Will Congress Take the Year Off?

Federal Medicaid funding, intergovernmental transfers (IGTs) for Medicaid funding at the state level and other state initiatives, tort reform, and long-term care financing using private insurance: These are all on Congress’s plate. The main course, though, is the 2004 general election. LTC’s issues just might go cold and eventually get dumped, until a new Congress can take them up in 2005.

Reviewing the prospects for these issues one by one:

Federal Medicaid Funding
This year’s congressional session led off with a bang, with the Senate adopting a budget resolution that would have lopped off $11 billion in federal Medicaid funding during the next five years. That was soon withdrawn. However, the House of Representatives went on to pass a $2.2 billion five-year cut by a narrow 215-212 margin. At press time, a House/Senate conference committee had yet to address this, but the prospects for federal matching funds remaining at current levels was very much in question. The proposed cuts were serious enough at a time when three successive BDO Seidman studies sponsored by the American Health Care Association (AHCA) showed Medicaid “shortfalls” throughout the states amounting, at last count in fiscal ’02, to $4.1 billion. This summer, though, stands to see another major Medicaid hit when a $10 billion add-on Congress passed last year that increased the federal match by about 3%, and is generally credited with relieving much of the fiscal pressure on nursing homes, expires.

Long-term care lobbyists interviewed for this article seemed less than sanguine about the prospects for any turnaround this year. “An extension of that $10 billion looks to be an uphill battle,” said John Schaeffler, AHCA’s vice-president of legislative affairs, but added, “We’re working hard on this and expect to see legislation introduced to extend the add-on.” Barbara Gay, director of information for the American Association of Homes and Services for the Aging’s advocacy group, agrees it will be a struggle. “With a deficit amounting to more than $500 billion, Congress is looking for ways to cut spending,” she noted.

Intergovernmental Transfers
Closely tied to the increasingly wobbly status of the federal Medicaid match is the practice whereby many states have taxed providers of Medicaid services and applied the extra cost to raising the federal match-the peculiar IGT that has been lambasted as (pick one): (1) a rip-off by cash-strapped states raising money for non-Medicaid purposes, (2) unfair to privately supported facilities that pay the tax but don’t get the Medicaid benefits, and/or (3) a “back-door approach” to national health insurance, often by conservative politicians denying it every step of the way. According to Gay, “Concern about IGTs, especially after a General Accounting Office report criticizing their use for non-Medicaid purposes, may have been behind the Senate’s proposed $11 billion cut.” Meanwhile, legislation aimed at allowing states to waiver privately funded facilities from the process seemed stalled at press time. The Bush administration-no friend of IGTs-is trying to wean states off them with its block grant proposal. “As of now,” said Gay, “there are states that are planning their budgets on the assumption that both the add-on and, possibly, the IGT will be lost.”

All of these federal plans and programs pose serious consequences for the states.

State Initiatives
States such as Iowa, Montana, Pennsylvania, and Tennessee have all been cited by AHCA as announcing drastic consequences for their nursing homes under current federal policies. Coming off a fiscal year in which 33 states were actually able to increase rates for nursing home care (according to the Kaiser Commission), prospects this year are looking decidedly gloomier. Medicaid outlays continue to grow at about three times the population growth, according to Kaiser, and the National Governors Association (NGA) has noted that elimination of the $10 billion add-on alone will further increase states’ Medicaid obligations by 15 to 20%. The Kaiser survey indicated that states have been experimenting with various attempts at controlling Medicaid costs across the board: prescription drug controls, disease management and chronic illness initiatives, healthcare savings accounts within Medicaid, “cash and counseling” demonstrations (fixed contributions to qualified individuals to plan their own care), and even monthly premiums and copayments. Recently, a South Dakota healthcare commission evaluating the “state of the state” narrowed down a list of 30 possible areas to study-and LTC, particularly nursing homes, was among the “final four.”

The much-ballyhooed “alternative” to nursing homes, home- and community-based services, may not be working as advertised, at least as a cost-saving device. A report from New Mexico, for example, noted that a “personal care option” program the state anticipated would cost about $10 million actually cost $200 million and was the state’s fastest growing Medicaid component. “The ‘personal care option’ approach is very likely to see an explosion of costs,” noted Matt Salo, the director of NGA’s Health and Human Services Committee, “because they don’t have the controls of more targeted waivers. We think home- and community-based is absolutely the way to go.” AAHSA’s Gay added, however, “Nursing homes do provide a lot of services that are not healthcare, and for home- and community-based to work, those services have to be available. But funding from the Older Americans Act, the Social Services block grant, and senior housing programs has been frozen for years.” AHCA’s Schaeffler said, “Everyone supports the concept of providing care in the most appropriate site, but people in Washington are starting to look a little deeper at home- and community-based in terms of cost and quality assurance. Those questions are being asked.”

Perhaps the bright light in all this is the aggressive interest in long-term care shown by the NGA under chairman Gov. Dirk Kempthorne (R-Idaho). Kempthorne vowed last year that his chairmanship would be focused on LTC issues, with nationally televised forums and “best practices” investigations of such topics as financial planning, disease management and prevention, community-based care, and technological innovation. Earlier this year the NGA released a report on healthy aging and ways that state governments can contribute to this. In short, the future, if not the immediate future, begins to look more hopeful.

Tort Reform
A summing up of this issue, as it applies to long-term care, can be short and sweet: It’s going nowhere. Even though the Bush administration has taken a pro-LTC industry stand on this, the physician sector of healthcare has generated the most activity, in terms of floor votes, but has yet to achieve anything. “You need 60 votes,” said Schaeffler, pointing to the Senate, “and we just don’t have them.”

Long-Term Care Financing-Private Insurance
Earlier this year Sen. Larry Craig (R-Idaho) introduced the year’s most significant piece of LTC financing legislation-seemingly minor legislative adjustments that expand the power of states to enter into partnerships with private insurers to cover LTC costs (see “The Power of Seven Well-Chosen Words” [View on Washington], Nursing Homes/Long Term Care Management, April 2004, p. 18). This would revive a once-promising experiment that ran afoul of congressional opposition with only four such partnerships in effect a little more than ten years ago. Though the concept and LTC insurance policies have more acceptance now, Schaeffler said, “Absent a major legislative vehicle to attach this to, like last year’s Medicare prescription bill, we’re pretty much left to exploring the idea this year. Its chances are better next year.” Along with legislation introduced last year by Reps. Nancy Johnson (R-Conn.) and Earl Pomeroy (D-N.D.), which would allow financing of LTC premiums with above-the-line tax deductions and other incentives, the Craig bill will likely languish in Congress’s election year hopper (a misnomer, if ever there was one).

In fact, 2004 may turn out to be one of the quietest years on record, from the standpoint of LTC legislative innovation. With Congress distracted by other issues and the major presidential candidates uttering broad platitudes at best (see, for example, “John Kerry: Absent on Healthcare?” [View on Washington], Nursing Homes/Long Term Care Management, March 2004, p. 14), nursing homes had better get ready for some tough going. “In the meantime,” said Schaeffler, “our job is to keep reminding everyone that long-term care funding stability is a prerequisite if we expect to continue to see improvements in care quality.”

Some LTC lobbyists predict, hopefully, that next year things will be seen in a different light. And, with enough protesting and complaining and voting for responsive people this year, maybe LTC insiders can make that light shine strong and true.