Grassley-Baucus Emergency Health Care Relief Package

Date: September 15, 2005

Memorandum for: Interested Parties

From: Karen Davenport, Jeanne Lambrew & Meredith King

Hurricane Katrina has created a health as well as a humanitarian crisis. Survivors have been injured and weakened; they are homeless and jobless. Injuries need treatment, health conditions need care, and public health threats need to be contained. Yet health providers in Louisiana, Mississippi, and Alabama are themselves in crisis. And those states across the nation that have welcomed Hurricane Katrina survivors may not be able to afford those additional health care costs. A quick and effective response is needed.

The need for a strong progressive plan is great – Hurricane Katrina has devastated the affected states’ ability to provide health care to their citizens, and states that are taking in hurricane victims aren’t equipped to handle the influx of people. The response put forth by the administration puts the entire health care burden on the states and offers no additional funds.

The Grassley-Baucus proposal would:

1. Provide Katrina survivors with health coverage wherever they are now located. A simplified eligibility and enrollment process would be created to enroll people from federal disaster counties in Mississippi and Alabama and federal disaster parishes in Louisiana into Medicaid. It would also extend to people who live elsewhere in the affected states who have lost their jobs since Hurricane Katrina. This coverage would encompass everyone with income below the poverty level, pregnant women and children with income up to twice the poverty level.
2. Make it simple and swift to care for Katrina survivors. Once enrolled, Katrina survivors who are located in other states would receive Medicaid as though they were Medicaid enrollees in that state. This means no new systems or rules for health care providers or states.
3. Provide fair, guaranteed federal funding for health care for Katrina survivors. The federal government would pay all of the cost of providing Medicaid to covered Katrina survivors in any state in which they are enrolled. This would continue for five months with a potential five month extension.
4. Provide financial relief to states. The federal government would pay the full cost of Medicaid coverage for all residents of Louisiana, Mississippi and Alabama through December 2006. In addition, the proposal would ensure that no state would experience a decrease in its federal matching rate in 2006.
5. Provide new funds for health care providers. A new, federally administered Disaster Relief Fund would offset uncompensated care costs that health care providers have incurred caring for Katrina survivors.

Why this proposal is necessary

This approach would be the most simple, fast and fair way to ensure that Katrina survivors have access to health care. Capped grants to states, one approach proposed by the administration, can help with other needs, including rebuilding the health care infrastructure, but they cannot effectively ensure that Katrina survivors receive the health care they need. The advantages over a state grant program or a Medicaid waiver option include:

1. Medicaid has an existing infrastructure in every state, permitting it to deliver coverage immediately to Katrina survivors wherever they may be. Enrollment systems exist, and health providers are already linked to the system.
2. Healthcare costs associated with Katrina cannot be anticipated and thus cannot be financed by fixed funding to states. It is impossible to know how many Katrina survivors will move, where they will go, and how long they will be away from their home state. Federal Medicaid funding that follows Katrina survivors through the Medicaid program – no matter where they go – will ensure that care gets delivered and paid for.
3. The health care needs of Katrina survivors are great. The physical and mental stress of this disaster could lead to unexpected costs. Fixed funding through capped grant approaches cannot be responsive to costs, while Medicaid coverage automatically adjusts based on need. And, ultimately, we do not know where the survivors will settle for the short term. A Medicaid approach allows the funding for health care needs to follow the survivor, wherever he or she may land.
4. Louisiana, Mississippi, and Alabama face a double challenge: greater need and fewer resources. The economic impact on the Gulf States is likely to be enormous, causing revenues in these states to plummet. This means they will not be able to meet their normal fiscal obligations, let alone the new demands on their health programs created by the hurricane. Until they can rebuild their economies, they should not be expected to generate the revenue needed to pay for critical care for their elderly, disabled, and low-income families. A waiver approach would not meet this need.

Why the administration’s approach is wrong

Hurricane Katrina has caused a health system disaster. Countless Americans are injured, vulnerable and need help. Yet the systems in Louisiana, Mississippi, and Alabama are strained. And states that have welcomed Katrina evacuees are in no better shape.

More than 10 days after the hurricane struck, the administration has done virtually nothing to provide health coverage to Katrina survivors. Last Friday, it announced a repackaged waiver policy that puts the burden on states to apply but offers absolutely no new dollars. Most recently, it has been negotiating individual deals with specific states, which will inevitably result in unequal treatment for survivors. This idea has serious flaws compared to Disaster Relief Medicaid, because it:

1. Delegates to the White House what Congress should manage. The administration is asking Congress to “trust us” to grant waivers for critically needed medical assistance for Katrina survivors. Yet it took over two weeks to issue a “policy” that is a restatement of what can be done anyway. And it puts bureaucrats and politics in between states and federal funding.
2. Puts a layer of bureaucracy between rapid assistance, the states and survivors. A waiver from the secretary of the Department of Health and Human Services would be a huge implementation barrier. Even with a waiver template, a state must apply, negotiate with, and accept any rules imposed by the administration before receiving assistance – which will only delay providing help to survivors. And the rules themselves could mean that some survivors may not receive assistance – states could have to accept inadequate funding or enrollment caps in order to obtain federal approval.
3. Provides no guarantee of equitable access for Katrina survivors. Up to a million people have been displaced by the hurricane. Applying strict eligibility rules that exclude poor childless adults, or using 50 states’ eligibility rules will leave many uninsured. A simple, national eligibility category would guarantee Medicaid for all Katrina survivors.
4. Fails to adjust to uncertain health care costs of Katrina survivors. The physical and mental stress of this disaster could lead to unexpected costs. In addition, displaced people are not just leaving Louisiana, Mississippi and Alabama – they are moving from state to state. Fixed funding through waivers or capped grant approaches cannot be responsive to uncertain and evolving costs. Medicaid payments automatically adjust to need.
5. Creates an administrative – and fiscal – challenge for states. It appears that states already struggling with a large influx of people will have to apply for assistance or design their own programs through a waiver/block grant approach. The uncertainty of waivers means that they could be providing Medicaid and receiving no federal assistance at all for doing so.