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Busting Budgets And Relieving Suffering: The Case Of MedicaidMedicaid, the so-called sleeper component of the Social Security Act of 1965, has clearly come of age in Washington and state capitals as a program of very large proportions. Medicaid has eclipsed its more popular counterpart, Medicare, with respect to the number of people each program covers and the public revenues they spend each year to finance the coverage of their eligible beneficiaries. Enrollment in Medicaid has risen from four million in 1966 to forty-seven million in 2002. The latter figure represents far fewer children and nonelderly adults than are now eligible to receive services under this federal-state program. Over this long time span, Medicaid expenditures (federal, state, and in a few jurisdictions county) grew from $400 million to an estimated $257 billion last year. With many states facing fiscal shortfalls, Medicaid is once vulnerable to budget cutbacks, placing millions of its beneficiaries in jeopardy. In the absence of Medicaid, in all likelihood, the number of uninsured people would increase sharply, because most of its beneficiaries have no alternative source of coverage. The most enduring story about Medicaid is how, despite all of its shortcomings, it has evolved from a welfare program benefit to a vast health care program for a diverse population of people in need. This issue of Health Affairs is largely dedicated to an examination of the current tumultuous state of Medicaid. Over its history, Medicaid has been in an almost constant state of change. With Republicans newly in control of Congress and the Bush administration also strengthened by the election results of November 2002, there is a strong likelihood that change will continue, although its direction may be different. With Medicaid imperiled in many states, the administration, given its strong belief in federalism, fiscal prudence, and flexibility, may seek to give states even greater leeway to set their own courses. In 2001, as a first step, President Bush announced creation of the Health Insurance Flexibility and Accountability (HIFA) initiative. Under waivers and state plan amendments proposed by a dozen or more jurisdictions and approved by the Department of Health and Human Services (HHS), states have increased Medicaid eligibility to an estimated two million people. The three model waivers introduced by the administration seek to improve services for low-income families, senior citizens, and people with disabilities by connecting them to a medical home, emphasizing greater continuity of care, and creating new opportunities for independent living, all on a basis of budget-neutrality. Cindy Mann, the former director of the Family and Children’s Health Program Group at the Center for Medicaid and State Operations, Centers for Medicare and Medicaid Services (CMS), writes about the administration’s initiative in this issue. In our opening paper, Alan Weil asserts that Medicaid, despite its detractors, has demonstrated itself to be the best among few options for addressing a multitude of health problems. But he also notes that while states largely protected Medicaid from sharp budget reductions in 2002, its financial future in 2003 and beyond is less certain. Larry Brown and Michael Sparer see in Medicaid a dim but promising picture of broadening, if not universal, coverage through incrementalism, innovation, and further experimentation with managed care. Because Medicaid has grown so large, as Donald Boyd points out, states make policy choices about it in relation to their broader fiscal environment. And Robert Hurley and Stephen Somers discuss the perils and promises that hold for states that rely on managed care plans to deliver Medicaid services. We owe a special debt to Hurley, who took on the challenging task of serving as the initial reviewer of all of the papers considered for this issue. After his examination, all of the papers, including his own, were subjected to the scrutiny of at least two external reviewers. Following on, Bruce Vladeck discusses the large but poorly recognized role that Medicaid plays in providing services to people that are disabled. Richard Frank, Howard Goldman, and Michael Hogan dissect the relationship between Medicaid and mental health care. And Diane Rowland and James Tallon, who have presided over the Kaiser Commission on Medicaid and the Uninsured, cite the lessons they have learned over the past decade. In addition, Jeff Goldsmith contributes an illuminating interview of Oregon’s outgoing governor, John Kitzhaber, and Katie Levit and colleagues at the CMS report on the latest trends in U.S. health care spending as documented by the National Health Accounts. We gratefully acknowledge the support of the Robert Wood Johnson Foundation, which helped to make publication of this issue possible.
Founding Editor
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