Haley Barbour Leads War on Medicaid as States Ready Health Reform

The likely GOP presidential candidate says Medicaid recipients drive BMWs in Mississippi.

By Julie Appleby Mar 22, 2011

This article originally appeared in Kaiser Health News.

Mississippi Gov. Haley Barbour raised eyebrows in Washington earlier this month when he said some Medicaid recipients in his state drive BMWs. But back home, Barbour’s critics weren’t surprised.

"He’s had a frontal assault on Medicaid since he came into office" in 2004, says state Rep. Stephen Holland, a Democrat and chairman of the House Public Health and Human Services committee.

Barbour, who’s considering a run for the Republican presidential nomination, is unapologetic. In his seven years as governor he has irritated advocates for the poor with cost-cutting changes and a controversial requirement that most recipients appear in person every year to re-establish eligibility. Now he wants virtual carte blanche authority to reshape the federal-state Medicaid program, which is why he was in Washington, urging Congress and the Obama administration to give states greater flexibility.

A fierce opponent of the health overhaul law and the broadening of Medicaid eligibility set to begin under it in 2014, Barbour says Medicaid is "in need of serious reform, not expansion."

Barbour’s outspoken advocacy of state control over Medicaid has brought attention to his own record. Both supporters and detractors find much to draw upon: Critics say he has slowed spending growth in the state’s nearly $5 billion a year program at the expense of the neediest and most vulnerable residents. Given free rein, he would cut even further, they fear.

"It would wither on the vine like grapes in a hot sun," says state Rep. Dirk Dedeaux, a Democrat and chairman of the House Medicaid Committee.

Supporters say he’s made common-sense decisions to reduce rising drug costs and to ensure that people enrolled in the program are, indeed, eligible. Still, even as they extol the efforts he’s made to change the program, they also argue that he is powerless to do much.

"The federal government makes a lot of the rules and the state legislature makes all the rest," says Francis Rullan, spokesman for the Division of Medicaid in the Office of the Governor.

Federal Money Subsidizes State Program

Cost concerns aside, Barbour doesn’t want to jettison the program, like a few governors have considered. Medicaid, which serves the disabled as well as the poor, is a critical source of health coverage–and an enormous source of federal aid.

Without Medicaid, "this impoverished state could not have a health system," Holland says. In 2009 nearly one in four adults earned less than the federal poverty level, $10,830, so many can’t afford private insurance. Yet the needs are great: 68 percent of adults are overweight or obese–the highest rate in the country.

It’s not easy to qualify for Medicaid. The state is among the dozen with the strictest income limits in the country for Medicaid–an adult in a two-person family in Mississippi can’t earn more than 44 percent of the poverty level, about $6,472 a year. Childless adults can’t get on the program, no matter how poor. Still, 22 percent of the state’s 2.9 million residents are enrolled in Medicaid, half of them children.

"If you don’t have a family member on it, then you probably know someone at your church who is on Medicaid," says Roy S. Mitchell, executive director of the Mississippi Health Advocacy Program, which lobbies on behalf of the poor and is often at odds with Barbour.

The economic impact is huge, too, because Washington pays most of the Medicaid bill. Holland says the federal payments are "the No. 1 economic generator" in this state, amounting to about $4 billion.

Although other states get more total federal dollars for Medicaid, Mississippi’s program is the most heavily subsidized in the nation: For every $1 the state spends on doctors, hospitals and other medical care through the program, the federal government kicks in $5.61. That ratio will drop to $3 for every $1 the state spends when stimulus funds approved by Congress in 2009 expire at the end of June.

But the state still has to pay its share–$619 million in this fiscal year. Next year, it needs to add another $200 million, mainly to replace stimulus funds.

Medicaid Rolls Growing

Mississippi will see its Medicaid rolls grow starting in 2014, when the new health law requires all states to cover all those who earn up to 133 percent of the federal poverty level, currently $19,564 for a two-person family. Except for some children, the state currently does not cover families earning that much.

By some estimates, Mississippi’s Medicaid program could encompass as much as one-third of the state’s population, with the federal government fully covering the additional costs for the first three years. By 2020, the federal share drops to 90 percent, putting the state on the hook for the balance.

State Sen. Joey Fillingane, a Republican, is pleased that "that many more Mississippians will have fantastic medical coverage." But, as a fiscal conservative, he sees a problem: "It means the other two-thirds of the state’s population are paying for this one-third that is getting the benefit."

Under Barbour, Medicaid enrollment dropped from fiscal 2005 to 2008, but it has been increasing during the recession, reaching 631,000 by the end of December. Total state and federal spending has grown at an annual average of 4 percent–well below his predecessor’s record of 16 percent annual growth, the governor’s office says.

Much of the slowdown in spending comes from changes he made in 2005 to limit prescription drugs to five a month–with only two being brand-name products. Some also came from ending a state prescription program and shifting most of the 65,000 elderly or disabled enrollees into Medicare’s prescription program, Barbour told a congressional committee.

Barbour credits tougher scrutiny of applicants’ eligibility as one way he’s helped slow growth in the program. Despite those efforts, he told the Washington Post that "we have people pull up at the pharmacy window in a BMW and say they can’t afford their co-payment."

He’s exaggerating, says Christy Dunaway, executive director of Jackson, Miss.-based Life Living Independence for Everyone, a nonprofit providing services to people with disabilities. "I’m sure there are people who abuse the system," she says, "but I don’t for a minute believe there are as many as the governor thinks there are."

Unlike most other states, Mississippi requires the majority of its Medicaid enrollees to attend face-to-face re-enrollment meetings each year. Those who don’t show up are dropped from the program. Some are exempted–people who are house-bound or in nursing homes.

That requirement has helped the state "greatly reduce fraud and abuse of the system by those who don’t qualify," says Sen. Terry Burton, a Republican who serves on the public health and welfare committee. "If that appears to be vilifying those on the program, or being uncaring in some shape or form, I don’t think that’s true. I know this governor and he is a caring person."

Critics say that with many of the sites inaccessible by public transit, the requirement is not weeding out fraud, but is simply a barrier to coverage. "A lot of people are no longer on Medicaid because they could not make that meeting, didn’t have transportation or didn’t understand" the letter sent to them telling them of their appointment, says Dunaway.

At the governor’s office, Rullan points out that the state has about 100 sites for enrollment meetings and says the state will "make alternative arrangements" for people who cannot travel to an office. Far from being a barrier, Rullan says in-person screenings can help identify additional services for enrollees–and are often a far more effective way to explain the complex Medicaid program to enrollees.

States Demand More ‘Flexibility’ 

Barbour says he wants Washington to give him freedom to quickly make changes in Medicaid eligibility and benefits–such as starting to charge co-payments for children’s medical care, something the program bars at present. Advocates might disagree: Such a move would ignore "how much $5 or $10 means to people on Medicaid," says Mary Troupe of the Coalition for Citizens with Disabilities in Jackson.

The governor also told Congress he wants to create a special nursing home for children using funds collected from penalties assessed on deficient nursing homes. To do so, Barbour says, he needs federal approval, a process that can take months.

Barbour joined other governors in urging Congress to package federal Medicaid money in large block grants, giving states flexibility. "Y’all would save a lot of money if you let us run the program," he told lawmakers.

Critics–including many Democrats–say block grants could result in the loss of health coverage for millions if states are not held to federal requirements for benefits and eligibility.

In exchange for the freedom a block grant would give him, Barbour says he would agree to accept only 2 percent to 3 percent annual increases in federal assistance–less than half of what the feds expect to pay out in the coming years.

That would cost Mississippi a bundle: $2.5 billion over five years, compared with what it stands to receive if federal payments grow at the 6.6 percent annual rate now projected by government budget analysts across all states.

"From our experience, we believe the state will be able to save tax dollars if we have the flexibility to run the program to fit Mississippians’ needs," Barbour said through a spokeswoman. "If we’re forced to run the program exactly as we do now, then clearly we would spend a great deal more money."

Barbour has not said exactly how he would save money to make up for the loss of federal funds. That worries advocates for the poor–and Sen. Burton.

While he’s all for block grants, "I don’t know that we want to agree to a cap at this point," Burton says. "I think you need a block grant without strings attached, and no cap, so we can provide the best services for our people."

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.