OCTOBER 16, 1995 VOLUME 3, NUMBER 16
The new Republican majority in Congress has consistently worked toward balancing the federal budget and returning governmental control to a more local level. Shortly after taking charge, the new majority was also presented with projections of shortfalls in Medicare and Medicaid.
Since Medicare provides the vast majority of medical care for elderly citizens and Medicaid pays for about half of all nursing home costs nationally, any proposals for change in those two programs would necessarily have a disproportionate impact on the elderly and disabled. Recent discussions in the House and in several key Senate committees show just how dramatic that impact is likely to be.
Earlier this year, the House of Representatives and the Senate agreed to a budget for fiscal year 1996 which included a $270 billion cut in Medicare, $182 billion cut in Medicaid, elimination of many federal programs, reductions in other social programs, and a tax cut of $245 billion. The expressed goal is to balance the budget in seven years.
As the House and Senate begin to work out minor differences in their respective proposals, several common themes have emerged. It is now almost certain that the Republican plan will contain the following elements:
- Elimination of Medicaid by converting it to a program consisting of federal block grants to the states.
- Elimination of the Nursing Home Reform Act of 1987.
- Major modifications to the funding and reimbursement elements of Medicare.
- Dramatic funding cuts and restrictions on the Legal Services Corporation.
- Drastic reductions in funding under the Older Americans Act.
Medicaid Block Grants
The largest impact might well be felt in connection with the conversion of the federal Medicaid program into a block grant to the states. Under the House proposal, for example, Arizona’s anticipated increases in Medicare funding would be reduced by a total of $711 million less over the next seven years (the 1996 payment would actually increase by $110 million). The Senate version would reduce Arizona’s anticipated Medicaid subsidy by over $1.1 billion over the same seven years, including a $141 million reduction in 1996.
At the same time that federal subsidies are drastically reduced, federal mandates on service would also be cut. Although there are differences between the House and Senate versions, both would eliminate most eligibility standards, allowing states to set their own rules for participation, copayments and deductibles. While childhood immunizations must be covered in both versions, the Senate does not expressly require nursing home coverage (though it does require coverage for elderly and disabled individuals earning less than $1142/month.
Most insidiously of all, however, the House version eliminates any requirement of rules governing spousal impoverishment. States would be free to return to the pre-1987 rules, under which an nursing home patient would receive assistance only if his spouse had spent down to $3,000 in countable assets. Even the current exemption for the patient’s home could be limited, and liens could be required at the state’s option.
Repeal of Nursing Home Standards
The Nursing Home Reform Act of 1987 set national standards of care for the industry. Among the most important consequences of the NHRA has been the dramatic reduction in use of restraints. In fact, recent studies suggest that the implementation of NHRA standards has reduced hospitalization among nursing home residents by as much as 25%.
Both the House and Senate would repeal the Nursing Home Reform Act. This would leave the adoption and enforcement of regulations to the same state governments whose inaction and failure generated bipartisan federal action in the first place.
Both the House and Senate have acted to increase premiums for all recipients. Next year, for example, premiums would be expected to rise from $46.10 per month for Medicare Part B to $54 (the premium had been scheduled to drop slightly next year). For the first time Medicare would be partially means-tested, with high income individuals (over $75,000) and couples (over $125,000) paying higher premiums. The Senate would also increase the age for Medicare coverage to 67, to match the scheduled increase in Social Security eligibility.
Originally, a significant portion of the savings was scheduled to come from reductions in payments to doctors. Facing possible American Medical Association opposition to the proposals, House Speaker Newt Gingrich last week agreed to as-yet unspecified limitations on those reductions. News reports indicate that the AMA has voted to approve the changes, after having been promised another $300 million in fees.
Legal Services Cutbacks
The national Legal Services Corporation (“Legal Aid” to most) has been the target of many previous budget cutting cycles. This time, the current budget of $415 million is slated to be cut by between 18% (Senate version) and 33% (House version). In addition, Legal Services programs will be prohibited from various activities seen as threatening the pace of welfare or regulatory reform. In the Senate version, for example, LSC lawyers would be prohibited from filing class actions.
Among the specific proposals being debated regarding Legal Services, training and education programs now provided by the National Senior Citizen’s Law Center would be eliminated. LSC lawyers would be specifically prohibited from filing any action challenging the legality of welfare reform measures or from handling fee generating cases in Medicaid, Medicare or similar litigation, even though private attorneys have not been interested in such cases.
Long Term Care Ombudsman
Since Richard Nixon’s administration, in 1972, the Long Term Care Ombudsman program has been an integral part of funding under the Older Americans Act. The Ombudsman program has been a mainstay of assistance and support for institutionalized patients and their families and advocates. Anyone working in the field for the past 25 years would be able to recall nursing home conditions and the quality of long term care prior to the activist work of local Ombudsmen.
The House Appropriations Bill would zero out funding for the Long Term Care Ombudsman, as well as elder abuse prevention. These actions would save $4.4 million and $4.7 million, respectively (remember that the Doctors’ lobby asked for and was given approximately $300 million in restored funding). The Senate would continue these programs, plus $1.3 million for legal hotline programs like the one administered by Southern Arizona Legal Aid.
The House bill also would reduce funding for the Older Americans Act by 13%. Services provided under the OAA include much of the funding for Area Agencies on Aging (such as the Pima Council on Aging in the Tucson area).