THE 5 POINT PLAN – AN OVERVIEW:

The United States Census Bureau recently reported that for the three year period of 2002 to 2004 an average of 11.7 percent of Missourians lacked health insurance. (1) The number of uninsured is likely to remain high in the coming year due to the Medicaid cuts enacted earlier this year by the Missouri General Assembly, the rising costs of health care and the declining number of employers offering health benefits. Missouri can do better. Reforming Medicaid by adopting administrative revisions and then calling it by another name is not enough. In order to ensure access to affordable health care for all Missourians, the Missouri Catholic Conference offers to the Medicaid Reform Commission the following 5 Point Strategic Plan:

• Expand the availability of affordable private health insurance, with special efforts to encourage employers to offer health benefits.

• Cooperate with the federal government to control the skyrocketing costs of health care.

• Encourage more effective and coordinated use of local resources of health care providers to serve the poor and uninsured.

• Reform Medicaid by requiring better stewardship of taxpayer money and assuring health coverage for families and individuals who cannot afford private insurance.

• In all state initiatives related to health care, place greater emphasis on promoting healthy lifestyles among citizens and providing preventive health care.

THE 5 POINT PLAN IS BASED UPON VALUES MISSOURIANS SHARE

Underlying this proposed 5 point strategic plan is a vision for a health care system based upon values that the Missouri Catholic Conference believes are shared by most Missourians. Missourians believe in hard work and personal responsibility, but they also believe that the larger community should help those who cannot help themselves.

Individuals have a responsibility to care for their own health. Parents have a responsibility to care for the health of their children and normally must work to pay for health services.

In America health insurance is normally offered as a part of compensation for employment. In our view, it should not matter whether the person is employed as a cook, a mechanic, a farmer, an engineer or a brain surgeon as to whether health benefits are provided. All work has dignity and our state should honor work by enacting policies that promote just wages and adequate job benefits, especially health coverage.

There are those, especially the frail elderly and the disabled, who cannot work. Our state, if it is to promote a society of compassion, must ensure that such vulnerable people have access to health care.

Along with other churches and charitable organizations, the Catholic Church provides health care to the poor. But private charity alone is not sufficient to meet the needs of all the medically indigent.

Government has a moral responsibility to ensure that people have access to affordable health care, which can be done in different ways, including encouraging community, charitable, and private sector responses.

The 5 Point Strategic Plan seeks to ensure access to health care by building on the existing resources within our state – employers, health care providers and local communities. By forging effective partnerships, the state of Missouri can create a health care system that is cost-efficient, produces positive health outcomes and ensures access to health care for all Missourians.

STATEGIC POINT 1: Expand the availability of affordable private health insurance, with special efforts to encourage employers to offer health benefits.

Most Americans obtain health coverage through their work. Part of the rationale for cutting adult Medicaid was that health coverage provided by private employers could replace Medicaid for those able-bodied adults willing to work. But fewer employers offer health benefits. Between 2001 and 2004 the percentage of employers offering health coverage dropped from sixty-eight to sixty-three percent. (2) It has become a daunting fiscal challenge for employers to provide health benefits. The health premium for family coverage paid by Midwest employers in 2004 averaged $10,280. The Kaiser Family Foundation reports that “health insurance premiums rose modestly in the mid-1990s, then increased by double digits for the past four years, rising 11.2% in 2004.” Even more telling, “Premium increases significantly outpaced overall inflation and the increase in workers’ earnings.” (3)

Because of these high costs to employers, someone working for a large corporation is far more likely to have health benefits than someone working for a small business. The state of Missouri should explore policies to enable small businesses to obtain better insurance rates. The state should also encourage employers to provide health coverage in terms that are affordable to low-income workers. Several policies to consider:

• Facilitate Insurance Pooling: Facilitate more insurance pooling through trade associations so that small businesses can obtain better insurance rates. Alternatively, allow small businesses and farmers to purchase health coverage through the state of Missouri’s consolidated health care plan.

• Offer Business Tax Credits: Target a tax credit to small businesses that for the first time provide health benefits to employees. Limit the credit to the first three or four years that the health coverage is offered.

• Provide Premium Assistance: Help low-income workers by paying a small portion of their health insurance premium and co-pays or by offering workers a tax credit or deduction for their premium payment. This would allow many to opt for their employer’s health coverage rather than Medicaid.

STRATEGIC POINT 2: Cooperate with the federal government to control the skyrocketing costs of health care.

State officials quite naturally focus on the rising costs of Medicaid because of its direct impact on the state budget, but Medicaid is only part of the overall health care market in which costs are rapidly escalating. National health care expenditures increased by almost two and half times from 1990 to 2003, rising from $696 billion in 1990 to $1.7 trillion in 2003. Health care costs are consuming an increasing share of the Gross Domestic Product (GDP) and by 2003 represented 15.3 percent of GDP. The Kaiser Family Foundation reports that “Growth in U.S. per capita health spending has been higher than the growth in the CPI since 1980.” (4)

While drug spending in the United States continues its upward spiral, advertising by the pharmaceutical industry may be creating a climate in which people seek to “self-prescribe” medication for problems better solved by other means. Only the United States and New Zealand allow advertising of prescription drugs directly to consumers. (5) The state of Missouri should join with other states in calling for more effective action by the federal government to reign in health care costs, particularly in regards to pharmaceuticals.

• Urge the federal government to consider policies outside of Medicaid/Medicare that will encourage more moderate pricing by drug companies.

• Urge Congress to enact a ban on prescription drug advertising to dampen consumer demand for inappropriate drug treatments.

STRATEGIC POINT 3: Encourage more effective and coordinated use of local resources of health care providers to serve the poor and uninsured.

There are a number of local health providers - hospitals, federally qualified health centers (FQHCs), public health departments, not-for-profit health clinics, and religious health ministries – that offer health care to the poor and uninsured. The state of Missouri already partners with some of these providers. An inventory of these resources may lead to additional strategies to enhance access to health care for the poor.

Partnerships between government and hospitals reach back to the outset of Missouri history. For example, when the Daughters of Charity established the first Catholic hospital in the United States in 1828, the City of St. Louis agreed to help pay for the cost of caring for indigent patients. (6) At present, through the Federal Reimbursement Allowance program, federal funds reimburse Missouri hospitals on average about sixty-one percent for the care they provide to the uninsured.

Federally qualified health centers (FQHCs) receive federal funds and combine these with state funds and privately raised funds to provide primary and preventive care on a sliding fee schedule for many Missourians. These centers are locally controlled and are intended to respond to local needs. They draw new doctors to areas of medical shortages, who by practicing at these clinics can often qualify for debt forgiveness on their medical school loans. We have been impressed by testimony from FQHC officials documenting improved health outcomes for their clients. (7)

There are also federally funded rural health clinics that offer vital health care services to the medically indigent. Community based not-for-profit clinics have emerged that provide dental services in areas where the poor cannot access dentists through normal channels.

Religious ministry in health care extends beyond the hospital setting. The Deaconess Parish Nurse Ministry, for example, offers nurse training and guidance to over thirty congregations in the St. Louis area from a wide range of denominations seeking to establish parish nurse programs. (8) Catholic Charities of St. Louis provides assisted living for low-income elderly in remodeled convents and other settings at a monthly cost of about $1500, an amount well below the costs typical for this service industry. Charges to the elderly are kept to a minimum by combining Medicaid and personal funds with charitable contributions. (9)

Without the active involvement of federal and state government, it would be very difficult for local providers to offer health care for the poor and uninsured. For example, while the Catholic Charities’ assisted living program uses former convents and draws significant philanthropic funds, Medicaid funding is an important piece of the puzzle that ensures fiscal viability. Without the Medicaid funding, Catholic Charities might be compelled to reduce its assisted living ministry thereby causing more of the elderly to turn to skilled nursing homes where Medicaid costs are much higher.

The state of Missouri and other levels of government should also encourage collaboration among health care providers. For example, within the past year, St. Louis County initiated the Mental Health Collaborative, through which public mental health services are delivered under contracts with non-profit community based counseling agencies. Instead of terminating mental health services, which had been considered due to budget constraints, the county consulted with these community agencies and find a more cost effective way to continue providing services. (10) This is the kind of conversation that needs to take place in communities across Missouri, where local public officials, health care providers and employers work together to ensure positive health outcomes and health care access in their area at a more affordable overall cost. The state of Missouri can play a vital role by supplementing local resources and encouraging more local collaboration.

• Require local public officials and health care providers – hospitals, FQHCs, public health departments, rural health clinics and not-for-profit agencies receiving public funds – to prepare a strategic plan for collaborative efforts to promote positive health outcomes and ensure access to affordable health care. Invite community and business participation.

• Establish a state block grant program to provide assistance in the development of these local strategic plans.

• Increase state funding for federally qualified health centers and encourage the federal government to increase its support for FQHCs. Provide incentives for the establishment of FQHCs in new areas.

• Encourage medical and dental care providers to locate in areas of medical shortage, most especially rural Missouri. Toward that goal, we recommend an increase in the funding for the Primary Care Resource Investment for Missouri (PRIMO), which offers medical loan repayments for doctors and dentists who agree to serve in areas of medical shortage.

• Create a pilot program that will fund the delivery of more specialized care at FQHCs. This can make more specialized care available, especially in rural Missouri.

• Establish a competitive state grant program for smaller community based not-for-profit agencies who offer health care, especially dental care, to the uninsured and working poor.

• Oppose any federal policy to abandon the Federal Reimbursement Allowance (FRA) program. FRA is even more essential in the wake of the recent Medicaid cuts.

• Offer a state income tax credit to individuals and businesses contributing to community health outreach efforts like the Deaconess Parish Nurse Ministry.

STRATEGIC POINT 4: Reform Medicaid by requiring better stewardship of taxpayer money and assuring health coverage for families and individuals who cannot afford private insurance.

Health clinics alone are not sufficient to meet the needs of the medically indigent overlooked by the private market. The clinics are not in many regions, but even if their geographic reach was expanded they are normally not equipped to provide specialty care or surgery. In short, we believe a program like Medicaid remains an essential part of the safety net for the poor. At the same time, we recognize that reforms are clearly overdue.

Federal matching funds comprise about sixty-one percent of Medicaid funding and even greater matches are provided for the Children’s Health Insurance Program. A re-structured Medicaid program will still require these matching funds if Missouri is to provide health coverage for the poor and uninsured. However, the need for federal matching funds should not deter the Commission from proposing new policies for Missouri's Medicaid program. Waivers can be sought and federal law changes can and should be pursued.

• Enhance Efforts to Eliminate Fraud by Providers: A 2004 evaluation of Missouri’s Medicaid Fraud program by the Committee on Legislative Research, Oversight Division recommended that the Medicaid Fraud Control Unit (MFCU) within the office of the Attorney General and the Program Integrity section of the Missouri Division of Medical Services undertake additional steps to detect fraud and recover monies from providers defrauding the state. A number of these recommendations have been implemented. The MFCU responded to the evaluation by reporting that for the five fiscal years 2000 through 2004 they had obtained settlements and judgments for the recovery of $24,374,245.28. MFCU also provided data demonstrating that their unit collected far more per staff member than was collected by corresponding fraud units in surrounding states. In general, it appears MFCU is aggressively pursuing Medicaid fraud. In order to enhance the chances of successful prosecution of Medicaid fraud, we recommend additional funding for MFCU and we suggest the legislature consider the request of the Attorney General to grant MFCU original jurisdiction within the state of Missouri to pursue Medicaid fraud cases. Also, as recommended by the Oversight Division’s evaluation, MFCU should consider any means feasible to maximize its federal matching funds. (11)

• Count Assets/Determine True Financial Need: This past session we heard testimony from case workers concerning Medicaid applicants who qualified for assistance even though they owned boats and other luxuries. The response to this problem is not to deny Medicaid to truly needy working families, but to require an asset test so a family’s complete financial picture is considered when determining eligibility. Unfortunately, current federal law prohibits an asset test for certain categories of Medicaid recipients. The state of Missouri should take a leadership role in securing federal policy changes so asset tests may be conducted. A higher asset limit should be allowed for asset intensive businesses like family farms that must make ends meet on very thin profit margins. Greater funding is also needed so that caseworkers can accurately determine if applicants qualify for assistance.

• Control Drugs Costs/Monitor the “Clawback”: The Missouri Hospital Association has documented that Medicaid expenditures for prescription drugs rose from 187.5 million dollars in FY93 to 1.07 billion dollars in FY04. Expenditures for prescription drugs represented twenty-two percent of total Medicaid expenditures in FY04. We support current state efforts to direct pharmaceutical purchases to less expensive generic drugs and we support efforts to ensure that drugs are not abused by recipients. A report from the National Governors Association issued August 29, 2005 offers a number of recommendations that merit serious consideration, such as requiring greater transparency to pharmaceutical pricing methods for Medicaid to ensure states can obtain the best price for required drugs and allowing states a greater ability to join with other states in purchasing pools that may obtain better pricing from pharmaceutical companies. (12) Through the aptly named “clawback” provision, the new Medicare law ensures that states remain primarily responsible for the drug cost of individuals dually eligible for Medicare and Medicaid. But while the states continue to foot the bill, the federal government removes from states the authority to authorize or reject drug purchases for the dually eligible and shifts that authority to the federal government. The state of Missouri should join with other states in urging the federal government to either return drug purchasing authority to the states for those dually eligible for Medicare and Medicaid or establish stronger federal controls on drug costs.

• Explore solutions to the rising costs of long-term care Medicaid coverage: In testimony to the Commission, Susan Feigenbaum, chair of the Department of Economics at the University of Missouri-St. Louis, observed that “Medicaid accounts for almost half of all revenues by nursing homes in this country and over two-thirds of all nursing home occupants receive Medicaid benefits.” We support current efforts to use Medicaid funds to keep the elderly and disabled at home thereby allowing them to live more normal lives while enabling the state of Missouri to avoid the higher costs associated with residential care. Consideration should also be given to how elderly individuals of a more middle economic strata and receiving Medicaid can help pay for their long-term care. There needs to be a national discussion concerning how federal and state policy can encourage individuals to save earlier in life for the costs of long-term care.

• Reevaluate Medicaid cuts to Durable Medical Equipment: It is becoming increasingly clear that the Medicaid cuts for durable medical equipment not only will undermine the health of vulnerable people but will in some cases place a greater strain on the state Medicaid budget. Dr. Samuel Klein, director of the Center for Human Nutrition at Washington University, has told the Commission that the state will pay far more to hospitalize individuals who previously received treatment by using an intravenous tube at home. It appears to make little sense to provide coverage for wheelchairs but not for wheelchair batteries. We urge the Commission to reevaluate the Medicaid cuts to durable medical equipment and to restore funding when necessary to preserve life and good health.

• Require Cost-sharing: We support cost-sharing at income levels at or above 150% of the federal poverty level as has been enacted in the Children’s Health Insurance Program. Cost-sharing not only saves the state money, but it also encourages individuals to actively participate in their own health care. Rules for collecting cost-sharing, however, should be sensitive to the paycheck to paycheck budgeting realities of families.

• Provide Incentives for choosing Clinics over Emergency Rooms: Testimony offered to the Commission by Theresa Garcia, M.D. reported how in many instances Medicaid recipients present at hospital emergency rooms for medical issues that could be handled more appropriately by neighboring health clinics or physicians’ offices. Probably the most effective way to discourage this behavior is by having emergency rooms collect a modest co-pay as is done when a person comes to a local health clinic. Alternatively, the emergency rooms could establish a procedure to refer patients to local health clinics when only non-emergency care is required.

• Restore Medicaid for the Working Poor: We support providing Medicaid health coverage for the working poor with incomes below the federal poverty level. This could be accomplished in several ways. The state could keep the eligibility level at twenty-two percent of the federal poverty level, but allow an earned income disregard. Income earned from a job would not be counted as income for purposes of determining Medicaid eligibility. Another option would be to raise income eligibility to one hundred percent of the federal poverty level while requiring Medicaid applicants to accept available work, though this would require a change in federal law. In general, the state of Missouri should honor the dignity of work and workers by restoring health coverage for the working poor

• Restore Ticket To Work with Work Requirement: The legislature should restore state participation in the federal Ticket to Work program that allows the disabled to work without losing health coverage due to earned income. But the restored program should require participants to perform a reasonable amount of work appropriate to their capability.

• Assist the Most Vulnerable: Medicaid lumps individuals into broad categories such as the elderly, the disabled, families, and children. Each category has its own eligibility rules and creates its own political constituency. In the legislative appropriation process one category is pitted against another and assumptions are made about who is the most vulnerable and who merits the most funding. This manner of categorizing individuals fails to account for unique individual circumstances. For example, an elderly couple may appear to have fewer resources than a poor working family, but this may not be the case if that couple owns a home that has substantially appreciated in value. Medicaid or its successor should adopt a more individualized approach that recognizes personal and community circumstances and better identifies the most vulnerable. One step toward this goal would be to establish a universal floor of Medicaid eligibility that ensures that all those below the federal poverty line who cannot find affordable health insurance are covered no matter what Medicaid category they fit into.

• Increase Provider Reimbursements/Increase PRIMO Funding: The Missouri State Medical Association has testified to the Commission that “The aggregate amount of the Missouri Medicaid budget spent on physician services is only 3.6% compared to the national average of over 6%.” Providers should be rewarded through better reimbursements when they act as full community partners and when, in the case of not-for-profit health care institutions, they meet their community benefit obligations as is expected of tax-exempt organizations. However, increasing funding for the Primary Care Resource Investment for Missouri (PRIMO), which offers loan repayment for doctors and dentists, would probably have a greater impact in making more health care available to the poor.

STRATEGIC POINT 5: In all state initiatives related to health care, place greater emphasis on promoting healthy lifestyles among citizens and providing preventive health care.

Ultimately, good health cannot be delivered like a consumer good. Without personal cooperation, the sick person will not get well. Without community cooperation, the overall health of the community will not improve. A health care system whose mission is limited to reimbursing providers for medical services rendered will remain a reactive system confined to treating problems as they arise rather than a pro-active system that addresses the root causes of those problems.

Our medical technology, for example, has enhanced the odds of delivering and caring for high-risk newborns, but to actually reduce the number of high-risk births more pregnant woman must obtain proper pre-natal care. This is a personal responsibility of the pregnant woman, but it is also a responsibility of the community. Without affordable public health education delivered in communities where low weight birth rates are high, pregnant women will not obtain pre-natal care. Both the woman and the community will suffer the negative consequences.

The director of the Department of Health and Senior Services, Julie Eckstein, has presented to the Commission a number of intriguing ideas for how the state of Missouri can foster a culture of health, including work wellness programs, more effective health education in K-12 schools, the creation of walkable communities, and the promotion of healthy lifestyles by adults. The statistics Director Eckstein presented on smoking and obesity suggest the need for greater efforts in these areas as well.

CONCLUSION:

The Missouri Catholic Conference urges the Commission to act boldly and compassionately to develop a health care system for our state that more fully involves individuals in taking responsibility for their own health while assuring that all have access to affordable health care. This will require the active involvement of families, local communities, local health care providers, businesses and state and federal government.

In this effort, the role of the federal government is essential. State officials and the Missouri Congressional delegation should seek federal policy changes that will allow the state of Missouri to fashion a new health care system unencumbered by antiquated rules, such as the no-work and no asset test requirements in certain existing Medicaid programs. Only in this way can Missouri fashion a health care system that reaches out to elderly, the disabled, the poor and that honors the dignity of work and workers by making sure that all workers have access to affordable health care.

1 U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2004, http://www.census.gov/prod/2005pubs/p60-229.pdf. The reports states that “Research shows health insurance coverage is underreported in the CPS ASEC…” However, this report does not take into account people who are losing their health coverage in 2005 due to the recent Medicaid cuts.

2 Kaiser Family Foundation, Employer Health Benefits: 2004 Summary of Findings, http://www.kff.org/insurance/7148/index.cfm.

3 Kaiser Family Foundation, Trends and Indicators in the Changing Health Care Marketplace,http://www.kff.org/insurance/7031/ti2004-3-2.cfm; http://www.kff.org/insurance/7031/ti2004-3-3.cfm.

4 Kaiser Family Foundation, Trends and Indicators in the Changing Health Care Marketplace,http://www.kff.org/insurance/7031/ti2004-1-set.cfm; http://www.kff.org/insura nc e/7031/ti2004-1-3.cfm.

5 Julius A. Karash, “Pitching Prescriptions,” The Kansas City Star, July 21, 2005.

6 William Barnaby Faherty, S.J., The St. Louis Irish: An Unmatched Celtic Community (St. Louis: Missouri Historical Society Press, 2001).

7 Testimony to the Missouri Medicaid Reform Commission, Joseph E. Pierle, Missouri’s Federally Qualified Health Centers, Missouri Primary Care Association, July 12, 2005.

8 Deaconess Parish Nurse Ministries, http://www.parishnurses.org/home.phtml.

9 Information provided by James C. Stutz, President, Catholic Charities, Archdiocese of St. Louis.

10 Id.

11 Oversight Division, Committee on Legislative Research, Program Evaluation: Medicaid Fraud Program Follow-Up, December 2, 2004. http://www.moga.state.mo.us/oversight/over04/audit/EvaluationMedicaidFraudFollowUp_12-13-04.pdf.

12 National Governors Association, Short-Run Medicaid Reform, August 29, 2005, http://www.nga.org/Files/pdf/0508MEDICAIDREFORM.PDF.