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When it comes to health policy, whether it’s delivered by states or the money and rules trickle down from the federal government, there is near consensus among conservatives, moderates, and liberals — the health care system, as directed by government, is weighted down with complexity. This revelation is being embraced, in one form or another, and the whiff of change is in the air.
Keeping it simple isn’t an option; making it simple is. It’s the reasoning behind the decision by Tommy Thompson, Health and Human Services secretary, who went from fighting Wisconsin’s battles with Washington to serving as a general for what was the opposition, to spend a week in Baltimore to gaze into the heart of the rulemaking beast — the Health Care Financing Administra-tion. He knew what he would find before he arrived. The agency he says America loves to hate is freighted with "excess regulations and responsibilities without the resources to do the job effectively."
In the next few months, Mr. Thompson plans to take his philosophy on the road to the other mammoth federal health care bureaucracies — the Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health. If he finds a way to cut red tape, the effects will be felt all down the line to the state houses and Main Street in many small towns. No one is predicting when change could come. But when and if it does, it will join the tide of change that has marked Medicaid and Medicare since their creation in the mid-1960s.
Welfare reform of the 1990s is only the recent, largest wave of change. "The character of Medicaid has changed dramatically. The de-linking of Medicaid and welfare was on the way before the law changed because there were so many kids on Medicaid and not on welfare," Vernon Smith, a principal with Health Management Associates in Lansing, MI, tells State Health Watch. "Now states have more latitude to simplify. It takes time."
Mr. Smith is one of the authors of Eliminating the Medicaid Asset Test for Families: A Review of State Experiences, published recently by the Kaiser Commission on Medicaid and the Uninsured in Washington, DC. Smith and company eyeballed nine states and the District of Columbia when they stopped conducting asset tests in July 2000. After talking to state officials, he found that the change streamlined the eligibility process, saved administrations money, and made enrollment more accessible for families that needed it.
Here are some blurbs from state officials gushing over the change:
• "[It] was an important part of a package of changes that resulted in saving because the process took less paper and less time." — Missouri
• "It has paid off in worker attitude and in potential applicants who view the process like enrolling in commercial insurance." — Oklahoma
The states involved were:
• New Mexico;
• Rhode Island.
The experience of those states and the nation’s capital has been that eliminating the asset test streamlines the eligibility determination process, allowed them to adopt automated eligibility determination systems, improves the productivity of eligibility workers, and makes enrollment a friendlier more accessible process for families.
The downside: There continues to be some concern that dropping the test would cause state budgets to increase.
In 1996, when the federal government introduced welfare reform, it allowed states freedom to change Medicaid eligibility rules. The asset test, which counts the resources of families such as savings accounts and automobiles, was a standard part of the paperwork of determining eligibility. The states generally each have a different set of similar rules, but nine took the plunge by July 2000 by saying, "This is one round of paperwork we can do without."
Two states, Pennsylvania and Massachusetts, eliminated Medicaid asset tests for all family cases before welfare reform. Ohio dropped the Medicaid asset test for adults in families. Oklahoma, Missouri, and Washington, DC, dropped the tests when they implemented the Children’s Health Insurance Program, and from 1998 to 2000, the remainder dropped the tests for parents. Arizona, Connecticut, Illinois, New Jersey, and South Carolina are considering following suit.
The participating states and the district had similar experiences. The asset test for families had been difficult to administer and had only a tiny effect on limiting eligibility. Families found locating bank statements, insurance policies, and other documentation a hurdle to enrolling. Then, if all the documentation was gathered, the state had to review everything, resulting in what these states agreed was a cumbersome burden on administrative workers — a face-to-face interview would have to be conducted, and then all paperwork would have to be confirmed with banks and insurance companies. It all cost too much money and time. Even if the process were completed, officials said there were only a small number of denials for Medicaid.
The states, in their quest to eliminate the asset test, pursued the change administratively, through public hearings and then a change in the amendment governing Medicaid. In Massachusetts, officials wanted a study showing there would be a savings to the program. In New Mexico, officials were worried that applicants who happened to own large amounts of property would become eligible; they found those applicants to be in tiny numbers. If administrative workers didn’t have to review the asset test, then the states found they could install automated eligibility systems. Staff efficiency rose with the test’s elimination.
According to the study, families benefited, too. Applications became shorter. In Missouri, the application went from 22 pages to two, and in Oklahoma, from 12 to two. There was less stigma associated with applying, too, as these states focussed on providing "health care" not "welfare," making signing up more enticing for those needing help.
"If you go back to the mid-’80s, the proportion of the Medicaid caseload not on welfare was around 15%," Mr. Smith says.
"Now there are more people on Medicaid not on welfare than there are on welfare. This is a dramatic change. The de-linking of Medicaid and welfare was on the way before the federal government changed the laws because there were so many kids on Medicaid and not on welfare. Now the states have more latitude to simplify," he adds.
(For a copy of Eliminating the Medicaid Asset Test for Families: A Review of State Experiences, go to www.kff.org/content/2001/2239/.)