Error processing SSI file
Exclusive Report
Medicaid tab saps Michigan
"It's getting more frustrating trying to get the services I need and the help my daughter needs," says Betty Counts, with her 45-year-old mentally and physically handicapped daughter, Yvette, at her home on Detroit's northwest side.
Carole Pearl, right, is an outspoken advocate for maintaining Medicaid funding. It helped pay for nursing home care for her mom, Helen Anderson, who died March 14 at age 88.
Comment on this story
LANSING — Michigan has begun to dramatically cut critical watchdog services — ranging from child care and adult foster care licensing to food inspections and liquor control — to cope with a growing financial monster: Medicaid, the state’s massive health care insurance plan for 1.35 million poor people.
Even as Michigan’s tax revenues fell the past four years, Medicaid caseloads shot up 27 percent and costs spiraled up 40 percent. The state now spends a quarter of its general fund on Medicaid coverage — and more than $7 billion annually overall.
Virtually all other state programs are under increasing pressure. Spending for higher education is down 14 percent since 2002, resulting in comparable tuition hikes. Payments to local governments have been slashed by 15 percent since 2001, leading to layoffs of police, shorter library hours, fewer road projects and reductions in numerous other municipal services.
A Detroit News examination of employment records shows state staff cuts have hampered oversight and regulation of child care and adult foster care licensing, food inspection, state park management and other key programs and services.
Something must be done — urgently — to limit Medicaid’s growth and bolster other services, experts agree. And that might mean limiting eligibility for one of the nation’s central anti-poverty programs.
“We’re spending way too much on indigent health care. It’s bankrupting the state,” said Jack Danko, a laid-off auto worker from Grosse Pointe Park.
“If you ask the average person whether the state should provide indigent health care, they’d probably say yes. But the question has now become, would you rather have indigent health care or adequate funding for your children’s school? Would you rather have indigent health care or decent roads to drive on? Would you rather have health care for the poor or keep dangerous criminals in prison? It’s out of control.”
The financial toll is eye-popping. Throughout the nation, Medicaid has strained state coffers as it has mushroomed into the largest health care plan in the country. In Michigan, Medicaid covers more than one-third of births and 70 percent of nursing home costs in the state.
“The stock market, tax cuts, prison spending, the sluggish economy and Medicaid have all contributed to the state deficit. But Medicaid is the elephant in the room,” said Stuart Paterson, a senior research associate for the Citizens Research Council of Michigan and former state Medicaid director.
One example shows the scale of the problem: The $48 million the state pays each year for just two Medicaid prescription drugs that lower stomach acid and cholesterol levels equals the total state spending at Oakland University, or the combined budgets for the state Attorney General’s Office and departments of civil rights and civil service.
Virtually all of the $400 million in tax increases Gov. Jennifer Granholm has proposed on cigarettes, liquor and inherited estates are earmarked to close a yawning hole in Medicaid. Yet another $200 million shortfall is projected for this year’s state budget, and half of that is because of the mounting Medicaid caseload.
The problem will only get dramatically worse in the near future, when the first wave of the baby boomers approaches old age and requires more health care and nursing home care.
“This is unsustainable,” said Paul Reinhart, who directs the state Medicaid program. “There is recognition that something must be done.”
Some services cut
The state nibbled at the edges of the problem last year, cutting some Medicaid services, such as dental care, podiatry, hearing aids and chiropractic programs for adults. Those services were recently added back into the budget by a Senate subcommittee, although senators provided no funding mechanism for the $27 million expense. Another proposal to cut $13 million in home help services for patients who can’t do their own laundry, grocery shopping or house cleaning has been put on hold.
Other states have made far more substantial cuts. Texas reduced coverage for pregnant women. Oregon and Oklahoma eliminated Medicaid for residents whose income is barely above poverty level but yet have high medical costs.
Those kinds of solutions are not being considered in Michigan. Granholm said her reading of the sentiment of state residents is that it’s a priority to provide health care for low-income people with disabilities, seniors, children and pregnant women.
“I am determined to live up to those priorities,” Granholm said in an interview. “I’m not willing to just lop 200,000 people completely off of health care. I think that we have an obligation as a society to protect the vulnerable.”
But Granholm acknowledged that if she can’t convince the Legislature to go along with her “sin tax” proposals, the state will need to make deep and painful cuts in Medicaid.
“Then you will have more and more people without health care and fewer critical services provided,” she said. “People will have to make choices about whether they want to provide health care for seniors and children or whether they want to provide prison space for violent inmates, or funding for schools, or police protection for local communities.”
The 200,000 recipients at risk are mainly children in families who are marginally above the $15,000-a-year household income level set by the federal government for mandatory Medicaid services.
Cuts in Medicaid impact people like Betty Counts, who takes care of her 45-year-old mentally and physically handicapped daughter, Yvette, at her home on Detroit’s northwest side. The elimination of some services for adults last year forced her to forgo visits to the dentist. Limits on prescription drugs have made it tougher for her to get the medicine her daughter needs. And low Medicaid reimbursement rates have made it more difficult for Counts to find a doctor who sees Medicaid patients, she says.
“It’s getting more frustrating trying to get the services I need and the help my daughter needs,” said Counts, who works part-time with mentally challenged children. “Some of the money for medicines and dental care have to come out of our pockets, and it’s very expensive.”
Cases, costs multiply
Medicaid started out as part of President Lyndon Johnson’s Great Society plan in the mid-1960s. Michigan’s program was launched in 1967 at an initial cost of about $67 million for 220,000 low-income people. The idea was that the federal government and the states would split the cost 50-50 — unlike the Medicare program, which is 100 percent federally funded and is exclusively for senior citizens regardless of income.
At the time, no one anticipated the enormous growth in caseloads and expense. In Michigan, the number of Medicaid recipients has increased 95 percent since 1972.
Among the reasons for the unabated growth: Expanded eligibility rules that brought more uninsured families under the Medicaid umbrella and widened coverage of services to include prescription drugs; long-term nursing care; mental health services and screening; and diagnosis and treatment for babies and youngsters.
Medicaid has become the primary source of funding for long-term care, picking up 70 percent of the tab in Michigan at a cost of $1.7 billion. The money is not only going to the poor. Lawyers have figured out how to transfer the patient’s assets to other family members so the long-term care will be paid by Medicaid.
Michigan’s Medicaid costs have climbed sharply in the past few years, largely because the limping economy drove up unemployment rates and welfare caseloads.
Also, the federal government is peeling back a special Medicaid financing deal, a move that will affect Michigan more than most states because Michigan was aggressive in pursuing the extra federal help under Gov. John Engler. The state will lose $150 million in each of the next two years as that program is phased out.
On top of that, a Medicaid relief package that accompanied President Bush’s tax-cut program ends in July, meaning another $168 million cutback in federal funds.
“The Medicaid shortfall in this budget (for the year starting Oct. 1) is $500 million,” said Sen. Tony Stamas, R-Midland, who chairs the Senate panel that deals with Medicaid spending. “I’m convinced the vast majority of these services go to those who really have a need. More than 70 percent is spent on the elderly, disabled and blind.”
Other programs suffer
The state’s Medicaid burden is shortchanging other state programs.
Asked if the recent cuts in higher education and revenue sharing for local governments and reductions in regulatory staff could have been avoided if not for the sprawling Medicaid program, Granholm said: “Yes. It’s a zero-sum game, there’s no doubt about it.”
As Medicaid expenses ballooned 40 percent since 2000, the state was compelled to shed about 8,000 employees from its payroll through early retirement and hiring freezes. That’s 13 percent of a work force that now stands at 53,500.
State oversight and regulatory functions are among the areas affected. A review of staffing trends shows substantial reductions in recent years in adult foster care licensing workers (43 percent reduction since 2000); child day care licensing (30 percent reduction since 2000); food inspectors (cut by 22 percent since 1994); dairy inspectors (cut by 28 percent since 1996); and liquor control enforcement staff (25 percent cut since 1995).
Carol Quarterman, director of the Child Care Coordinating Council of Detroit/Wayne County, said she couldn’t immediately point to any horror stories linked to the reduction in child care regulatory staff. But she said the staff cuts have meant the regulators, who are seen as experts in their field, have no time to serve as consultants to help improve services at child care facilities.
“The licensing people used to help our child care operators beyond just investigating complaints,” Quarterman said. “They would help with staff development, curriculum, arranging play areas ... now they have larger caseloads and no time for these kinds of services.”
You can reach Mark Hornbeck at (517) 371-3660 or mhornbeck@detnews.com.
Copyright © 2004
The Detroit News.
Use of this site indicates your agreement to the Terms of Service (updated 12/19/2002).