MINUTES OF THE meeting

of the

ASSEMBLY Committee on Health and Human Services

 

Seventy-Second Session

March 10, 2003

 

 

The Committee on Health and Human Serviceswas called to order at 1:46 p.m., on Monday, March 10, 2003.  Chairwoman Ellen Koivisto presided in Room 3138 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mrs. Ellen Koivisto, Chairwoman

Ms. Kathy McClain, Vice Chairwoman

Mrs. Sharron Angle

Mr. Joe Hardy

Mr. William Horne

Ms. Sheila Leslie

Mr. Garn Mabey

Ms. Peggy Pierce

Ms. Valerie Weber

Mr. Wendell P. Williams

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

None

 

STAFF MEMBERS PRESENT:

 

Marla McDade Williams, Committee Policy Analyst

Terry Horgan, Committee Secretary

OTHERS PRESENT:

 

Louise Bayard-de-Volo, Nevada Women’s Lobby

Melanie Nathanson, Senior Health Policy Analyst, Center on Budget and Policy Priorities

 

 

Chairwoman Koivisto informed the Committee that Melanie Nathanson would be giving a Power Point presentation entitled “The Bush Administration’s FY2004 Budget:  Implications and Opportunities for Nevada” (Exhibit C).  Chairwoman Koivisto explained the talk would center on happenings at the federal level that might have an impact on decisions made by the Nevada Legislature. 

 

Chairwoman Koivisto announced that Ms. Nathanson had joined the Center on Budget and Policy Priorities in 2002, and she had focused her efforts on state Medicaid issues and worked on related state and national policy areas.  Ms. Nathanson had worked with Senator Bob Graham of Florida and she had also worked on issues before the United States Senate Finance Committee, including Medicaid, State Children’s Health Insurance Program (SCHIP), as well as welfare, Title XX, Medicare, and other issues.  She had served as a Senior Legislative Assistant for Congressman Sander Levin and had covered the Human Resources, Social Security, and Health Subcommittees of the House Ways and Means Committee.

 

Louise Bayard-de-Volo, Nevada Women’s Lobby, introduced Ms. Nathanson, and explained that her visit had been sponsored by the American Association of Retired Persons (AARP) as a part of Grassroots Lobby Day, and also because that week attention was focused on the uninsured.

 

Melanie Nathanson, Senior Health Policy Analyst, Center on Budget and Policy Priorities, thanked the Committee for allowing her to make her presentation on the issue of the uninsured in the United States, and on creative ways of dealing with that problem.

 

Historically, Ms. Nathanson continued, the uninsured had been dealt with through public programs like Medicaid, SCHIP, and Medicare.  Before Medicare, she explained, the elderly were the population most likely to be without health insurance and living in poverty.  She also indicated there were elements within the Medicare program that could be improved that would positively impact the state and the state’s budget, as well as positively impact the legislators’ ability to see the Medicaid program thrive and evolve.

 

Ms. Nathanson said she would discuss federal trends in the Medicaid program as well as happenings on Capitol Hill, both within Congress and the Administration, regarding issues of the uninsured, Medicaid reform, and SCHIP.  Referring to enrollment in Medicaid and SCHIP and how they related to spending, Ms. Nathanson noted that children and parents comprised two-thirds of all Medicaid enrollment but only comprised about one-third of Medicaid spending.  She indicated that some states, but not Nevada, were modifying coverage to children and parents even though most of the increases in spending had come from areas of the elderly and disabled.  Ms. Nathanson explained that Medicaid covered approximately 11 percent of all Americans, 20 percent of all children, and about one-third of all births.  She pointed out that Medicaid was the only program providing comprehensive nursing home care via insurance, which she stated was significant, given the aging of the “baby boomer” population and the increase in people over the age of 65 moving to Nevada.  Medicaid also paid for about 20 percent of all prescription drug costs nationwide, Ms. Nathanson noted.

 

Ms. Nathanson pointed out a growing gap between Medicaid costs and state revenue growth, saying that in 1999 and 2000, both were rising at about the same rate.  However, in 2001, 2002, and into 2003, increased costs had been seen in Medicaid spending that paralleled increased costs in private healthcare spending.  Ms. Nathanson noted a disconnect between increased expenses in the Medicaid program and the amount of money required to continue funding it, which had now led to a structural deficit within the tax system.  Referring to Nevada’s budget deficit, Ms. Nathanson indicated it mirrored national trends and calculated that Medicaid expenditures represented approximately 15.4 percent of the state budget. 

 

Prescription drugs, Ms. Nathanson emphasized, were the number one force driving the tremendous increase in Medicaid costs.  The next factor driving Medicaid costs, she pointed out, was enrollment increases because of the decreased number of jobs available and the decrease in numbers of insured.  The other two factors driving increased Medicaid costs were medical inflation and utilization, and long-term care, she added.

 

Medicaid did an excellent job filling the holes in Medicare, Ms. Nathanson testified.  One-third of Medicaid benefit costs, she explained, covered Medicare beneficiaries, and as “baby boomers” continued to age, retire, and need prescription drug or long-term care services, the percentage would rise if nothing were done to improve the quality of the Medicare program.  Medicare, she noted, had been a good 1965 program; however, it was based on an obsolete idea that most health care was delivered through an in-patient environment.  That was no longer the case, Ms. Nathanson observed, and many in-patient services could be avoided through prescription drug protocol that could keep people out of the hospital.  She noted that because the prescription drug benefit was not available to Medicare beneficiaries, Medicaid was picking up the slack and was going to be the source for much of the healthcare, particularly prescription drugs and long-term-care services, that seniors and people with disabilities needed.

 

In discussing state Medicaid programs and their impact on the recession, Ms. Nathanson referred to a study by the Kaiser Family Foundation, which had examined all 50 states and their Medicaid programs.  She indicated that 49 states were looking at different ways to modify their programs to deal with their current budget deficits, but added that Nevada was one of the states that was most benign in looking at Medicaid as a tool to fill its budget gap.  Cutting Medicaid, she continued, would be “penny wise and pound foolish,” because in all 50 states it was the number one source of federal funding.  Ms. Nathanson noted that Medicaid and SCHIP had prevented an even greater rise in the number of uninsured.  The Centers for Disease Control and Prevention (CDC) had provided data showing a dip in public and private coverage for children and adults in 2002 that was filled by both Medicaid and SCHIP.  The CDC estimated that 2 million children and 1 million adults would have been uninsured without the Medicaid program.  Ms. Nathanson noted that health care jobs had prevented worse unemployment during the current recession.  She pointed out that in Nevada, every $1 million in spending cuts would have resulted in $2 million taken out of the business sector, and over $800,000 removed from state wages.

 

Increase enrollments indicated that Nevada was doing a good job of covering its residents, Ms. Nathanson noted.  Medicaid, she explained, was a counter-cyclical tool that “picked up” people who had lost their insurance coverage when they lost their jobs, and that was what the programs were there for.

 

On the other hand, Ms. Nathanson noted that Nevada’s uninsured rate was 18.4 percent while the national average was 16.5 percent, with 15.8 percent of children lacking coverage and 19.6 percent of adults lacking coverage.  She commented that those statistics were significant for a variety of reasons, one being the public health implications of having people in a state without health insurance.  She pointed out that when one lacked insurance coverage, one did not get treated until it was absolutely necessary, which impacted hospitals and people’s ability to pay those hospitals.  Also, people who did not get treatment were more likely to spread their diseases around and she explained that it was a well-known fact that an insured populace was a healthy populace and that it was far cheaper to pay for preventive care than to pay for acute care.

 

Ms. Nathanson emphasized that states were facing the worst fiscal crunch since the 1930s and World War II, and as a result were continuing to look for creative ways to cover their residents through public programs.  She insisted that the present levels of public services would be very difficult to sustain unless there was a structural change in the ability to raise revenue.  Ms. Nathanson reiterated that either the revenue systems must be reformed, or the services were going to have to decline.  Referencing Governor Guinn’s Budget, she noted that the Governor’s view was to raise revenue instead of cutting services.

 

Ms. Nathanson also believed it was necessary to rethink fiscal federalism, particularly in regard to shared programs between the federal and state governments.  If partnerships were developed between the federal government and the states, for programs to move forward, she emphasized that the federal government should contribute what was necessary, their fair share, and keep those promises.  Many funding inequities, she cautioned, moved in the opposite direction.

 

In discussing Medicaid during these economic times, Ms. Nathanson cautioned against “pushing the panic button.”  Because Medicaid was the second highest expenditure in most states, it became the part of the budget that most people automatically looked at in terms of cutting expenses.  She noted that Medicaid was really a victim of its own success, but pointed out that the huge per capita growth in the program had been from 1990 to 1995. 

 

Referring to occurrences in Congress, Ms. Nathanson indicated that there was a great deal of legislation in the works, some bipartisan and some looking to provide states with temporary fiscal relief through an increase in the Federal Medical Assistance Percentage (FMAP).  One Senate bill would provide $20 billion of state fiscal relief, $10 billion through an increase in the FMAP and $10 billion through an increase in social services block grant funds.  She added that Nevada would receive approximately $68.5 million.  Ms. Nathanson noted that there was a huge push in the Senate to include those funds in the Senate Budget Resolution that would occur by the end of the month.  Similar legislation, she noted, was also moving through the House of Representatives.  In addition, the ranking member of the Senate Finance Committee, Senator Max Baucus, had a bill that would give $75 billion to the states in a block to be used for any purpose. 

 

The President’s Children’s Health Insurance Program (CHIP) policy, Ms. Nathanson cautioned, did not go as far as the bipartisan agreement crafted in 2002, but held up by the chairman of the House Budget Committee.  The President, she explained, proposed to allow states to maintain funds for an extra year that had been set to expire this year.  Nevada would keep about $10 million that would otherwise revert to the United States Treasury, she observed. 

 

Other people were moving forward with a proposal for SCHIP that would bring back $1.2 billion in CHIP funds that expired last year and had reverted to the Treasury.  The fate of that legislation depended, she cautioned, on whether there was any money put in the budget for those purposes. 

 

Ms. Nathanson indicated other language in the President’s budget would allow states to garner more from the Medicaid drug rebate system, which would allow the average wholesale price to take the place of the average manufacturer’s price in determining rebates.  That could be a very good thing for states struggling with the prescription drug portion of their Medicaid program, she predicted.  The President’s budget included a five-year extension of transitional Medicaid, which was Medicaid primarily for women and their children who were moving from welfare to work.  The budget also included some simplifications that state Medicaid directors had been asking for to make the program work more smoothly, as well as a five-year extension of the QI-1 Program, a block- granted program that gave states money to cover premiums for senior citizens who were receiving Medicare.

 

Ms. Nathanson cautioned that none of the proposals she had mentioned would go into effect if the Administration’s Medicaid Reform proposal were adopted.

 

Assemblywoman McClain inquired what “QI-1” was.

 

Ms. Nathanson explained that in the Balanced Budget Act of 1997, Congress created a new program that was essentially a block-granted amount of money that states could tap into to cover senior citizens who were at 120-150 percent of the poverty level to help them pay their Medicare premiums.  The money, she noted, had expired in 2002, but Congress brought it back this year, for one more year, and the President had requested it be extended for an additional five years.  Ms. Nathanson indicated there was no matching requirement and that Nevada should be taking advantage of those funds.

 

Ms. McClain stated she did not know if Nevada was taking advantage of the program, but that they should look into it.

 

Ms. Nathanson volunteered to check into the situation for the Committee.

 

Ms. Nathanson next went on to discuss the big, comprehensive Medicaid proposal that made up the bulk of the Medicaid portion of the Administration’s budget.  She explained that it provided states with an option to either maintain their Medicaid and SCHIP programs, or enter into a block grant agreement with the federal government for its Medicaid and SCHIP programs.  There were very few concrete details about this proposal, she cautioned. 

 

Chairwoman Koivisto inquired whether the block grant would require the states to accept an irrevocable cap and asked to have that explained.

 

Ms. Nathanson explained that if a state chose to enter into the block grant structure, it would be unable to get out within the context of the ten-year budget window.  If a state chose the block grant option, she continued, it would receive additional flexibility to cover different eligibles, probably for optional beneficiaries and optional services for both mandatory and optional beneficiaries.  Ms. Nathanson reminded the Committee that there were 34 optional benefits already available in the Medicaid program for states to adopt.  She explained that optional beneficiary categories could include expanding coverage of pregnant women up to 185 percent of the poverty level.  Optional services for mandatory beneficiaries also would be included under the cap and would be items like prescription drug coverage, dental care, home and community-based services, and personal care services.  Ms. Nathanson offered to get a comprehensive list of categories for the Committee.

 

Assemblywoman McClain agreed that she would like to see the list.  Then, referring to the block grant program, she asked what would keep the federal government from changing the funding a few years from now.

 

Ms. Nathanson answered that a commitment by the federal government not to change the funding would be what would keep them from changing it.

 

Continuing her explanation of the Administration’s plan, she mentioned a “carrot,” additional funds the federal government would allocate to states based on an unknown formula, to allow some temporary fiscal relief for a state that entered into the arrangement.  Those funds would begin in FY2004 and increase until FY2010, but then in FY2011, federal funding for the program would decline, she cautioned, so the program would wind up being budget- neutral.

 

Comparing the proposed program to the current one, Ms. Nathanson explained that the federal government and the states shared the costs of the Medicaid program, with Nevada being at a 53 percent FMAP.  The proposed funding, she noted, would be a pre-set, capped amount and the states would pay a “maintenance of effort” each year that was as yet undetermined.  What was clear from the documents was that the base year would be FY2002. 

Ms. Nathanson warned that, for a state like Nevada with a lean program, it would then be hard to “fatten” the program.

 

Federal funding, she reiterated, would be based on 2002, with an as yet unknown inflator built it.  The block grant would be split into two:  an acute care block grant and a long-term care block grant with monies from the SCHIP program being transferred into the acute care side of the grant.  States would be able to transfer up to 10 percent from one block grant into the other and could use about 15 percent for administrative fees and hospital payments such as Disproportionate Share hospital payments.

 

Ms. Nathanson noted that the block grant would only apply to optional benefits and services, and enrollees.  Mandatory benefits, such as in-patient and out- patient care, and institutional care for long-term care recipients, would be outside the block grants, she explained, and indicated that it also appeared the FMAP structure would remain in place for mandatory benefits for mandatory services.  She added that it was not clear whether consumer protections, such as federal nursing home quality standards now in place, and patient’s-bill-of-rights-type protections for Medicaid beneficiaries, would continue to apply.  Ms. Nathanson mentioned that 85 percent of nursing home residents who were on Medicaid were so called “optional” beneficiaries, and that states might not be able to cover their needs under the new block grant proposal as opposed to the current open-ended entitlement structure.

 

Ms. Nathanson mentioned some “pros” of the Administration’s proposed plan were that it would permit more flexibility in eligibility benefit and design, for instance, covering certain people in different geographic areas of a state so that people in urban areas might receive one benefit and people in rural areas another.  Currently, if a state opted to cover a service, it was covered for everyone, statewide.  She cautioned that some members of Congress who represented primarily rural areas had expressed grave concerns about that sort of shift, because it tended to be more expensive to cover individuals in rural areas, as access to providers and hospitals was oftentimes limited.  Ms. Nathanson added that another positive of the Administration’s plan would allow states to expand coverage without waivers, which could be an arduous process. 

 

Ms. Nathanson indicated the Center on Budget and Policy Priorities was concerned that the design of the Administration’s plan would result in inadequate fiscal relief for states.  It would also disallow increased federal contributions for future expansions to the program that a state might want to make.  She mentioned that health care was a very volatile system and that it was impossible to know when increased spending might be necessary in Nevada.  Block grants, she warned, did not allow for growth, whereas an open-ended entitlement did and could move with the needs of the state.  She noted that the Administration’s plan also continued to shift the burden for health care onto states because the Medicare program did not efficiently cover what senior citizens needed, such as prescription drugs and long-term care services, so states would have to continue to fill in those gaps.  Ms. Nathanson stressed that there was no need for a “quid pro quo” and that there was considerable movement in Congress looking to provide the states with fiscal relief.

 

The risks to capping federal payments, Ms. Nathanson reiterated, included hurting long-term economic growth to the state, limiting rather than increasing federal responsibility for Medicare’s benefit gaps, and ending the shared federal-state risk for cost savings and cost growth in Medicaid.

 

Chairwoman Koivisto commented that cuts to Medicaid also meant cuts in federal dollars, so that would be a “double whammy” to Nevada.  When the state could not take care of those people, who would have been covered if there had been no cuts to Medicaid, Chairwoman Koivisto wanted to know who would pick up the costs.

 

Ms. Nathanson indicated oftentimes when people lost their Medicaid coverage, they found themselves forced to leave their illness untreated until it became a dire emergency.  She also indicated some charity care was available and also that some providers opened their offices a few hours a week free of charge.  Under the Emergency Medical Treatment and Active Labor Act (EMTALA), she added, emergency rooms were required to cover people when they walked in the door, so hospitals paid, and the taxpayers paid.  Ms. Nathanson indicated that oftentimes an individual who went in for emergency care was billed and paid what he could, often for the rest of his life.  She explained that the costs were covered by a combination of poor people trying to pay their own way, the taxpayers and the hospitals picking up some of the slack, and the Disproportionate Share hospital money, coming through Medicaid.  People were going to get covered, she added, but the question became whether it was more efficient to get people the care they needed, which was usually less expensive and provided a better quality of life for that individual and for the public at large, or did we prefer to go for the most costly route to cover individuals.  She reiterated that Nevada, in not looking to cut Medicaid, had taken both the fiscal and public health issues into account when designing its budget.

 

Assemblywoman McClain asked whether the percentage of the poverty level for Medicaid coverage was the same for all age groups, or whether seniors were different.

 

Ms. Nathanson replied that senior citizens were covered at Supplemental Security Income (SSI) levels to get full Medicaid.  Nevada’s Medicaid program, she elaborated, was at the mandatory limits for each category.  As an example, she explained that in Nevada, pregnant women and children up to 5 years old were at 133 percent of poverty; children 5 through the age of 18 were at 100 percent of poverty; and adults who were not working and were on public assistance were at 29 percent of poverty.  Ms. Nathanson observed that working parents could get coverage through Medicaid at about 90 percent of poverty and reiterated that Nevada was at the mandatory levels.

 

Assemblywoman McClain asked if that was for all categories except senior citizens.

 

Ms. Nathanson answered that it was all categories including senior citizens.

 

Assemblywoman McClain asked whether seniors were also at the mandatory levels.

 

Ms. Nathanson agreed.

 

Assemblywoman McClain opined that the level for seniors could be raised.

 

Ms. Nathanson stated that all levels could be raised, and that many states had raised them.

 

Chairwoman Koivisto informed the Committee that 74 percent of poverty was $6,645 per year and commented that someone with an income of that level was probably living on the street.

 

Ms. Nathanson agreed that seniors who qualified for full Medicaid, which included full prescription drugs, were excruciatingly poor.

 

Assemblyman Mabey inquired whether there were any places in the United States where free care for working individuals was provided.  He thought he had heard of such a place in North Carolina.

 

Ms. Nathanson replied that all states had something in place to provide a measure of indigent care such as a community health center, a physician, or a hospital that provided charity care.  There was only so much such entities could

do, long term, she cautioned.  The goal, she reiterated, was to prevent them from getting to the point where they were in a dire emergency. 

 

Assemblyman Mabey asked if there were any differences between Health Maintenance Organization (HMO) Medicaid and straight Medicaid.  He mentioned that in Las Vegas, to be on Medicaid, one must go through an HMO; however, in the northern part of the state, one did not.

 

Ms. Nathanson replied that before 1997, if a state wanted to put a population of individuals into a Medicaid HMO, it had to get a waiver.  In 1997, states had asked for more flexibility to put more people into Medicaid HMOs without having to go through the waiver process.  She said states had a broad amount of flexibility to place Medicaid beneficiaries in HMOs if they were available and the state wanted to.

 

Chairwoman Koivisto thanked Ms. Nathanson for appearing before the Committee.

 

Ms. Nathanson thanked the Committee for allowing her to make her presentation and volunteered to supply any assistance the Committee might need.

 

 

Chairwoman Koivisto indicated Committee introduction had been requested for a bill draft request (BDR).

 

 

·        BDR S-1206—Makes appropriation to Governor for support of Nevada Commission for National and Community Service. (A.B. 271)

 

ASSEMBLYMAN WILLIAMS MOVED FOR COMMITTEE INTRODUCTION OF BDR S-1206.

 

ASSEMBLYMAN HARDY SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

With no further business to come before the Committee, Chairwoman Koivisto adjourned the meeting at 2:45 p.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Terry Horgan

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblywoman Ellen Koivisto, Chairwoman

 

 

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