EDITORIAL: Medicaid rule change threatens coverage

Feb. 14--Medicaid -- the federal health care program for low-income Americans known in Oregon as the Oregon Health Plan -- faces a threat from a rule change proposed by the Trump administration that would eliminate complex financing arrangements that states use to pay their share of Medicaid costs. Administration officials insist they only want more "transparency, integrity and clarity," and want to examine what one official has called "shady" financing schemes that drive up taxpayer costs.

What's "shady" is the quiet way the Centers for Medicare and Medicaid Services (CMS) proposed a new fiscal accountability rule, apparently without any idea what the consequences might be.

The nation's governors are warning that consequences could be severe.

Oregon Gov. Kate Brown, a Democrat, and Massachusetts Gov. Charlie Baker, a Republican, wrote a letter on behalf of the National Governors Association officially commenting on the proposal. Their letter warns the changes would threaten access to health care for millions of Americans.

That's especially true in Oregon and other states that accepted the expansion of Medicaid under the Affordable Care Act, which extended Medicaid coverage to include many low-income adults as well as pregnant women, newborns, elderly nursing home residents and people with severe disabilities. Patrick Allen, director of the Oregon Health Authority, says the federal proposal would jeopardize coverage for 300,000 Oregonians who gained coverage in the expansion, and threaten prescription benefits, mental health services and dental care for 1 million children and adults in the program.

Nationally, one in five Americans is covered by Medicaid; in Oregon, it's one in four.

The federal government pays 60% of the cost of Medicaid; states pick up the rest, and they rely on a variety of funding mechanisms that allow them to leverage federal matching funds and expand the coverage they can offer their residents. In Oregon, the state's share amounts to about 24% of the state budget.

Among those are "provider taxes" on hospitals, nursing homes and insurance companies that get invested back into Medicaid. The providers generally support these taxes because they wind up getting more revenue back in payments on behalf of patients than they put in.

Also targeted in the proposal are payments from local governments to a state that also help leverage federal matching dollars, along with supplemental payments to hospitals that treat large numbers of low-income patients.

The Trump administration, which has tried to repeal the Obama-era expansion of Medicaid, says it will review 4,000 comments it received on the proposal before a final decision. CMS says the cost of the proposal is "unknown," but it disputes the results of a study done on behalf of the American Hospital Association that predicted $37 billion to $49 billion in cuts to Medicaid (6% to 8% of the program), and cuts in payments to hospitals of 17%.

An agency that says in its own proposal that it doesn't know the cost has no business dismissing anyone else's estimates.

At a minimum, the administration should go back to the drawing board and conduct a full study of the ramifications of its proposed rules before proceeding, something it apparently has not done. Other interested groups, including the American Medical Association, have called for the administration to withdraw the proposal entirely. That would be even better. Until the administration or Congress or both come up with a better system than the one we have, it makes no sense to dismantle a program that provides health coverage to more than 70 million people.

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