-sponsored health insurance. (See chart)
Besides, argue AARP and other advocacy groups, cutting Medicaid spending without meaningful, systemwide changes doesn’t actually save any money, but merely shifts costs elsewhere.
"If you cut poor people from Medicaid, they’ll be forced to go to emergency rooms—which are more expensive—or county clinics," says John Luehrs, AARP’s national coordinator of state affairs. "And that will drive up private insurance premiums and state and local taxes." [See "Get It Right on Medicaid," by AARP CEO Bill Novelli.]
Joel Ferber, a managing attorney of Legal Services of Eastern Missouri in St. Louis, has studied the likely impact of Blunt’s proposed cuts. "The state’s own estimates show that Missouri would lose $379 million in federal matching funds," he says. "And taking that much money out of the state will hurt its economy." A study by the John Cook School of Business at St. Louis University estimates that the cuts would cost Missouri 10,130 jobs and more than $737 million in economic activity.
In the end, what the state is doing, says Ku of the Center on Budget and Policy Priorities, "is cutting into services that people very much need."
People like Quincy Boyd, a 62-year-old food service worker in St. Louis. Boyd works in a large state residential center for the mentally retarded and developmentally disabled, carrying food to the cottages and helping with kitchen cleanup.
A full-time state employee, Boyd has state-sponsored health insurance. But when he was diagnosed with prostate cancer, his policy didn’t come close to covering the cost of the operation or the follow-up treatment. He was operated on through a free cancer-surgery program at a state hospital, and Medicaid picked up the costs of his follow-up doctor visits and treatments. Boyd qualified through a Medicaid temporary assistance program that’s slated to be eliminated under Blunt’s plan.
"I paid and paid for my insurance, and when I needed it, it wasn’t enough," Boyd says. "I bring home about $900 a month, and I sure didn’t have the money to pay for that operation [and the other treatment] myself. Without Medicaid, I’d be sitting here with cancer. But here I am, back at work, and blessed with good health."
Boyd needs follow-up tests for another year. But if his program is cut, he says, he won’t be able to afford them.
"There are 961 employees here," Boyd says, pointing out a window at the huge institutional campus. "A lot of them need Medicaid because they just don’t make enough money. These cuts are going to hurt a lot of people—more people than you know."
In fact, one of Blunt’s proposed cuts would terminate payments that provide medical equipment—wheelchairs, walkers, crutches and prosthetic limbs, for example—to several hundred thousand older and disabled Missourians.
But the 34-year-old Blunt—dubbed "Baby Blunt" (his father is majority whip in the U.S. House of Representatives)—recently told reporters that even after all the cuts, "15 percent of the people in Missouri will be on Medicaid. That is a very generous social-welfare program."
While Blunt has vowed not to raise taxes, a number of states are not only cutting people and services from Medicaid but also are looking for fresh ways to raise revenue and control costs. Mississippi, for example, is fighting over a legislative plan to raise the state’s tobacco tax to help pay for Medicaid, and Florida’s Gov. Jeb Bush is floating a proposal to privatize Medicaid in his state by enrolling beneficiaries in managed health care plans. In Wisconsin and Ohio, lawmakers are considering expanding home- and community-based Medicaid programs to reduce the number of residents entering expensive nursing homes.
Clearly, states are already on the front lines of the Medicaid budget battle, and the prospect of being left on the field with fewer federal dollars, as Bush has proposed, alarms even many Republican governors. With more people moving into Medicaid and health care costs still rising at twice the rate of inflation, Arkansas Gov. Mike Huckabee, a Republican, says that it’s unrealistic to think that states can "meet not just the needs but the absolute demands of Medicaid, and do it with less money."
Congress is now split on the issue and looking for a compromise: the House voted for steep cuts to the program while the Senate voted against cuts to Medicaid. But whether people are on Medicaid or forced off, their health needs won’t go away simply because they join the growing ranks of America’s uninsured (now 46 million). That means states will be faced with caring for larger numbers of the uninsured, without federal Medicaid money, in costlier hospitals and local clinics.
"You take out a piece here and a piece there," says Brenda Benedict, who will lose her job and apartment if her Medicaid program is cut, "and you forget that this jigsaw puzzle is people. We’re the pieces."
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