Different Deficit Reduction Efforts, Same Result for Medicaid?

All Roads in Congress May Lead to Block Granting Medicaid

Congress is considering a number of different mechanisms that may result in cuts so large that the only option would be to block grant Medicaid. Under a block grant, Congress would give states a reduced, fixed amount of money and eliminate many of the requirements (such as who to cover and what services to provide). Block granting is the worst option for people with intellectual and developmental disabilities (I/DD) as it would fundamentally change the structure of the program, not just cut funding for it. The individual entitlement to health care and long term services and supports would be lost and the states’ entitlement to reimbursement for actual costs would be lost. This is why it is so important to hold Members of Congress accountable for their positions on each of the mechanisms described below.

What are Spending Caps?

One approach to deficit reduction that is being seriously considered is to impose spending caps or limits. These caps limit government spending, usually limiting it to a certain percentage of Gross Domestic Product (GDP). There is one proposal that would limit federal spending to 20.6% of GDP (spending is currently 24% of GDP). This figure is the average amount of federal spending compared to all goods and services produced by the country (or GDP) in the last 40 years (before spending on aging baby boomers, national security, and interest on the debt was significant). Congress is currently considering three types of caps:

  • A global spending cap (for all federal spending);
  • An entitlement spending cap (for Medicare, Medicaid, and Social Security spending); and
  • A global health spending cap (for Medicaid, Medicare, and Affordable Care Act spending).

What happens if federal spending exceeds the spending caps?

There would be an enforcement mechanism of automatic, across‐the‐board spending cuts (called “sequestration”) if the spending limits or targets were expected to be missed. Low income programs, such as Medicaid and Social Security, would not be exempted. To bring federal spending back in line with the proposed spending caps or targets, Congress would be forced to make drastic cuts in entitlement programs. Those cuts would most likely have to include block grants for the Medicaid program.

What Legislation is Congress considering that might include spending caps?

There a currently two main efforts in Congress that are expected to involve spending caps. The first, a measure to increase the debt ceiling, is by far the most serious threat, as the U.S. is close to reaching a point of default on its financial obligations. The second, a balanced budget amendment, may or may not advance.

  1. Raising the Debt Ceiling. The U.S. debt reached the limit of $14.3 trillion allowed by law in mid‐May. However, the Treasury Secretary is able to manage accounts without defaulting until about August 2. If federal borrowing authority is not increased by August 2, the U.S. will begin defaulting on its debt, triggering a catastrophic global financial crisis. Some Members of Congress have stated that they will vote to raise the debt ceiling ONLY IF major cuts in federal spending are included. While no specific programs and amounts have yet been made public, Medicaid is widely expected to be a major target.
  2. Balanced Budget Amendment. Unlike the constitutions of most states, the U.S. Constitution does not actually require the Congress to pass a balanced budget. Some Members of Congress are looking to add a balanced budget amendment to ensure that the federal government does not spend more than it takes in, including no borrowing authority. If this were to happen, most federal spending would be radically reduced, including Medicaid.

Questions and Answers on Potential Medicaid Cuts

Q. What is happening in Washington?

A. There are many proposals being discussed in Washington to balance the budget. What these proposals have in common is that Medicaid spending would be dramatically cut in a short period of time. These proposals are:

  • Block Granting Medicaid, which would give states a fixed amount of money for health care and long term services and would likely remove requirements (such as eligibility and service minimums and quality measures) for how the states spend the money.
  • Spending Caps, with automatic enforcement, would set a limit on federal spending that is well below current spending and would likely result in a Medicaid block grant. Automatic enforcement mechanisms mean that, if a spending target is not met, cuts are made automatically without the need for further Congressional action.

In addition, Vice President Biden is leading a small group of six Members of Congress who are trying to find a way to cut the deficit. This group is working behind the scenes, and very little information about their negotiations is being made public. They are expected to reach an agreement allowing Congress to raise the debt ceiling by August 2.

What we do know is that cuts to Medicaid are on the table in all of these proposals, and that harsh fact alone requires us to act! Time is short.

Q. What happens if any of these proposals become law?

A. The cuts under any of the proposals for spending caps and automatic enforcement would be so drastic that a block grant would be the result for the Medicaid program (even if Congress does not immediately consider a straightforward proposal to block grant the program itself).

Q. What is the problem with block granting Medicaid?

A. One major problem is that the costs do not go away, but would be shifted to already cash-strapped states. If states do not make up for the federal cuts (the federal government pays 50 percent or more of the costs of every state’s Medicaid program), the costs would shift again, to individuals and their families, to health care providers, to other federal programs or to local governments.

  • There would be no more guarantees of health care services and waiting lists would grow even longer.
  • The block grant would likely have few rules and states would be free to change eligibility, cut services, and manage their programs with very little federal oversight.
  • We believe that block grants would force bad choices and cause real conflict as groups with diverse needs compete for scarce dollars.

Q. What “bad choices” might states make?

A. Since the services to people with disabilities and the elderly are significantly more costly than health care coverage for children, states could decide to serve fewer seniors and people with disabilities and focus scarce health care dollars on children. Here are some possible choices states might be forced to make:

  • Loss of home and community-based services (HCBS) and supports. Nearly 600,000 people with intellectual and/or developmental disabilities (I/DD) receive long term services paid for by Medicaid, and most receive them at home. States could decide to stop providing these services or limit the number of people who could get them, increasing waiting lists.
  • Move people back to institutions. With fewer requirements, people with I/DD may be forced back into institutions rather than community living. Under a block grant, rules for providing quality care could be more flexible and conditions in institutions could return to the way they were in the past.
  • Tightening of eligibility for services. To be eligible for Medicaid, people have to fall under certain income levels. States could restrict health care services to only the very, very poor.
  • More out of pocket costs for individuals and families. In order to get health care, people might have to pay more out of their own pockets. Since people using Medicaid have limited income resources to start with, requiring them to pay for their medical care or long term services and supports could be a significant barrier to care.
  • Reduction or elimination of critical services. If funds become scarcer, states may decide to reduce or stop providing basic services, such as personal care, prescription drugs, rehabilitative services, or home and community based waiver programs.
  • Less availability of doctors and providers for care. It is already very difficult for people using Medicaid to find doctors and other health care providers willing to accept the low payment rates, particularly specialists. If states cut the amount they pay doctors and other providers, those professionals may quit serving people under Medicaid, making access to care even more difficult to secure.

Tell Your Members of Congress – Don’t Cut Our Lifeline!

If we don’t speak up now, Medicaid and other programs critical to people with intellectual and/or developmental disabilities (I/DD) may take the brunt of the cuts. Members of Congress are very reluctant to cut Medicare, as the elderly community is a very reliable voting constituency and they are very vocal advocates. Historically, Social Security is considered the “third rail” in politics, and as such, not to be touched. That leaves Medicaid on the table as a prime target for cuts.

How can we make Congress understand why Medicaid is so important?
We have to personalize the importance of protecting Medicaid for people with I/DD. Advocates need to do the following:

1) Call your Senators or Member of the House of Representatives
Call the Capitol Switchboard to reach your Members of Congress: 202-224-3121. Also, be sure to sign up for our Action Alerts, and act quickly when we send them!

2) Make an Appointment with your Elected Officials
Call your elected officials for an appointment to discuss what Medicaid means to you. Find out when your Member of the House of Representatives will be home from Washington, and call his or her district office to make an appointment. Stress with the scheduler that you know that budget cuts could come up for a vote this summer, and you want your voice to be heard!

3) Attend a Town Hall Meeting
When Members of Congress are back in their districts, they often hold town hall meetings. Call their district offices to find out when the next meeting is so that you can attend and share your story directly with your Representative.

4) Invite your Senators and Representative to your local chapter of The Arc.
Invite them to join you at places or events where they will be able to meet with people with disabilities who depend heavily on Medicaid. For example, invite them to a supported housing setting or apartment supported by your chapter(s). Seeing firsthand the people who depend on Medicaid-funded long-term services and supports can have a powerful effect on Members of Congress and can help to dispel many of the unfortunate misperceptions about the program (for example, that it serves people who don’t really need it). If possible, invite them to a chapter event that’s happening during the recess where they may meet and talk with people who depend on Medicaid for services.

5) Write a Letter to the Editor
Local newspapers will print letters from local residents on timely topics. Sharing your personal story about how Medicaid is your lifeline to health care and long term services and supports will help people understand why we must maintain the program.

6) Use Social Media to Spread the Word
Facebook and Twitter are often the first source of news for your friends and family. Use your online network to ask them to get involved in this fight!

The Arc Commends Senator Franken’s Commitment to Protecting Medicaid

WASHINGTON, DC – The Arc is commending Senator Al Franken of Minnesota for pledging to protect the federal Medicaid program. Senator Franken met recently with leaders and members from The Arc Minnesota and with families who benefit from programs provided by Hammer, a disability service provider in Wayzata, Minnesota. Invoking the late Senator Hubert Humphrey, Franken said, “Who we are as a society both in Minnesota and across this country is defined by how we treat the most vulnerable. The kind of state Minnesotans want to live in is one that supports our citizens with disabilities. I will fight cuts to Medicaid that don’t protect these essential services.”

Medicaid is the primary source of health care coverage for people with intellectual and developmental disabilities (I/DD), providing them medical care, dental care, physical therapy, and assistive devices like wheelchairs, among others. Medicaid currently covers 60 million low-income Americans including nearly 30 million low-income children, 15 million adults and 8 million non-elderly people with disabilities. The program is being threatened by cuts proposed by some in Congress.

“Medicaid is the lifeline to the community for people with intellectual and developmental disabilities,” said Marty Ford, Public Policy Director for The Arc. “We cannot tolerate the kinds of cuts to Medicaid being proposed by the U.S. House of Representatives. We are very worried these cuts would return people with disabilities to institutions, which unacceptably segregate people and are generally more expensive. We have fought hard for many decades to get people with disabilities out of these institutions; we don’t want to go back.”

The House of Representatives passed a budget plan, known as the Ryan Plan after its author, Congressman Paul Ryan of Wisconsin, in April that cuts programs for people with intellectual and developmental disabilities. The bill includes drastic cuts and changes to:

  • Medicaid: Cuts $750 billion over 10 years and ends Medicaid as a guaranteed benefit by turning it into a “block grant” that leaves cash-strapped states to fill in the funding gaps with very little oversight.
  • Medicare: Replaces Medicare with a voucher program for younger beneficiaries that will certainly provide less than the current system.
  • Discretionary Programs: Eliminates, over time, most federal government programs outside of health care, Social Security, and defense as the cuts are so deep.
  • Health Care Reform: Repeals and defunds the Affordable Care Act.

Pat Mellenthin, Chief Executive Officer of The Arc Minnesota expressed gratitude for Senator Franken’s support. “We thank Senator Franken for his willingness to be a champion for people with disabilities by protecting Medicaid. The proposed cuts to Medicaid at the federal level are a double blow to people with disabilities, as they are already being targeted for drastic cuts in their services at the state level.”

Tim Nelson, CEO of Hammer and President of The Arc Minnesota, also praised the Senator’s commitment. “The services that we provide help people with disabilities be included in our communities and help them become contributing citizens. Cuts being proposed to Medicaid would pull people out of our communities and make them more isolated.” Hammer’s services are funded by a combination of state Medical Assistance and federal Medicaid dollars.

The Arc advocates for and serves people with I/DD, including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 700 chapters across the country promoting and protecting the human rights of people with I/DD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

The Arc Commends the U.S. Senate for Voting Down Disastrous Budget for People with Disabilities

WASHINGTON – Late yesterday, the U.S. Senate voted down a federal spending plan that could have disastrous consequences for people with intellectual and developmental disabilities (I/DD).  Leading up to the vote, The Arc, the nation’s largest and oldest human services organization for the I/DD community serving more than a million people with I/DD individuals and their families, opposed this legislation because it would cut $750 billion over 10 years out of Medicaid and end the program as a guaranteed benefit by turning it into a “block grant” that leaves cash-strapped states to fill in the funding gaps with very little oversight.

“The U.S. Senate’s vote put the brakes on a disastrous budget proposal for people with intellectual and developmental disabilities.  As Congress and the nation continue to debate how to promote economic recovery and tackle our deficit, it can’t be done on the backs of people with intellectual and developmental disabilities,” said Peter Berns, CEO of The Arc.

The House of Representatives passed this budget plan, known as the Ryan Plan after its author, Congressman Paul Ryan of Wisconsin, in April. The bill includes drastic cuts and changes to:

  • Medicaid: Cuts $750 billion over 10 years and ends Medicaid as a guaranteed benefit by turning it into a “block grant” that leaves cash-strapped states to fill in the funding gaps with very little oversight.
  • Medicare: Replaces Medicare with a voucher program for younger beneficiaries that will certainly provide less than the current system.
  • Discretionary Programs: Eliminates, over time, most federal government programs outside of health care, Social Security, and defense as the cuts are so deep.
  • Health Care Reform: Repeals and defunds the Affordable Care Act.

The $4.3 trillion from all of these cuts would be used to provide $4.2 trillion in tax cuts over 10 years without tackling the nation’s deficit.

For people with I/DD, these cuts would have a huge impact on their health and lives. People with I/DD could be denied health insurance coverage, home and community based services, supportive housing, job training, education, transportation, and other services. Medicaid currently funds 78% of services for individuals with I/DD.

President Obama Provides Clear Alternative on the Budget

Preserving Safety Net for Most Vulnerable, Not Tax Breaks for Millionaires

WASHINGTON, D.C. – The Arc’s Chief Executive Officer Peter V. Berns issued the following statement in response to President Obama’s George Washington University address:

“President Obama today reaffirmed his commitment to reducing the federal deficit while holding true to our most cherished American values.  We believe that the President’s plan to preserve our vital safety net programs – Medicare, Medicaid, and Social Security – is more balanced and fair than the plan advanced by the House Budget Committee. Instead of relying on cuts to vital programs for the most vulnerable Americans, the President is proposing to raise revenues by ending the unfair tax advantages enjoyed by the richest individuals and corporations in America and balancing the spending cuts.”

“We take heart in hearing the President’s frequent mention of people with disabilities in his speech.  This shows that he understands that the over 7 million Americans with intellectual and developmental disabilities will be among those most harmed by the House Budget plan to block grant Medicaid, end Medicare as we know it, repeal the Affordable Care Act, and decimate funding for housing, education, transportation and employment programs by making deep cuts over time. We appreciate the President’s call to stand for the rights of people with disabilities.”

The Arc to Congress – House Budget Plan for 2012 Will Wreak Havoc in Lives of People with Intellectual and Developmental Disabilities and their Families

Washington, DC – The Fiscal Year 2012 budget proposal released this week by House Budget Committee Chairman Paul Ryan (R-WI) , if adopted, would cause great harm to the more than 7 million people in the United States with intellectual and developmental disabilities (I/DD).  The plan would virtually eliminate federal funding for education, housing, job training, transportation, and other domestic spending.  Eliminating Medicaid and Medicare and replacing them with a block grant and vouchers threaten to wipe out much of the progress that people with ID/D have achieved over the last several decades. Our constituents could return to the widespread impoverishment, poor health, and isolation not seen since these entitlement programs were created in 1965.

“Under Chairman Ryan’s plan, people with I/DD can be denied health insurance and the services and supports they need to live and work in the community. There will be no guarantees of any assistance or support for people with intellectual disabilities who want to continue to live in their own homes, rather than institutions,” stated Peter V. Berns, Chief Executive Officer of The Arc.

Health Insurance.  Medicaid and Medicare are overwhelmingly the largest providers of health insurance for people with disabilities.  People with I/DD would no longer be entitled to Medicaid to pay for their health care services such as prescription drugs and doctor visits. Many people with I/DD cannot get medical insurance through the private market because: 1) they do not work full time and cannot obtain employer-sponsored coverage (only 21% of people with all disabilities are working); 2) they have pre-existing conditions and cannot find health insurers who will sell them policies; 3) if they can find insurers to sell them policies, the policies do not cover the services and products they need (or the coverage is exorbitantly expensive).  Under the House plan, both states and private insurers will be free to deny coverage and assistance to people with I/DD.

Long Term Services and Supports.  People with I/DD often require assistance with activities of daily living throughout their lifetimes, such as getting dressed, taking medication, preparing meals, and managing money.  Over 650,000 people with I/DD receive such long-term services paid for by Medicaid while living at home with their families, in other community-based settings, or in intermediate care facilities.  Under the House plan, states could be free to discontinue all of these services.

While there are numerous parts of the FY 2012 budget plan that are of grave concern, the proposal to block grant Medicaid is by far the most egregious.  Under a block grant system, states will be faced with the rising health care costs that result from population increases, outbreaks of diseases, and economic downturns or other circumstances.  Their only options will be to cut people off the Medicaid rolls, to eliminate necessary services, or to reduce provider payments. For people with I/DD, that means that they won’t be able to go to the doctor or obtain prescription medications they need.  Their very health and well being is at stake.  Block granting also creates a perverse incentive for states to return to the days where they warehoused people with disabilities in institutions to save money. States will no longer have to meet the quality standards currently imposed by the Medicaid program for community-based services or nursing homes.

The Arc appreciates the importance of reining in the federal deficit.  However, we believe that the budget cannot be balanced on the backs of our most vulnerable citizens.  There are far more thoughtful, effective and humane ways to accomplish this critical goal.  We know that providing home and community-based services is more cost effective and better for the individual than institutional care and we do not want to go backwards.  What is needed is to flip the system on its head and make home and community based services what is required and institutions the exception to the rule.

“The current situation is bad enough now, where people with I/DD literally wait 10 years or more to get Medicaid home and community based services.  Is Congress really just going to cut them off entirely from services that allow them to be included and participate in society like we all do?  What the House is proposing is just wrong!  It is that simple.” said Berns.

The Arc is the largest organization with a network of over 700 chapters across the country
for people with intellectual and developmental disabilities. The Arc promotes and protects
the human rights of people with intellectual and developmental disabilities and actively
supports their full inclusion and participation in the community throughout their lifetimes
and without regard to diagnosis.

The Arc and UCP Urge Congress to Implement the CLASS Act

Washington, D.C.  – The Arc and United Cerebral Palsy (UCP) restate their support for the Community Living Assistance Services and Supports (CLASS) program. Both The Arc and UCP worked hard to support passage of the CLASS Act and support full implementation of the program.

The CLASS program is a new long term care insurance program.  It is financed by voluntary payroll deductions and will provide a cash benefit for individuals with functional limitations. CLASS plan benefits can be used for personal care attendants, assistive technology, home accessibility modifications, and other supports and services that help people with disabilities to function in their daily lives.

UCP and The Arc support the CLASS program, in part, due to our concern that individuals and families should not be forced to impoverish themselves to cover the costs of services they or their family members need in the event of disability or advancing age.  Long-term services and supports can put enormous strain on both families as well as the federal-state Medicaid program.  Both organizations believe it is imperative that the hard-fought CLASS program be fully implemented.

Nearly half of all funding for long term services is now provided through Medicaid, which is a growing burden on states and requires individuals to become and remain poor to receive the help they need. There is also an institutional bias in Medicaid whereby approximately two-thirds of all spending is directed towards nursing homes and other institutions instead of preferred community-based services and supports.

The CLASS program is a national solution to a national problem. The plan should give consumers access to a broad array of support options, including a continuum of home and community-based supportive services. This new system will ultimately relieve pressure on Medicaid. The new system should promote independence and dignity across the lifespan by ensuring beneficiaries the right to control and choose what services they receive, how and where they are delivered, and who provides them.

We are pleased by the renewed attention to the CLASS program brought about by today’s hearing in the House Energy and Commerce Committee’s Health Subcommittee.  We urge members of Congress to ensure that the CLASS program is fully implemented as soon as possible so that the working public may begin to participate in the program and insure themselves against future need.

Home is in the Community

Most people with I/DD share the dream of living in the community in a home of their own.  For some, that dream may become a reality.

Earlier this week, Health and Human Services (HHS) Secretary Kathleen Sebelius announced that the federal government will dedicate billions of dollars to help individuals with disabilities access care in the community as opposed to institutions.

“There is more evidence than ever that people who need long-term care prefer to live in their own homes and communities whenever possible,” said Donald Berwick, administrator of the Centers for Medicare and Medicaid Services. “To restrict these individuals to institutions where even the simplest decisions of the day such as when to get up, what to eat and when to sleep are made by someone else must no longer be the norm.”

HHS is also proposing new rules to allow states to access additional federal Medicaid matching funds if they encourage individuals to live in a community setting, as opposed to a nursing home or other institutional setting.

Thirteen states are slated to receive about $45 million for demonstration grants this year, with $621 million budgeted through 2016.   Federal officials are awarding $621 million over the next five years to expand the Money Follows the Person to help people with disabilities who are living in institutions transition into the community with services and supports programs.

The new grants will have an impact on 13,000 people in Colorado, Florida, Idaho, Maine, Massachusetts, Minnesota, Mississippi, Nevada, New Mexico, Rhode Island, Tennessee, Vermont and West Virginia.

The Arc believes that adults with I/DD should have the opportunity to lead lives of their own choosing, reside in the community and to live independently with ready access to whatever services and supports they need to be included and participate as full members of the community.