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Will Congress Take the Year Off?

May 1, 2004
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As the first election-year salvos are fired, Congress must either take a stand on long-term care or run for cover by Richard L. Peck, Editor-in-Chief

BY RICHARD L. PECK, EDITOR-IN-CHIEF
It's not as though the needs have gone away, it's just that if long-term care is looking for any help from Washington with the many serious issues pressing upon it, this could be one disappointing year.

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 That was soon withdrawn.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."

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