Pennsylvania Department of Public Welfare Secretary Gary Alexander recently spoke on the topic “The Medicaid reform dilemma: What should states do next?” before the American Enterprise Institute (a conservative think tank). The video is available online. If you want to listen to Secretary Alexander's remarks they start at about 29 minutes in. Here is the link:
Some highlights from the Secretary's remarks (his views, my paraphrasing):
- DPW currently struggles with millionaire lottery winners who are on Medicaid but it can’t do anything about it because of the maintenance of effort provisions of the Affordable Care Act.
- The intent and fundamental purpose of Medicaid and Welfare is to move poorer people out of poverty.
- DPW is the largest state health and human services in the country: 17,000 employees and a budget of almost $30 billion.
- In PA we could save over a billion dollars a year by directing patients to lower cost but high quality care settings.
- Recipients on welfare need to move out of poverty to achieve the American dream. But welfare is failing – it is a trap instead of a safety net.
- The Pennsylvania Welfare Department’s spending is growing much more quickly than its revenues. Medicaid enrollment in PA is up over 100% over the last 33 years while the population has only grown at 7.2%.
- PA recently imposed an asset test on the SNAP (food stamp program) because it found that there were many people with an abundance of assets coming onto public programs. These programs were designed to kick in only when people exhaust their assets, so PA imposed an asset test.
- Today we have only 2.5 workers for every person on welfare. It’s the takers vs. the makers out there. We need to change the dynamic if we are going to have a safety net for those who are truly vulnerable and disabled.
- Medicaid is a safety net for those seniors who are truly destitute – it’s not for those seniors who are middle income or upper income and transfer their assets.
- The Rhode Island (RI) solution – a global Medicaid waiver – RI got a capped allotment of funds over 5 years. This is the closest we have gotten to a Medicaid block grant. What was most amazing in RI was the culture change that took place when the waiver was in place. It changed the incentives. Unfortunately, some of the flexibility – the ability to do health savings accounts - was revoked by the next administration. Medicaid and cash assistance programs in RI are expected to run a $30 million surplus this year – that would be equivalent to $400 million in surplus if it were PA.
- Solutions moving forward:
- Give states maximum flexibility. Freedom from federal rules will save 10%. PA has run financial models and estimates a savings of 7% to 16%. If we capped Medicaid growth at a generous 4% per year the federal government would save $771 billion over 10 years and total program savings including the states would be $1.3 trillion.
- Some things we can do right now:
o We can do things with waivers – the RI global waiver is an example. Using block grant waivers it is possible to save $1.8 trillion in federal and state funds over 10 years. Waivers don’t have to go through Congress – so you can avoid the gridlock.
o Give states a mega-block grant of all means tested programs including housing – Secretary Alexander estimates that in PA this would save $129 billion over 10 years. This can be done without hurting anyone – and still serving the neediest populations. We can solve our fiscal dilemma and meet our real goal – which is helping people out of poverty.
- In terms of Secretary Alexander's take on Republican states' reactions to the Affordable Care Act post the Supreme Court decision:
- Pennsylvania is looking at its data currently to see where we want to go.
- If a state is to say yes to Medicaid expansion they are going to be looking for concessions: for example - impose real work requirements around those who can go to work, impose greater cost sharing, utilize premium assistance, impose more personal responsibility. We need a maintenance of effort provision placed on individuals rather than states.