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O'Malley favors Medicaid growth

The Baltimore Sun

Gov. Martin O'Malley wants to make more people eligible for health care through the Medicaid program, a move that could cost the state millions at a time when it is facing a projected $1.5 billion budget shortfall.

Maryland makes it difficult for an adult to qualify for Medicaid. A working parent in a family of three has to earn less than $6,288 a year, about half the pay of a full-time worker earning the minimum wage. In Pennsylvania, the limit is $33,200.

"You have to be very, very poor indeed to be on Medicaid in this state," O'Malley said in a recent interview, saying he would like to expand the program.

Since the late 1990s, Maryland has tried to include more children in Medicaid through the Children's Health Insurance Program, and the state now covers them in households earning up to 300 percent of the federal poverty level, $51,500 for a family of three. But the parents of those children are rarely eligible for Medicaid, and adults without children can't get into the program unless they are blind or disabled.

With states such as Massachusetts and Vermont enacting universal health care plans, an attempt to cover more adults became one of the marquee issues of this year's General Assembly session. A coalition of health care advocates pushed a $1-a-pack increase in the tobacco tax through the House of Delegates as part of a proposal to offer coverage to an additional 100,000 people. The proposal died in the Senate.

O'Malley has not offered a specific plan for expanding Medicaid, but he lent his support to the concept while he is grappling to find solutions for the projected budget shortfall. The prospect that he might seek Medicaid changes at the same time thrills advocates for government-subsidized health care.

"It's great news for the people of Maryland," said Vincent DeMarco, president of the Maryland Citizens Health Initiative, one of the chief advocates of increasing the tobacco tax to benefit health care. "Thousands of Marylanders can't get the health care they need, and everyone pays through the hospitalization of the uninsured."

Critics say it makes no sense to expand one of the biggest reasons for the state's precarious financial position, particularly given more innovative health care expansion plans that have been tried in other states, ones that offer consumers more choice than Medicaid does.

Even without expanding the program, Maryland will spend about $2.5 billion, more than 15 percent of its general fund, on Medicaid this year. Spending on the program is expected to increase 6.9 percent a year, twice as fast as the projected growth in state revenue.

"It's expensive, and there's also the question of the quality of care people receive under the Medicaid program," said Sen. E.J. Pipkin, an Eastern Shore Republican who has proposed market-oriented health care reforms.

"The goal should be that people make their own decisions about their own health care rather than having the government make decisions for them."

People who want to expand Medicaid say it ought to serve people such as Curtis Brown, a 55-year-old West Baltimore man whose tendinitis forced him to give up a career as a welder. He also has high blood pressure, diabetes, stomach problems and dental problems.

Another state program covers some basic primary care, but Brown said it is not nearly enough. It doesn't cover most of his medications, and when he has had to go to the hospital, it hasn't covered him at all, leaving him with tens of thousands of dollars in medical debt.

"Sometimes I feel good, and sometimes I can barely walk, so if I got a job, it would probably have to be sitting down or something like that," Brown said. "I did get some medication one time to help the tendinitis, but the program doesn't cover your whole [cost], and I just don't be having the money for that. ... I think all my problems could be probably at least manageable through better medical."

Medicaid has been an attractive program for states to expand because they split its cost with the federal government. Relatively affluent states, including Maryland, pay half of the cost of their Medicaid programs, and poorer states pay less.

The greatest expansion in recent years has been in the coverage of infants, children and pregnant women through the Children's Health Insurance Program, which states have expanded so much that it has become more costly than originally expected, making its reauthorization the subject of intense debate in Congress.

Coverage for children

Maryland is one of the leading states in covering children through the CHIP program.

Nearly all states in the Northeast - including Delaware and Pennsylvania - have also expanded Medicaid eligibility for adults. The maximum income for working parents in a family of three to qualify is $17,680 in Delaware and $33,200 in Pennsylvania under a combination of state and federal programs. Maryland's $6,288 limit is similar to those in Virginia and West Virginia, which are $5,124 and $5,992, respectively.

"The way I put it is, it's the per capita income of Botswana," John M. Colmers, Maryland's secretary of health and mental hygiene, said of the state's limit. "We are in a state that is, depending on how you measure it, the second- or third-wealthiest in the country. We have done a very good job between Medicaid and CHIP for kids, but if you're an adult, it's not so great."

Not everyone thinks that expanding Medicaid is the way to solve that problem. Nina Owcharenko, an analyst at the Heritage Foundation, a conservative-leaning think tank, said a better approach would be to encourage a more robust, consumer-driven market of health care plans that would spur cost competition among insurance companies. Pipkin's proposals were designed to help establish such a market in Maryland.

The question, Owcharenko said, is not why the working poor can't qualify for Medicaid but why there isn't an insurance policy they can afford.

States that have enacted universal health care have done so with tactics besides expanding Medicaid, including some of the market-driven approaches advocated by the Heritage Foundation.

But Del. Peter A. Hammen, a Baltimore Democrat who is chairman of the House Health and Government Operations Committee, said that for Maryland to follow those states, Medicaid needs to be the first step.

Massachusetts used a variety of tactics, including a requirement that individuals have health insurance and that most businesses offer coverage; the creation of a health exchange that offers a variety of insurance plans; and the establishment of subsidies to help the less affluent afford their premiums.

The Massachusetts plan included some expansion of Medicaid, but Hammen said one reason it worked was that the state didn't have as large a gap in coverage for poor adults, which made it easier for leaders there to create programs to make up the difference.

"People look at the efforts that were conceived in other states and say, 'Why don't we do that?'" Hammen said. "We are in a significant hole when compared to the state of Massachusetts."

Alternative funding

The plan Hammen pushed this year would have increased eligibility for adults to 116 percent of the poverty level, which would mean about $19,200 for a family of three. It would have cost about $250 million a year in state funds, most of which would have come from doubling the tobacco tax to $2 a pack for cigarettes.

This spring, O'Malley did not support the tobacco tax increase, saying it did not make sense to pay for a program that would increase in cost with declining tax revenue, assuming that the extra levy would discourage smoking.

The governor said in the interview that current proposals to raise the federal tobacco tax could make an increase on the state level less palatable.

O'Malley also said he wants to try to make health insurance more affordable for small businesses, which has been a topic of debate for several years in Annapolis.

Ellen Valentino, Maryland director of the National Federation of Independent Businesses, said the state needs to reconsider the requirements and regulations regarding health insurance with the aim of encouraging a wider variety of plans.

"Over the past five years, there's been a lot of focus on new mandates, a lot of focus on employer responsibility, on establishing health care for all," Valentino said. But there hasn't been a good look at making policies more affordable for businesses and individuals, she said.

Colmers said he is developing three policy alternatives for the governor, low-, medium- and high-cost options for expanding Medicaid and other health care reforms. Besides finding ways to expand access to health care, the plans address quality and affordability, he said.

But no matter how much the state does to make coverage more affordable, it will never achieve universal access without expanding Medicaid, Colmers said.

"Even if we went to 120 percent of the federal poverty level, they're not working in jobs that are likely to have health insurance. Or if they could purchase insurance, they couldn't afford it. All their income would go toward health insurance," Colmers said. "There is no private-market solution."

andy.green@baltsun.com

Sun reporter Michael Dresser contributed to this article.

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