Spiraling Medicaid costs pose major challenge


Published: Sunday, January 12, 2003 at 6:01 a.m.
Last Modified: Saturday, January 11, 2003 at 10:14 p.m.
TALLAHASSEE - Lawmakers working on this year's state spending plan are grasping for ways to curb the growing cost of Medicaid. They're not finding any easy answers.
Medicaid, the state- and federally funded program for the poor, elderly and disabled, covers 2 million Floridians. It's the second largest part of the budget after education and since 1999 its cost has increased 13 percent a year to nearly $11.4 billion.
If the state doesn't slow the growth, officials project that in a little more than a decade Medicaid will cost $50 billion a year, the size now of the entire state budget.
With the economy sagging and the state struggling to pay for services lawmakers committed to financing during the 1990s, controlling Medicaid is one of the biggest challenges for the Legislature and Gov. Jeb Bush when they convene the regular session in March.
State officials have tried some creative cost-saving measures in recent years, but lawmakers are worried. To balance the budget they likely will have to consider cutting Medicaid benefits or reducing the number of people who are eligible.
"Florida is a retirement mecca," said Senate President Jim King, R-Jacksonville. And with improvements in medicine, people are "running out of money before they run out of life."
There's no reason to believe that Medicaid costs are going to slow. The program's three biggest expenses - nursing homes, prescription drugs and hospital care - are growing.
And, at current eligibility levels, the number of people on Medicaid likely won't slow soon either.
"We're growing, we've got people coming in from other parts of the nation. Two, we're aging," said Rhonda Medows, secretary of the Agency for Health Care Administration, which runs Medicaid in Florida.
The Bush administration has hit on some creative ways to reduce costs, the primary one a program that gives preference to prescription drugs that the state gets at a steep discount.
The state has a list of preferred drugs for Medicaid patients. If pharmaceutical companies want their drugs on the list, they generally have to give a discount.
"It has led to incredible savings for the state," said Steven Grigas, Florida's assistant deputy director of Medicaid.
That program is under fire from drug companies, though, who have sued to block it and others around the country, saying it violates federal law.
In another innovative effort, Florida allows some drug makers to get on the preferred drug list by agreeing to run "disease management" systems for the state.
In such programs, the drug companies monitor some Medicaid patients' across-the-board care, from diagnosis to drug therapy, contribute to patient education and sometimes make phone calls to remind patients to take their medication. That can help avoid more expensive treatment later.
Most importantly, the companies guarantee the programs will save a certain amount of money.
"If after the program concludes . . . we see the savings aren't made, they break out the checkbook," Grigas said.
Medicaid is only partly paid for by the state. The federal government picks up much of the cost, too. Florida is putting much of its cost-cutting effort into making sure the state gets as much federal money as possible.
The drug discount programs and other such efforts have saved the state's Medicaid program $1 billion since 1999, Bush administration officials say.
Florida is not the only state grappling with Medicaid.
A recent study by the National Conference of State Legislatures said that 44 of the 50 states will consider policies this year to control Medicaid costs, including reducing eligibility and the amount paid to doctors and other health professionals for their services.
Bipartisan legislation pending in Congress would increase the federal government's share of the states' Medicaid costs. But even if the measure passes, the $10 billion the bill would spread around the states would only go so far.
Medicaid costs were a big topic at a health care summit in Tallahassee last week attended by lawmakers, lobbyists and other officials looking for ideas. Len Nichols, a health care economist brought in for the meeting, offered this suggestion.
"The single greatest tool we have in our arsenal to deal with health care cost growth is frequent, fervent prayer," said Nichols, only partly joking.

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