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Representative Ro Foege
Report from the Iowa Legislature
February 1, 2004
Medicaid Savings Fall Short
Anyone reading this article is aware of the rapid increases in the cost of medical care, particularly in hospital and pharmaceutical costs. The Medicaid program is no different. Medicaid should not be confused with Medicare, which is solely a federal program of health services for all persons over the age of 65. Although more than sixty percent of total costs are paid by the federal government, the state administers Medicaid and provides about forty percent of the
cost.
Iowa is not alone in dealing with funding the escalating costs of Medicaid. States around the country are implementing various cost containment strategies. Many are discontinuing optional services or eliminating optional groups from coverage. Some are even cutting back their children’s health insurance program, comparable to our HAWK-I program.
A controversial Medicaid cost containment bill was passed in the Iowa House last year after long and contentious debate. And now, adding to the state’s ongoing budget woes, last year’s Medicaid cost containment legislation is now estimated to save the state only about $18 million instead of the $46 million savings originally estimated.
Last year, with medical inflation approaching double digits, the work group of which I was a member, crafted a projected $46 million package of cost containment. As the Democrat appointed to the work group, I spent many hours last year working with the Republican leadership on developing strategies to contain the rapidly increasing cost of Medicaid. The goal of the work group was savings and accountability for the taxpayer without loss of accessibility to health care for eligible seniors, families, and children.
Although I had worked long and hard on the cost containment bill, I could not vote for it when it came time for passage. Some of us had attempted to spread the pain of the reductions by taking a portion from both providers and consumers. When the final version of the bill was presented, the heaviest hit was on community pharmacists. Under the plan, pharmacists in Iowa will lose nearly $5 million per year in fees.
Medicaid costs are notoriously difficult to predict because the program is defined by federal guidelines as an “entitlement,” which means that it cannot be limited by cost. The demand for Medicaid increases in a slumping economy. For instance, people who are laid off when cutbacks in the labor force take place or when a plant closes, and lose their health insurance benefits, may have to depend on Medicaid to provide health care services, particularly if they are then hit with a major illness. More Iowans are turning to Medicaid because they lack health insurance, and Iowa has a growing number of senior citizens.
The $46 million in cuts never materialized. Some of the components are so complicated that they take months to implement. Other more preventive measures will not have an impact on the budget for several years to come. One such provision that I supported establishes a chronic disease management program. We know that diseases such as asthma, diabetes, or depression can be effectively managed, and, when properly managed, people with these conditions can avoid expensive emergency room visits or hospitalizations. However, we will not realize cost savings for a number of years from this part of the bill.
Fortunately, last year’s federal budget bill provided states with one-time bonus Medicaid funds. Iowa received a $47 million windfall, and the Iowa Department of Human Services has been able to use these bonus funds to balance the Medicaid budget without yet having to come back to the Legislature in search of supplemental funding.
This problem will not go away. I will continue to work with other members of the legislature to assure accessible health care for all vulnerable Iowans.
You can write me at the State Capitol, Des
Moines, IA 50319; call 515/281-7328 or e-mail me at
ro.foege@legis.state.ia.us.
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