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Control costs of Medicaid

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Finding the money to pay for Medicaid — health coverage for the neediest population — has become a chronic problem with the economic downturn, and without more realistic planning the situation is likely to reach a flash point in coming years.

Mustering the political will to deal with it is the issue, and that’s a commodity in short supply, too. Again this year, Hawaii had to delay reimbursements to providers in Med-QUEST, its Medicaid program. Those payments, $90 million for each month, will go to providers in July.

This kind of fiscal shuffle can’t go on forever. Tough decisions about how much Medicaid benefits we can afford need to be made, sooner rather than later.

Concern about Medicaid ratcheted up a few notches last week when a supplemental allotment for a program known as Federal Medical Assistance Percentages (FMAP) seemed in jeopardy. Congress, facing significant fiscal pushback from Republicans and Blue Dog Democrats, is looking for ways to curb spending. The $24 billion, six-month extension of FMAP funds looked like a likely victim of the current rally for budget-cutting.

Here’s the problem: As many as 30 states have counted on this extension coming through, some more urgently than others. Hawaii is one of the affected states, but its budget for the coming year includes no such allotment in its revenue. However, it does figure into the longer-range, six-year financial plan, which will have to be reconfigured if the extension doesn’t make it through.

But even if it does, all the states can only afford the slightest sigh of relief, said Lillian Koller, director of the state Department of Human Services, the agency that handles Medicaid benefits. Koller cited a report by the National Governors Association that projects a difficult fiscal 2011 and a slow recovery. Heading into 2012, no state will be able to assume fat tax coffers to support Medicaid without the extra federal help.

On top of that, the demand for services will only increase, as unemployment pushes more people toward the margins of poverty. The federal government will be constrained in how much it can help states, with the aging baby boomer generation becoming an increasing draw on Uncle Sam.

States are barred by federal regulations from narrowing the eligibility for Medicaid; lowering reimbursements to providers is likely to drive doctors to refuse to accept these patients, making medical access a real crisis.

This leaves the benefits themselves as the remaining area where cost control is possible. There should be a way to moderately reduce the benefit — through numbers of doctor visits, procedures covered or other means — without denying essential health care to Medicaid patients.

Despite the inevitable uproar over such an unpopular step, the next governor and the next Legislature will need to take a hard look at what kind of Medicaid program Hawaii can afford for the long term. This state has taken seriously its obligation to care for its neediest residents, but a system that is economically unsustainable will begin to fail in that duty, even as the needs increase.


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