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Medicaid Expansion Update

December 1998

Health care reform has re-emerged as a serious issue in Washington, DC. The spread of managed care has brought with it a multitude of horror stories about denial of medically necessary services, difficulty seeing the doctor you choose and getting the medicine and diagnostic tests you need. Even among those who have not experienced denial of care, the fear of one day being faced with it is high.

Before the current impeachment debate, Washington was rushing to embrace the consumer concern over regulation of managed care that, according to a recent TIME/CNN poll, ranks third on the public's priority list for Congressional action. Patient protection bills, which would ensure a broad array of rights to individuals covered under managed care, were introduced in both houses of Congress. President Clinton vowed to pass legislation that would protect the more than 150 million Americans in managed care. Although it is unlikely anything will move before the next session of Congress, managed care reform will hopefully be taken up again in January 1999. There is no question the outcome of these health care reform measures will be important for people living with HIV/AIDS. They should be monitored and fought for at the federal level.

While discussion of health care reform in DC is an important first step in addressing insured patient rights, it does absolutely nothing to help people without insurance. The number of uninsured Americans is over 43 million and lack of health care among this growing group is not being addressed in the current debate. Perhaps the most vulnerable are the uninsured living with chronic or life-threatening illness. One nationwide study showed that approximately 30% of HIV-positive people are uninsured and this is likely to increase in coming years. Another significant group of individuals is the underinsured, - people who only get a portion of the care they need (e.g. health care visits, but not prescription drugs) covered by third-party payers. Many, if not most, uninsured and underinsured Americans who are working but do not receive benefits from their employer and can't afford to purchase them.

In an attempt to begin to address this gap for people living with HIV, there are various proposals to expand Medicaid to include low- income people living with HIV. Medicaid is a joint federal and state safety net health care delivery program designed for low income individuals. However, to get Medicaid, people living with HIV have to qualify both by income and through the Social Security definition of disability. Social Security uses the Centers for Disease Control and Prevention's definition of AIDS along with evidence of functional impairment as proof of disability. In other words, under the current system, an HIV-positive person who can't afford health care insurance has to get sick before he or she can access the health care that might have prevented sickness in the first place.

This is obviously bad health policy and it ends up costing more money for the health care system. It is more expensive to treat someone with a serious illness than it is to try to prevent it. This public health strategy is particularly devastating given that new HIV infections are rising among groups that have been traditionally underserved. Women, youth, people of color, low income individuals and injection drug users have significantly less access to comprehensive health care. Many people newly infected with HIV will eventually be eligible for Medicaid but only after they get sick enough to meet the disability requirements. If proposed reforms moved forward, broadening eligibility for Medicaid to all low-income people with HIV, regardless of health status, everyone would benefit.

As research and discussion continues on the optimal treatment for HIV, one fact of medical care remains constant: the sooner an HIV-positive person knows his or her status and seeks quality medical care, the better the expected outcome. Regardless of whether an individual chooses to start therapy, monitoring the disease and establishing a strong patient/provider relationship is essential. People without comprehensive and supportive medical care have much less chance of benefiting from the full promise of HIV treatments. Programs have been established in an attempt to fill gaps in care for people with HIV, however, they remain a patchwork of services that are more comprehensive in some areas, less in others and often times underfunded.

The History

The original proposal to expand Medicaid to people living with HIV was put forward in 1997 by community advocates. Driven by the availability of more effective treatments, advocates believed that, in addition to being a humane thing to do, earlier treatment would reduce costs of treating opportunistic infections and hospital care. Therefore, it would be possible to serve more people.

Medicaid expansion at the federal level would ensure states provided more equal benefits to people living with HIV. Because Medicaid is a joint federal/state program, each state would have the opportunity to create its own program but it would have to be based, at a minimum, on federal criteria for eligibility and benefits.

Vice President Gore endorsed the Medicaid expansion proposal early in 1997 as a humane and cost effective way to deliver more effective HIV treatments to low income people. Gore requested a study to assess the possibility of expanding Medicaid. Although it is not law, it has been the Clinton administration policy that changes to Medicaid programs must be "budget neutral," meaning they can't cost the federal government additional money.

In late November of 1997, the Health Care Financing Administration (HCFA) presented cost estimates that showed significant overall increases in the cost for Medicaid expansion. Many advocates felt that the numbers presented were too high. Others felt that trying to prove cost neutrality within the Medicaid program in the prescribed time wasn't a reasonable way to determine if expansion was feasible and cost effective. If cost was to be a primary factor, advocates felt there are potential savings outside of the Medicaid system that could be included in the analysis. These might include savings on disability benefits, reductions in other government safety net programs, and taxes on the wages of those who are able to continue working because of maintained good health. The Clinton administration, however, appeared to be backing away from the proposal even before the cost figures were released. The discussion of expansion at the federal level slowed despite advocates' best efforts.

State Expansion

Several states, however, began exploring the possibility of expansion. A state can implement a Medicaid expansion at any time as long as it meets federal requirements, including cost neutrality and approval by HCFA. Maine, Massachusetts, Florida, Wisconsin, Colorado and now Texas are all exploring this possibility. Maine and Massachusetts are probably the furthest along in the process, with Maine expecting to submit a plan by the end of 1998. By all accounts, HCFA appears to be receptive to state efforts.

There are a number of factors states must consider in developing expansion programs:

Eligibility: States make the decision as to who will be eligible for the program. Medicaid generally has several criteria for eligibility, including income, assets and sometimes health status. Income eligibility is important because even people making above $20,000 annually may find themselves impoverished by medical expenses associated with HIV disease. Additionally, income level is one determinate of how many people will qualify and, therefore, an important consideration in overall program cost. Medicaid normally requires that people have less than about $2,000 in assets to qualify, excluding a home and car. Asset requirements will be an important point to consider if one of the objectives of expanding Medicaid is an attempt to keep people working and self-sufficient. People should be able to accumulate more than $2,000 in assets and still qualify for services. States may also want to look at medical criteria that would be in accordance with federal guidelines for HIV disease care, such as CD4+ counts of 500 or less or elevated viral load. However, medical criteria for determining eligibility for Medicaid may not be in the best interest of the patients because standards of care can change fairly quickly, causing the need for an official change in eligibility or inappropriate exclusion of certain individuals.

Benefits: The scope of benefits the plan will offer is another point of consideration. Maine is looking at a limited benefit through its plan, including primary care and medications. Massachusetts is considering a broader, more standard Medicaid plan. A standard plan is comprised of a range of services, including mental health benefits, home health care, etc.

Service Delivery: Medicaid services are delivered through a mix of managed care and traditional fee for service models. The role of managed care in any Medicaid expansion proposal needs to be thought through carefully. Managed care may have benefits and drawbacks as well as different cost structures. For further information on managed care and people with HIV, call the PI hotline for the managed care discussion paper.

Community Input: Every state currently planning an expansion program stressed the importance of constructive community involvement. Community advocates and potential consumers are able to bring real life experience to the planning process. Planning for a Medicaid expansion is a collaborative process and is probably best approached by working with rather than against Medicaid and other state departments that will have the responsibility of implementing the program.

Legislative Requirements: In addition to the development of the plan and the waiver (documentation outlining the plan that must be submitted to HCFA for any Medicaid expansion), states may need to request legislative authority to submit and/or implement the waiver. For example, in Colorado, a waiver proposal must go through the legislature, an action made more complex as Colorado has instituted term limits. Newly elected legislators may have less familiarity with HIV/AIDS issues.

Costs: Perhaps the biggest hurdle for Medicaid expansion is proving cost neutrality. The obvious benefits of providing health care and treatment to low-income HIV-positive individuals should be enough to move the proposal. However, it seems unlikely, given the Clinton administration's commitment to balancing the budget, that proposals which can't prove neutrality within five years will be seriously considered. Encouraging law makers to consider the cost savings impact on other state and federal programs may be key to leveling the debate around cost impact of Medicaid expansion.

This doesn't appear to be an impossible task. There are significant cost effectiveness data, much of which appeared at the International Conference on AIDS in Geneva this year. Reductions in care costs associated with highly active antiretroviral therapy (HAART) were reported in the areas of hospital stays, diagnostic costs for opportunistic infections, treatment for opportunistic infections and skilled home nursing care. Even when increased drug costs were added, there were overall reductions in the cost of HIV care.

The question that needs to be addressed for Medicaid expansion is how the reduction in the cost of care relates to the cost of serving increased numbers of people. A study authored by James G. Kahn and B. Haile at University of California San Francisco and S.W. Chang at Kaiser Family Foundation found that the expansion of the US Medicaid system could not only significantly delay thousands of deaths and AIDS diagnoses but is also affordable. It relied on reduced costs not only in Medicaid but in other programs as well, including ADAP (AIDS Drug Assistance Program), Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). It also relies on a small reduction in HIV drug prices to the Medicaid system. The study concluded that over a five year period there would be 11,400 fewer AIDS diagnoses and 4,200 fewer deaths if Medicaid was expanded nationwide. Moreover, another project -- the Treatment Access Expansion Project -- is looking at creating an interactive software program that would allow a cost/ benefit analysis of Medicaid expansion across several social service programs and is working on attaching a cost to productive years lost if expansion were not to happen. These efforts bode well for helping to justify Medicaid expansion at the federal and state level.

Next Steps

Although the action on Medicaid expansion from the Clinton administration has been disappointing, there is some continued federal effort. Rep. Nancy Pelosi gathered 68 signatures from members of the House of Representatives on a Dear Colleague Letter (a Congressional member's sign-on letter) asking Donna Shalala, Secretary of Health and Human Services, to reconsider Medicaid expansion, given the new cost efficacy data. Representative Pelosi and others worked to include directions in the federal 1999 budget that encourage HCFA to provide technical assistance and evaluation to states developing expansion plans. Additionally 7 signers of the Dear Colleague Letter also wrote to President Clinton asking him to expand Medicaid for low income people living with HIV and at a minimum to include it in his budget request for Fiscal Year (FY) 2000. Moreover, the Supreme Court recently ruled that a woman living with HIV disease was covered under the Americans with Disabilities Act (ADA)--legislation prohibiting discrimination against people with disabilities. Many hope the ruling will lend even more weight to proposals ensuring medical coverage to low income people with HIV.

Meanwhile, some states continue to move forward. Many of those states are working with the Kaiser Family Foundation to develop appropriate cost modeling, share information and receive assistance on their waiver process. Other states, including California, have begun feasibility discussions.

Although there are hurdles ahead for Medicaid expansion, now is the time to move forward. Developing mechanisms for people to access comprehensive care should improve the general health of people living with HIV, create opportunities for education regarding prevention of HIV disease and decrease overall rates of progression to an AIDS diagnosis. It may also decrease the number of lives lost to HIV disease. Moreover, it should decrease costs to other government programs. It may allow people with HIV disease to continue working for longer periods of time, contribute to overall productivity of the nation and ultimately the tax base. Medicaid expansion for people with HIV could also be an important model for filling a gap in US health care coverage for, at a bare minimum, all those who are most vulnerable to health care problems.

Back to the Project Inform Perspective December 1998 contents page.

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