Lawmakers Explore New Ways To Fund Medicaid

12/30/10 7:34AM By Nina Keck
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(Host) Controlling rising Medicaid costs may be one of the toughest hurdles for Vermont officials struggling with the state's budget.

As VPR's Nina Keck reports, lawmakers and hospital administrators say Vermont has to find new ways to fund Medicaid if services are to continue.

(Keck) Five years ago, providing health care to low-income Vermonters cost about $900 million.  This year it will cost almost $1.4 billion. And with the current economic situation driving up demand, it'll cost even more next year.

(Larson) "It's probably the single biggest financial challenge that we face on an ongoing basis.  It just consumes budgets."

(Keck) That's Mark Larson, vice chair of the House Appropriations Committee and co-chair of the state's Health Care Reform Commission.

(Larson) "Sometimes, critics of our Medicaid program would say that we cover too many people and we're too generous. So we should cut back."

(Keck) But he says it's not so simple.  Because Medicaid is funded by state and federal dollars, certain segments of the population must be covered.   

Larson says it's those groups - typically the very young and very old with severe disabilities - and poor elderly who are near death - that are the most expensive. 

Cutting others in the program, he says, won't really do much to lower the overall cost.  To save money, he says health care funding in general needs to be streamlined.

(Larson) "Because you have some people who are covered by Medicare, some people who are covered by Medicaid, some people who are covered by private insurance and some who are self-paying and others who are not covered at all. And it becomes a battle of who's paying, as opposed to trying to figure out how to get the most for what we pay."

(Keck) But as anyone who's watched the national debate over health care knows, restructuring something so complex will take time. Tom Huebner, head of Rutland Regional Medical Center, says with a projected $50 million hole in Medicaid funding expected next year, time is running out.

(Huebner) "The last few years the state has filled it by taxing hospitals and then using that tax to draw down money from the federal government."

(Keck) Huebner says this year, Vermont hospitals will pay $94 million in provider taxes. That money leverages an additional $169 million in federal matching funds. Huebner says almost 90 percent of that will come back to Vermont hospitals to pay for Medicaid patients. The rest, he says, will pay for other Medicaid programs, such as dental care and mental health services. It's a tax that Huebner says has worked well for almost 20 years.

(Huenber) "But the problem in the year ahead is by and large we've tapped out that tax. The federal government has limits on it and you can't go beyond a certain point.  And we're right at that point right now."    

(Keck) Bea Grouse is president of the Vermont Association of Hospitals and Health Systems.

(Grouse) "You know we're trying to fix the airplane while we're flying it, in a way."

(Keck) While President Obama's affordable health care act promises more federal funding for Medicaid, she says that money doesn't begin to flow until 2014.

(Grouse) "We have three more years to get through in what we believe will be a very challenging economy and we want to try to find a way to keep the house of cards standing until we can figure out a more sustainable way to pay for health care, deliver health care, make health care more efficient."

(Keck) Grouse and Huebner say spending cuts probably won't work because hospitals and doctors are already paid less than what their care costs. The hospitals suggest the money should come from new revenue sources, such as a 1 percent tax on managed care or insurance premiums.

Vermont lawmaker Mark Larson says everything will be on the table when it comes to Medicaid funding.   Besides cuts or new taxes, he says the state should also do more to promote smarter health care systems with electronic medical records and accountable care organizations

For VPR News, I'm Nina Keck.

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