States tailor Medicaid to meet individual needs

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Medicaid is being redefined throughout the country. Some states are cutting or eliminating the federal health insurance program for the poor, while others are expanding it to reach previously uninsured populations.

Last week, the Missouri Senate passed legislation that would move the state's Medicaid patients into three health plans, two of which would be administered by managed-care companies. The new benefit packages would replace the state's existing Medicaid program by 2013.

Missouri is taking advantage of new federal rules, which took effect last year, that allow states to modify their Medicaid programs on their own rather than through the burdensome process of petitioning the federal government for approval.

For the first time since the Medicaid program began in 1965, states have the ability to take their Medicaid programs from a one-size-fits-all system to a customized format that offers specific benefits to certain populations based on age and health conditions.

So far, four states -- Idaho, Kentucky, Missouri and West Virginia -- are employing the new rights to implement Medicaid reforms. In each state, Medicaid recipients are taken out of traditional Medicaid and grouped into benefits packages based on eligibility requirements. Proponents say the new Medicaid arrangement will improve public health by allowing states to target medical services to the neediest populations.

States are taking their Medicaid programs down divergent paths as they realize the federal government won't stand in the way of reform.

While overhauls in Idaho, Kentucky, Missouri and West Virginia are placing more restrictions on Medicaid services, states such as California and Massachusetts are widening their eligibility rules.

Critics warn the new flexibility will undo Medicaid.

"The new federal rules call into question the meaning of health coverage," said Rachel Klein, deputy director of health policy at Families USA. "Will people be able to get health coverage when they need it?"

Missouri's plan to reform its Medicaid program began in 2005, when spending cuts forced more than 100,000 residents out of Medicaid. Budget cuts also prompted Medicaid reform in Kentucky.

"We were facing a $700 million budget shortfall," said Mark Birdwhistell, secretary of the Kentucky Cabinet for Health and Family Services. "Everyone realized something had to be done and everyone was going to have to give up a little bit and some people will pay more in copayments."

Mr. Birdwhistell says the new system can save the state $1 billion over the next seven years.

Kentucky is enrolling pregnant women and parents, foster children and medically fragile children in one benefits package, dubbed Global Choices. It is one of four packages that supplants the old Kentucky Medicaid system. Patients enrolled in the benefit will receive basic medical services, not including long-term care, but will pay higher copayments than under the old Medicaid system.

Unique in West Virginia, Medicaid recipients will be required to sign an agreement stipulating that they will show up on time to doctors appointments and take the correct dosages of their prescription drugs or be relegated to a benefit package that offers lesser services than the state's old Medicaid system.

"This is using the stick more than the carrot approach. It's used more than we are used to seeing," said Joy Wilson, health policy director for the National Conference of State Legislatures.

As economic conditions have strengthened around the country, some states are using the extra funds to expand the program to cover more uninsured people. Unexpected revenue growth in 2006 led 15 states to kick in additional funds for their Medicaid programs.

Massachusetts sparked national interest by using Medicaid as a foundation for expanding public health coverage when it passed legislation last year requiring people to obtain health insurance. Many states already were working on some form of expanded health coverage, such as Vermont, Illinois and Maine, that expanded Medicaid programs. Now California and Pennsylvania are attempting to use Medicaid to expand health insurance, much like Massachusetts.

"States that are using Medicaid to broaden health care coverage are using it as a foundation to build upon for low-income people, which frees up other ways to make insurance more affordable," said Diane Rowland, executive vice president of the Kaiser Family Foundation, a nonprofit health care research firm in the District.