The Obama administration may be complicit in eviscerating Medicaid
By Bruce C. Vladeck & Bruce C. Vladeck
Texas Insider Report: WASHINGTON D.C. Virtually all of the debate over the health care legislation enacted last year has focused on the constitutionality of the individual mandate the requirement that by 2014 nearly all Americans either purchase health insurance or pay a fine if they fail to do so.
But
last week the court also heard oral arguments in another case that could indirectly have a far greater impact on whether the act can meet the goal of expanding health care access by broadening eligibility for Medicaid by 2014 to 15 million people.
One of the central substantive requirements of the Medicaid program which serves more than 50 million poor and disabled Americans is whats known as the equal access mandate which requires states to set the rates at which they reimburse Medicaid providers at levels sufficient to ensure an adequate supply of providers. As both Congress and the executive branch have understood since Medicaids creation in 1965 there would be little incentive for providers to participate in Medicaid if their payments were too far below market levels.
Nevertheless in response to vast budget shortfalls the California Legislature in 2008 enacted an across-the-board 10 cut in reimbursement levels for Medi-Cal the state Medicaid program. Three groups of Medicaid beneficiaries and providers sued the state arguing that the categorical reduction was inconsistent with and therefore pre-empted by the equal access mandate.
On the merits three federal appellate panels agreed and halted the rate reduction.
In the case it heard last week Douglas v. Independent Living Center of Southern California the Supreme Court will not resolve whether those decisions were correct: the incompatibility between Californias rate reduction and the equal access mandate appears to be settled.
Instead the justices agreed to consider a technical but critical question: whether private parties be they Medicaid beneficiaries or providers may
even bring such suits in the first place.
When Medicaid was enacted the possibility of private suits to enforce its provisions could be taken for granted. In the past decade however the Supreme Court has held federal statutes to an increasingly restrictive standard in deciding whether or not they may be privately enforced.
The result has been clear: most of the lower courts facing the issue in recent years have held that the equal access provision can no longer be enforced in suits by beneficiaries or providers.
But if beneficiaries or providers cant enforce the equal access provision who will?
The answer according to both California and the Obama administration which filed an amicus brief in support of California in the Douglas case is the United States Department of Health and Human Services. What they fail to acknowledge however is that the department utterly lacks the financial legal logistical and political wherewithal to enforce the provision. (We helped write an amicus brief in support of the plaintiffs.)
First the department doesnt have the resources to oversee compliance with the equal access provision. As Justice Anthony M. Kennedy pointed out at the oral argument last week only 500 employees supervise nearly $400 billion in Medicaid expenditures.
Indeed the departments budget for the administration of Medicaid declined by 44 between the 2008 and 2010 fiscal years even as Medicaid costs have kept rising.
Second even if the department sought to expand enforcement of the equal access provision it would encounter the additional hurdle that its
enforcement budget unlike the bulk of the Medicaid program depends on annual appropriations.
Medicaid must compete annually with the National Institutes of Health the Food and Drug Administration the Centers for Disease Control and Prevention and other agencies.
Third even with proper funding the department has repeatedly admitted that its authority to enforce the equal access provision and to provide remedies for violations is limited practically and legally.
When states fail to comply with the equal access mandate the departments options are either to reject a state Medicaid plan up front or withdraw financing after the fact both of which punish Medicaid beneficiaries at least as much as they punish the offending states. As a result the department has focused instead on trying to cajole rather than coerce states into complying.
Despite these reservations only Justice Kennedy seemed outwardly concerned during last weeks oral argument in Douglas about whether exclusive federal enforcement could be effective. If the rest of the justices hold that the equal access provision cannot be privately enforced that will open the door for other states with budget shortfalls to enact similar across-the-board cuts in Medicaid reimbursement rates.
From there it would be only a matter of time before providers abandoned Medicaid beneficiaries for private consumers en masse thereby vitiating the animating purpose of the Medicaid program.
Of course even if the justices rule for California Congress is free to respond by clarifying that Medicaid beneficiaries or providers should be able to enforce the equal access provision. But given the politics of the moment and the reality that violating the equal access mandate saves money for states and the federal government a true legislative fix seems unlikely.
The Supreme Court now seems likely to decide the fate of the mandate perhaps as early as June.
As such even as it vigorously defends the constitutionality of the individual mandate the Obama administration may be complicit in eviscerating
Medicaid and setting back the broader goal of ensuring that all Americans have access to quality health care.
Bruce C. Vladeck was the administrator of Medicare and Medicaid from 1993 to 1997. Stephen I. Vladeck is a professor of law at American University.
