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Will Medicaid become the path to universal coverage?
During the first term of the Bush administration, Medicaid costs were rising and states were battling to stay even, says Michael S. Sparer, PhD, JD, a professor of health policy at Columbia University's Mailman School of Public Health in New York City.
"But during the second half of the administration, you saw real battles," he adds.
Looking backward, Dr. Sparer notes that from the '60s to the mid-'80s, "Medicaid was a pretty lousy program for poor people, with low reimbursement, tremendous interstate variation, and minimal benefits. But in the late 1980s, Medicaid became what it is today: The most successful program for the uninsured in American history."
During the late '80s through the early '90s, Medicaid saw major expansion, including the State Children's Health Insurance Program in 1997, but things slowed down in the early 2000s. Beginning in 2005, a number of states began trying to expand their Medicaid programs again.
"For the first time in a long time, you had a real philosophical debate over the future of Medicaid," says Dr. Sparer. The Bush administration took the position that Medicaid had gone too far, was no longer just a program for poor people, and was increasingly covering low-wage workers and middle-class people.
"Bush really tried to cut back states' efforts to leverage federal dollars and expansions," he points out. "Then Obama comes in and very quickly made clear that he views Medicaid and SCHIP as an important part of the effort to help the uninsured. That is a 180-degree different perspective."
In addition to passing SCHIP authorization and helping states with the countercyclical financing of Medicaid, there also was talk of expanding Medicaid to cover the unemployed. "That was pulled out of the stimulus package because of Republican opposition," says Dr. Sparer. "But I think you will continue to see Medicaid expansion of a variety of sorts. The Obama administration views Medicaid as a means-tested health insurance program and publicly funded safety net, not just for the poor, but for the lower-wage worker as well."
Two parallel pressures
Dr. Sparer says going forward, there are going to be "two parallel tracks that are going along simultaneously." On the one hand, there is pressure to use Medicaid as a vehicle for aiding the uninsured, particularly in a time of rising unemployment.
"Medicaid as a vehicle for expanding access is clearly on the agenda," he says. "At the same time, there's a tremendous budgetary impact that leads to great pressure to cut costs. There's not a governor in the country that doesn't complain about the cost burdens that Medicaid imposes on their budget, even with the $87 billion coming in, and probably hasn't said at some point to his Medicaid director, 'Figure out how to save me some money in Medicaid.'"
This means that Medicaid directors are under tremendous pressure to simultaneously expand access and cut costs-a difficult position to be in. "I think the biggest challenge going forward is, 'How do you simultaneously use Medicaid as a vehicle to expand access to the uninsured while at the same time, not breaking the state budget?'" says Dr. Sparer.
"Medicaid started out as a welfare program, but that changed many years ago," says Neva Kaye, senior program director for the National Academy for State Health Policy. "The public's perception has taken a while to catch up to that. But as its role grows greater, there is a possibility that might change the public perception."
Could rising unemployment, making millions of additional Americans eligible for Medicaid benefits for the first time, fundamentally change how the public views the program? Dr. Sparer says it's just possible that it might.
"Medicaid is no longer just a program for poor people. That is clear," he says. "The $64 billion question is, does that mean the stigma that has arguably been attached to Medicaid will begin to fade away? I think that's possible."