Medicare Compliance & Reimbursement

Medicaid threatened by decline in employer coverage for lower-income workers

Even as states and the federal government complain that Medicaid costs are overstraining their budgets, the percentage of Americans who have no insurance at all continues to rise.

As in the past, this year's Bush administration budget proposes measures in and out of Medicaid that the White House believes would lower rates of uninsurance, but Congress hasn't enacted similar proposals that the administration has proposed in the past.

With the human consequences of uninsurance felt most at the state and local level, Washington's inaction has left states scrambling for means to expand coverage at low cost. Finding mechanisms to do so has been uphill work.

Medicaid covers 53 million Americans, and its current troubles stem more from swelling enrollment than from rising costs. At the same time, Medicaid expansions have been one of the main means pushed by both state and federal lawmakers to slow rising uninsurance rates among working people.

Several states have obtained federal waivers to add some members of this population - mostly children and their parents - to Medicaid rolls, offering slimmed-down benefits. But allowing endless seepage of uninsured people onto Medicaid won't work in the long run, said National Governors Association Executive Director Ray Scheppach at a Feb. 18 reporters' briefing sponsored by the Robert Wood Johnson Foundation and the Alliance for Health Reform.

It's "actually beginning to scare me" that, in "the period 2001 to 2003, ... employers pulled out, particularly, from providing healthcare to low-income people quite dramatically," said Scheppach. "It went from 67 percent to 63 percent. That happens to be the same amount that public programs grew."

It's not a one-time recessionary thing, as some argue, Scheppach said. "The restructuring of the economy continues, because we're service oriented, and more small businesses don't provide health care. And now you've got the large industrial firms being hit in the international marketplace. You add all that together, and I suspect you're going to see wholesale withdrawal of employer-sponsored health care for those people under 200 percent of poverty."

That long-term trend spells trouble for states, said Scheppach. Medicaid "is the only safety net available, and therefore everybody falls on that."

The discussion of Medicaid that Washington hopes to start in earnest this year must deal with that new economic reality, Scheppach said. "We always focus on Medicaid reform, or how do we create a more efficient program, and I'm fine with that. ... But we really need to go on two tracks. We need to find other policies ... for the low-income people."

As state worry grows about both Medicare costs and rising uninsurance rates, governors are likely to push Washington harder for help in addressing the uninsured problem. [...]