Read this testimony from CBC July 1 hearing then help build PUSH Local Coalition for National Health Care!  Go to  link M. Francesca Chervenak, Esq. Pennsylvania Health Law Project on behalf of the Consumer Health Coalition Good morning, Congressman. My name is M. Francesca Chervenak and I am the Managing Attorney of the Pennsylvania Health Law Project's Pittsburgh office. The PA Health Law Project is a private, non-profit, public interest law firm that supports and represents low-income families and individuals, the elderly, and persons with disabilities who are having problems either accessing health care or with the quality of their health care services. We represent individual consumers and consumer groups across the state of Pennsylvania. Almost all of our work is with public health care programs-that is, Medicaid (what Pennsylvania calls 'Medical Assistance'), the Children? Health Insurance Program (CHIP), Medicare, and the adultBasic Program which is the new state insurance program for uninsured adults.I am here offering testimony today on behalf of one of the consumer groups we work with called the Consumer Health Coalition. The Consumer Health Coalition is based here in Pittsburgh and is made up of advocacy groups, human services agencies, community-based organizations and individual health care consumers. The Coalition is a non-profit organization dedicated to improving access to, and the quality of, health care for at risk populations. It is equally dedicated to ensuring that the consumer voice is heard in policy decisions regarding health care.Thanks to fiscal relief for the states recently appropriated by Congress, Pennsylvania is slated to receive approximately $900 million over the next two years-half of which is targeted to Medicaid. The Governor and the Department of Public Welfare are still deciding how that money will be spent, but it will provide some welcome assistance for our state in dealing with its fiscal crisis, increased health care costs and a growing Medicaid population. We are very grateful that you and your fellow Congressmen and women recognized the states' 'need for federal relief during this economic recession and acted quickly.   The first part of my testimony addresses the Medicaid 'reform' proposal being put forward by the Bush Administration for consideration by the Congress. Before I do that, however, I would like to say a little about Medicaid as it exists today in Pennsylvania.    Right now, Medicaid provides health care coverage to over 1.5 million low-income Pennsylvanians, most of whom are children, the elderly and persons with disabilities. Right now, Medicaid is jointly funded by the state and federal government so that every dollar Pennsylvania spends on Medicaid is matched by $1.21 in federal money.  Right now, about 1/3 of Pennsylvania's Medicaid costs are for dually eligible persons-that is, those on Medicare who also apply for Medicaid to pay for the health care Medicare does not cover- prescription drugs and long-term care.    The Bush Administration is proposing a major overhaul of the Medicaid system. Under the Bush Plan, states are offered two choices-keep the current Medicaid program and receive no additional fiscal relief or assistance from the federal government, or trade the program in for a new capped federal allotment that offers states'flexibility' in how they run their Medicaid program. If states accept this proposal, however, they give up the current open-ended federal match they receive for all their expenditures in exchange for a cap on all federal Medicaid funding over the next 10 years-in essence, a 'block grant' funding system.    At face value, the proposal seems reasonable and appealing-especially as it offers the states that accept it an additional $12.7 billion dollars in federal money over the next 7 years to help them through their financial difficulties. Pennsylvania is now facing its worst budget deficit in 25 years, and the offer of additional federal monies is hard to resist. However, as advocates for Medicaid recipients, and as organizations that serve and work with low- income families, the elderly and Pennsylvanians with disabilities, we have many concerns regarding the Bush Administration's proposal.    First, the $12.7 billion in additional federal monies is actually a loan. Given that any Medicaid reform adopted must be budget neutral, additional monies given to the states during years 1 through 7, must be 'paid back' by the states in years 8 through 10. This ;pay back; will likely be in the form of greatly reduced federal funds to the states in those years while health care costs continue to rise.   Second, the block grant provided by the federal government to the states under the Bush proposal is based on each state's 2002 Medicaid expenditures, with a 2-3% increase per year over the 10 year period. Basing the next 10 years of federal funding on 2002 Medicaid expenditures will penalize states like Pennsylvania that have a growing Medicaid population.    The poor economy has resulted in more people turning to Medicaid for health coverage. In the first three months of 2003 alone, the number of Medicaid recipients in Pennsylvania grew by more than 24,000 persons. In addition, our large elderly population is growing larger and growing even older which means greatly increased Medicaid costs for services such as long-term care and prescription medications. If our Medicaid costs over the next decade exceed the federal block grant being proposed, and all indicators show that they will, Pennsylvania will either need to make up the shortfall with state revenues-or drastically cut Medicaid services and/or reduce the number of individuals covered by Medicaid.    Third, the Bush Administration touts its proposal as giving states the flexibility that many have long argued for in the Medicaid program. It must be noted, however, that states already have a considerable amount of flexibility in how they shape their Medicaid program. Currently, states can: cut optional populations and services; can seek federal 'waivers' to allow them to create Medicaid managed care delivery systems; and can expand coverage to additional populations by using income and resource disregards to bring them within the program's financial limits. The additional 'flexibility' offered by the Bush Administration is very alarming because it seems to us to be primarily a flexibility to cut services and reduce the number of people who can access the Medicaid program.    The Administration proposes to remove all existing protections for the 'optional' Medicaid populations-which include some of our most vulnerable Pennsylvanians such as the frail elderly and children with severe disabilities. States would also be given the flexibility to impose additional copays for services and other cost-sharing mechanisms on consumers. We find it very troubling that many of our most medically needy citizens, and those with the fewest resources, would have fewer medical services covered by Medicaid at the same time they face increased out-of-pocket costs they can ill afford.    Fourth, we have an overarching concern about the fundamental change from financing Medicaid through a federal/state match to financing Medicaid by a capped federal allotment or block grant. States would be giving up the assurance of, and their reliance on, increased federal money when Medicaid costs and state expenditures rise. If Medicaid populations and health care costs continue to increase from year to year as they are expected to in Pennsylvania, while federal funding stays at a fixed block grant amount, states will be forced to cut their Medicaid costs. That will likely be achieved by removing the so-called 'optional populations' from Medicaid coverage and no longer covering so-called 'optional services'. I want to be very clear about what this means for Pennsylvania.    Currently the 'optional populations' we cover through Medicaid, and who are therefore at risk to lose their health coverage, include such vulnerable groups as:pregnant women and children up to age 1 who have household income between 133% and 185% of the federal poverty level ($22,422/year for a family of 2) Children ages 1 through 5 who have income over 100% of the poverty level ($12,120/year for a household of 2) Women with breast or cervical cancer who have no other creditable health coverage Elderly persons and those with disabilities who spend down to the SSI level ($619/month for 1 person) to get Medicaid coverage Elderly persons with disabilities that are able to remain in their homes and communities because they can get services under the PDA (Aging) Waiver    The 'optional services' Pennsylvania currently covers for its Medicaid population are critical to maintaining the health of MA recipients. These optional services that would be at risk for elimination under the Bush Administration proposal include such services as: Prescription drug coverage Eyeglasses and optometrist services Dental care and dentures Physical and rehabilitative therapy Home and community-based services Given these concerns, we urge you and your colleagues not to adopt the Bush Administration's Medicaid proposal or any other proposal that would impose a  'block grant' or cap on federal Medicaid funding to the states. Instead, we urge the Congress to provide additional monies as needed over the next few years to ease the fiscal burdens on states like ours and to help shore up the Medicaid program for our most vulnerable populations.    In addition, we ask you and your colleagues to close the gaps in the Medicare program which result in huge costs to the states as many Medicare recipients apply for Medicaid coverage for health care costs not covered by Medicare. Specifically, we agree with the National Governors' Association which has long argued for the federal government to assume responsibility for the costs of prescription drugs as well as long term care for these 'dually eligible' persons.    We know that the House and Senate each passed separate legislation last week that provides for a prescription drug benefit for seniors and persons with disabilities on Medicare. We work with thousands of elderly individuals and persons with disabilities every year who have Medicare coverage but who struggle every month to pay for their prescription medications on a fixed income. We are glad to see attention being given by the Congress to this critical health care need that has gone addressed for too long and we will be anxious to see the final bill that emerges from the Conference Committee.      Though we are generally supportive of offering a Medicare prescription benefit, our preliminary analysis of the two bills shows that neither offers a perfect solution to the problem and both present some concerns. The out-of-pocket costs to consumers under each bill are still quite high. If a Medicare recipient currently spends $6,000 a year on prescription medications, they will still have out-of-pocket prescription costs totaling almost $4,000 a year in deductibles, co-pays and premiums under the House Bill and under the Senate Bill*.    A second concern we have is that both Bills rely heavily on the private insurance market to offer 'prescription drug only'  insurance and develop private Medicare managed care plans. Many consumers prefer the traditional fee-for-service Medicare system that has served them well since the beginning. They fear either bill will mark the end of that delivery system as consumers are forced to join HMOs or PPOs in order to get prescription benefits. The 'prescription drug only policies' each bill envisions Medicare recipients will be able to purchase do not currently exist, and one question is whether private insurance companies will want to offer such policies.      Our experience here in Pennsylvania over the past few years with Medicare HMOs have made many consumers suspicious and cynical that managed care will be a more cost-effective way to deliver Medicare, or that the private insurance market is committed to serve the Medicare population. We have seen insurance companies that started Medicare HMOs and then quickly fled the program in droves leaving consumers in the lurch.    We have also seen Medicare HMOs drastically increase their premiums yearly while at the same time reducing their prescription coverage that was a major inducement to consumers enrolling in the plan to begin with. Since 1999, the Center for  * See the Kaiser Family Foundation website at www.kff.orgMedicare and Medicaid Services (CMS) has consistently listed Pennsylvania as one of the states that experienced the greatest loss of Medicare HMOs.     Of major concern to us is the viability of Medicare managed care plans in many of the rural parts of our state. A number of our rural counties have never had a Medicare HMO available to their residents. Others had one or more HMOs at the beginning but lost them when the HMO could not make a ?go? of it financially in a rural area. Of the 346,297 rural Medicare beneficiaries in Pennsylvania, 35% have no access to a managed care plan and 44% have no access to a plan that offers prescription drug benefits.**  As a result we are cautious and hesitant to endorse either Bill which places such emphasis and reliance on the private insurance market and managed care delivery systems. Thank you for the opportunity to address you today and for listening to our comments and concerns.   ** See Families USA Report May, 2003