Mississippi's Barbour seeks more state control of Medicaid

Kaiser Health NewsMarch 11, 2011 

US NEWS OILSPILL 10 BI

Mississippi Governor Haley Barbour, Tuesday, June 8, 2010, in Biloxi, Mississippi

JOHN FITZHUGH — John Fitzhugh/Biloxi Sun Herald/MCT

WASHINGTON — Mississippi Gov. Haley Barbour raised eyebrows in Washington last week 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 the chairman of the Mississippi House's Public Health and Human Services Committee.

Barbour, a former head of the Republican National Committee who's considering a run for president in 2012, is unapologetic. In his seven years as governor he's 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. Other Republican governors are pursuing the same authority.

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'd 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 Barbour'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's powerless to do much.

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

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 funds.

In 2009, nearly 1 in 4 adults in Mississippi earned less than the federal poverty level, $10,830, so many can't afford private insurance. Yet the needs are great: 68 percent of the state's 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, about half of them children.

The economic impact is huge, too, because Washington pays most of the state's Medicaid bill — 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 pays its share — $619 million in this fiscal year. Next year, it needs to add $200 million to that tab, mainly to replace stimulus funds.

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 a 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 ratchets down to 90 percent, putting the state on the hook for the balance.

State Sen. Joey Fillingane, a Republican who supports Barbour's management of Medicaid, is pleased that "that many more Mississippians will have fantastic medical coverage." But, as a fiscal conservative, Fillingane 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. The state also saved by ending a state prescription program and shifting most of the 65,000 elderly and 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. But some say he's exaggerating the problem.

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

Washington should give states more flexibility, Barbour says, by packaging federal Medicaid money in large block grants. "Y'all would save a lot of money if you let us run the program," he told Congress.

Other governors support that idea, while critics — including many Democrats — say block grants could result in the loss of health coverage for millions if states aren't held to federal requirements for benefits and eligibility.

In exchange for the freedom a block grant would give him, Barbour said he'd 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.

Barbour hasn't said exactly how he'd save money to make up for the loss of federal funds. That worries advocates for the poor — and state Sen. Terry Burton, a Republican who serves on the public health and welfare committee.

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

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