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Guest commentary / Federal formula

Medicaid flaw is a ticking time bomb

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By Brendan Williams
Those states that are the poorest receive the highest Medicaid matching rates, as high as 73 cents on the dollar in Mississippi, while states with the highest incomes -- like Washington -- receive 50 cents on the dollar. The fatal flaw in this income-based formula is it ignores the fact that a few states, like Washington, have no income-based taxation.
Enter provider assessments. With one, our state established a daily average payment rate for nursing homes of $171.43 per patient for the current fiscal year. That Medicaid payment would otherwise average $160.93. Reducing it that much would take roughly $1 million a year from Everett patients alone. Additionally, federal Medicare cuts already loom as a threat -- with or without the 2 percent cuts sequestration alone brings if we fall off the fiscal cliff.
A past 2003 assessment provided resources to help block proposed nursing home cuts of $72 million in successive legislative sessions -- and instead afforded 5.6 percent in rate increases from 2003-2005. It's no exaggeration to report this gambit kept care facilities solvent. Furthermore, Medicaid underfunding is a hidden "tax" upon private-paying patients of an extent greater than the pass-through costs of provider assessments.
In contrast, a hospital assessment enacted in 2010 has not met proponents' hopes. Initially restoring cuts made in 2009, and intended to improve payments significantly, its revenue was diverted by a cash-strapped state to an extent where the mechanism simply reduced the scale of hospital cuts. Hospitals sued over the diversion. The assessment, which expires July 1, 2013, was expected to generate $419.6 million this biennium. Hospital advocates may debate whether its continuation's benefits outweigh its costs -- in a world of imperfect choices I think they do.
Moreover, they should retain the option to have that debate. President Obama has proposed reducing the ability of states to use provider assessments -- saving $21.8 billion over 10 years -- while Republican Tennessee Sen. Bob Corker has proposed eliminating them altogether over 10 years -- saving $50 billion.
Neither plan works for Washington. Short of increasing, at the likely expense of some other state, Washington's lousy federal medical assistance percentage, our congressional delegation must fight to preserve all tools available to return as much federal money as possible to our state.
Government austerity inexorably rolls downhill, leaving someone stuck with the bill, as we saw with Tacoma's recent decision to end a tax exemption for nonprofit hospitals -- picking up $5.5 million for 2013-14. A state budget already deeply in the hole for the coming fiscal biennium hardly needs misplaced federal austerity to make things worse, especially for those in medical need.

Olympia attorney and former state representative Brendan Williams is a long-term care advocate.

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