Arizona – A Cautionary Tale

On February 1, as part of his proposed budget, Governor Cuomo announced his plan to cut Medicaid by billions. He hopes to use the cuts to help close New York’s $10 billion deficit without raising any taxes.1 The Governor created a Medicaid Redesign Team, including state officials, members of the New York State Assembly and Senate, health care industry leaders, insurance experts, and business and consumer leaders to create proposals to reform the State’s Medicaid program. Nonprofit groups, patient advocates, and Medicaid recipients were concerned the Team’s proposals could have detrimental effects on New York’s most vulnerable populations. Now that the proposals have been released, we find the nonprofits, advocates, and patients’ worries were not unfounded.

Medicaid provides health care coverage for the many people throughout the nation who cannot afford it. It protects people with disabilities, pregnant women, children, families with small children, and the elderly. Many New Yorkers rely on Medicaid for health care; as of 2007, Medicaid covered 26 percent of New Yorkers.2 Cuts to Medicaid can put New York’s most vulnerable citizens at risk.

Medicaid programs are state-run and jointly funded by the state and the federal government. The federal government requires states to provide certain services to receive federal Medicaid funding and other services that are “optional.” Although the term “optional” makes some coverage seem less important or not vital, it is misleading―a hard lesson we learned in Arizona.

On October 1, 2010 Arizona’s Medicaid Program stopped covering lung transplants, liver transplants for patients with hepatitis C, and certain bone marrow and pancreas transplants.3 Under federal law these are “optional” services,4 however, there is nothing optional about transplants for the people who will die without them.

The State made the cuts to help close a $2.6 billion shortfall in its budget,5 but the savings barely made a dent in the State’s budget gap. According to the legislative liaison of Arizona’s Medicaid Agency, the cuts saved the State only $800,000 for the remainder of the fiscal year and $1.4 million for an entire year.6

To make matters worse, the State’s legislature may have made their decision based on incomplete and misleading data. For example, they relied on a report from State health officials that claimed at most only one of fourteen patients who had a bone marrow transplant through the state’s Medicaid program lived longer than six months after the procedure. However, national studies indicate that approximately 40 percent of patients survive. People with hepatitis C who receive liver transplants have an even higher rate of survival―over 80 percent for one year and 60 percent for five years.7 The cuts removed about 100 people from the transplant list; as of January 6th, two of them had died.8

Aside from outright not covering services for patients, a state can cut payments to Medicaid providers. This can have a serious affect on the nonprofit health care sector. As of 2003, over 60 percent of hospitals in the United States were nonprofits9 and there are many nonprofit groups besides hospitals that provide health services. Since many community-based human services are funded with Medicaid (avoiding more costly institutional care), Medicaid spending on human services actually saves State taxpayers’ money. By definition, nonprofits do not have a profit margin to buffer and absorb cuts. Decreasing Medicaid payments to nonprofit groups can seriously undermine their ability to help patients.

New York faces a huge challenge balancing its budget; however, it is imperative we learn from Arizona. Governor Cuomo took an important step in this process by convening a team including experts and stakeholders in Medicaid to review possible reforms, and the Redesign Team did make several good proposals; for example, establishing supportive housing to avoid placing seniors in nursing homes and automating the Medicaid eligibility process.

But the team also put forward several proposals that could have dangerous consequences― for example, setting thresholds for the number of visits per year to Behavioral Health Clinics, which provide mental health and substance abuse services. If the number of visits exceeds the lower threshold, patients or health care providers will be expected to absorb the additional costs of medically necessary treatment. Also, the team suggested limiting physical therapy, occupational therapy and speech therapy to 20 visits per year (not including children with developmental disabilities). Expecting low-income individuals or health care providers to absorb part of the costs or flat out limiting visits means people might not get the standard of care they need or will be discouraged (or unable for financial reasons) from seeking treatment.

The New York State legislature has one month to deliberate on whether or not to adopt the Redesign Team’s recommendations. New York politicians must understand cuts to Medicaid will affect many people including those with disabilities, pregnant women, children, families, and the elderly. Just because a service is “optional” under federal law doesn’t mean it won’t make a world of difference to a patient or even save lives. And state cuts that affect providers can’t be easily absorbed without affecting patients. Medicaid cuts can kill.

Contributed by Michaela Hyams
of the Human Services Council of NYC

1 http://www.governor.ny.gov/press/020111transformationplan
2http://www.nysaaaa.org/News20Headlines/2010/Reports/CitizensBudgetCommissionRpt%20-%20Lewin%20Group%20-%202010.pdf
3 http://www.nytimes.com/2010/12/03/us/03transplant.html?_r=2
4 http://www.nytimes.com/2010/12/03/us/03transplant.html?_r=2
5 http://www.nytimes.com/2010/12/05/us/05transplant.html
6 http://www.nytimes.com/2010/12/05/us/05transplant.html
7 http://www.nytimes.com/2010/12/19/us/19transplant.html
8 http://www.cbsnews.com/stories/2011/01/06/eveningnews/main7220629.shtml
9 http://www.gao.gov/new.items/d05743t.pdf

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About Human Services Council

The Human Services Council strengthens New York's nonprofit human services sector, ensuring all New Yorkers across diverse neighborhoods, cultures, and generations reach their full potential.
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