Last week, MassInc. released a report about the state of the Commonwealth’s finances. The study’s author, Cameron Huff, raises the important point that the state budget has a “structural imbalance, with on-going spending exceeding revenues.” This is something that politicians, policy-makers and the public need to talk about; Huff’s report contributes much to the conversation. Going forward, though, we should make sure that we aren’t placing undue responsibility for increased spending on MassHealth, the state’s Medicaid program.
For his report, Huff looked at two decades of state budgets from 1987 through 2007. He finds that Medicaid “spending totaled $7.4 billion in 2006, an increase over 1987 of more than $4.5 billion, or 163 percent. This percentage growth was almost five times that of the budget as a whole. Medicaid’s share of the budget rose from 13 percent to 26 percent between 1987 and 2006. Increases in Medicaid were two-thirds of the overall growth in state spending.”
Both the Boston Herald and the Globe’s venerable business columnist Steve Bailey picked up on Huff’s conclusions. In his column March 19, Bailey cited Huff’s study and opined that “the rising cost of healthcare is devouring the budget, crowding out almost everything else.” He goes on to quote Huff’s statistic that Medicaid “accounted for almost two-thirds of all state spending growth over the last 20 years.”
In an editorial March 20, the Herald does much the same.
This over-simplification of Medicaid’s place in the state budget isn’t helpful in correctly diagnosing the problem. If we are going to assess the long-term health of the Commonwealth’s budget, we can’t take numbers out of their revenue context. It’s important, in looking at the increased share of the budgetary pie consumed by Medicaid, to do so in relation to the dramatic reduction in tax revenues that have pared the state budget.
To be fair, Huff observes that the “state has become increasingly dependent on volatile funding sources for revenue growth” such as taxes on capital gains and businesses. But he doesn’t tease out the impact of revenue decreases tied to decisions made by the public (such as approving a ballot initiative to decrease the state income tax) and state lawmakers (such as increasing the personal exemption and increasing deductions that can be taken for adoption expenses).
It’s certainly within the prerogative of the legislature to raise or lower taxes, and within the purview of the public to weigh in on the same topic either by ballot initiative or by contacting state reps and senators. But to assess Medicaid’s costs over time — and its corresponding consumption of state resources — we must compare annual state Medicaid costs with comparable changes in the state’s economy. One standard way of doing that is by measuring personal income.
A 2006 report by the Massachusetts Medicaid Policy Institute authored by Nancy Wagman and Noah Berger does just that. It shows that from fiscal years 1994 to 2005, Medicaid spending grew by 5.6 percent. During the same period, the economy, as measured by personal income, grew by 5.4 percent. Tellingly, state revenues grew by just 4.4 percent. The reason state revenues didn’t keep pace with economic growth? Tax cuts enacted by the public and the state legislature.
Between 1994 and 2005 Medicaid spending as a share of personal income increased $158 million. In the same period, state revenues as a share of personal income dropped by $2.5 billion. Since the federal government reimburses the state for approximately half of its Medicaid expenses, the increase to the state in Medicaid spending from 1994 to 2005 was just $79 million. This figure — $79 million — as Wagman and Berger point out, is “less than one-half of one percent of the Commonwealth’s budget” for 2005.
By comparing Medicaid’s annual cost as a share of the state budget without taking tax cuts into consideration, one might conclude, as Huff does, that Medicaid’s sometime reputation as a budget buster is “a label more than well deserved.” In fact, the many permanent tax cuts enacted by the public and state lawmakers account for a much more significant portion of the structural deficiency the Commonwealth is now facing.
Wagman and Berger conclude: “Although Medicaid spending as a share of the economy has remained relatively stable, state revenues as a share of the economy have dropped substantially.”
As the state continues to engage in tough debate around the costs of health care and health care reform, it is critical that the numbers we are talking about are placed in proper context. Huff acknowledges up front that the Commonwealth’s budget over the past 20 years reflects “the state’s collective values and priorities.” But failing to detail the costs of tax cuts alongside the costs of health care, human services, education reform and local aid gives an incomplete picture of what the state’s resources actually are and how they’ve been allocated.
Jarrett Barrios, President, Blue Cross Blue Shield of Massachusetts Foundation
Let’s keep the numbers “in context” by having Jarrett Barrios share with the public the amount of money he is being paid by Blue Cross and Blue Shield. And don’t try to fool the public with “but it’s the BCBS Foundation, not the insurer”. The two entities are joined at the hip.
The past MA BCBS “foundation” executive director Andrew Dreyfus did just what BCBS planned in creating their bogus “foundation”. BCBS had him give away millions of dollars in BCBS hush money to Massachusetts “advocacy groups” and academic facilities. Then BCBS promoted Mr. Dryfus to become a BCBS Corporate Vice President.
As corporate VP who had effectively bought off the major advocacy groups with “foundation” funding Andrew Dreyfus helped BCBS to cash in by creating the state’s “landmark law” to force residents to purchase expensive private insurance under the individual mandate. This was accomplished with nary a peep from the “advocacy groups”.
While he’s at it, would Jarrett Barrios also “provide context for the numbers” by sharing with readers the salaries and compensation for all other executives at Massachusetts Blue Cross and Blue Shield (both “corporate” and “foundation” since they’re not really that different). An update on the Attorney General’s investigation into the $20 Million payout to past BCBS CEO William VanFaasen would provide useful “context” as well.
The other goobledygook Mr Barrios has given us is not very useful to the public.
This shows $538.46 per person cost to sign up with outreach grant money – OUTRAGEOUS waste!
Below is from
“Chapter 58 Implementation Report Update No. 11 – February 12, 2008″
http://www.mass.gov/Eeohhs2/docs/eohhs/healthcare_reform/080212_chapter60.pdf
In the FY08 budget, $3.5 million was appropriated for the MassHealth, Commonwealth Care and Commonwealth Choice grant project to award grants to community and consumer-focused public and private non-profit organizations for activities directed at reaching and enrolling eligible Commonwealth residents in MassHealth and Connector Authority programs
Forty-five (45) community-based organizations were awarded funds in November 2007 for the direct service grantee model. These grantees have quickly implemented this program, performing outreach and enrollment activities in their regions. All 45 grant organizations submitted monthly grantee progress reports in January for December activities. As of December 2007, over 6,700 individuals were assisted with the application process, and more than 6,500 newly eligible individuals have been approved for benefits.
——-
$3,500,000 (in grants) divided by 6,500 (number enrolled) = $538.46 per person
Ms Vance – The $3.5Mil in government grants you refer to are indeed an OUTRAGEOUS waste of taxpayer money.
These grants have the same effect as the grants from the insurance industry: instead of Massachusetts advocacy groups criticizing the dysfunctional, inequitable, and horridly expensive healthcare system that we all are struggling under, they are busy applying for grants — both from MA Blue Cross and Blue Shield and the state government — and spending this “healthcare money” to bring people into a dysfunctional and wasteful system. How unethical is that? Very.
Both the government and the insurance industry grants act as hush money because health care advocacy groups should be advocating for fundamental changes and improvements in the system so that quality, affordable health care is guaranteed (not “mandated”) for everyone.
Learn more at http://www.MassCare.org/about
Beth’s comment above misunderstands the purpose and use of state outreach funding, and makes some math errors as well.
First, grant money is used to fund community-based organizations in conducting outreach and assisting individuals signing up for health insurance coverage programs. Since the passage of health reform, we’ve learned that the complex changes to our health care system can cause confusion. The groups use grant funds to find and connect with individuals who have not signed up for coverage, explain their options to them, and provide a helping hand through the daunting application process for insurance. But it doesn’t stop there. Once someone is covered, it takes considerable time and effort to maintain their status, as many folks may be disenrolled or lose coverage over time.
The advocates in this field work extremely hard. Incredible effort is involved with breaking down the health care system so that individuals know exactly what to do next, how and where to sign up for coverage, and not get confused along the way with information that is frequently changing or that may be misunderstood.
Additionally, the organizations only report a direct count of the number of people they have enrolled, that is, with whom they sit down and complete applications. What doesn’t get counted in such reporting is the number of individuals who have received information from the funded organization, and then received help elsewhere. The struggle with outreach is that a person often must hear a message multiple times before taking action, and a lot of the work that organizations and advocates do does not get credited along the way.
Second, the state closely evaluates the work of the grantees. Funded organizations are able to share best practices and connect over the activities that have worked for their group, and which may also be effective for other groups.
Finally, we wish to address some of the calculations in the blog comment. As a correction, the 45 organizations received funding out of a smaller pool of money than was stated. You are correct in that the overall pool of money issued through the fiscal year 2008 budget was $3.5 million, but $1.1 million of that money was set aside for another set of larger grants. So the 45 organizations, who received between $26,000 and $55,000, shared a smaller amount of money: $2.4 million. Additionally, their work is far from done.
One more thing about the numbers. We calculated that if 6,500 people were enrolled in just one month of December, and if the funded organizations continue at this same pace, they will have helped roughly 45,500 people over the course of the seven months that they have been funded to do this work, through June 2008. Dividing $2.4 million by 45,500 leads us to conclude that it is costing the state roughly $52 per person to be assisted and enrolled. On top of this, the state gets federally reimbursed for 50% of this cost, so it’s an even better deal for the state, at $26 per person. And of course, that only counts the people directly assisted who the organizations are able to report on, and leaves out the many others indirectly assisted by the outreach work.
Jennifer Chow
Health Care For All Outreach and Enrollment Manager
Jarrett Barrios,used to be my state rep.and then my senator. I agree that other things must be considered in regards to medicaid/revenue growth. They must also take into account the amounts of people no longer paying taxes in this state because,they have left, due to the high cost of everything. Demographics also tell a story. They are unemployed,due to layoffs. The comments “within the perview of the public to weigh in”, speaks to the fact that politicians ex and present have forgotten, the people “are” the government.Weighing in by ballot intiative is no longer an option in Massachusetts,as he well knows. Years of hard fought activism for the health care ammendment,went up in smoke at the last juncture. NO VOTE at all, shelved to a fictitious committee. I was sitting in his office watching the live feed. Making way for the “insurance” mandate. Insurance is not health care and I resent the fact that the people involved, continue to use them interchangeably. WE all know from helping others,or experiencing it ourselves,that our health care dollar goes more to huge salaries,marketing budgets, web-sites, customer service, etc. Until that is addressed, nothing has been reformed. The people of MAssachusetts were moving towards universal “health care”,not insurance. The failure of everyone involved in this mess,is the failure to actually know the citizenry and realize how many people were and are living in poverty in this state. That is why they will not be able to sustain this, the numbers to subsidize are huge. I as a public citizen am not opposed to raising taxes, as long as it goes to nutrition, education and community services that are now on the chopping block. I will not support this failed effort at reform, to make more millionaires.
In response to Jennifer Chow, I am a former SHINE counselor and have won 2 national awards for community service on Outreach and Enrollment for Medicare D. You must never use “ifs’” when crunching numbers, only facts in evidence. I know outreach work is hard stuff: been on TV, out to churches, senior centers, linguistic agencies, etc. The tax deadline has passed, so it doesn’t really matter how many more get enrolled, the penalty phase has begun. FYI, the enrollment process was flawed, people did not get screened and notified in a timely manner. Many people never got a letter from The Connector,prior to January 1,because it got stuck in the screening process. I filed my 21 year old sons’,with him, and attached all necessary documents. He continues to get mail from DMA,just this week, asking him to bring proof of who he is. He has also received a letter from Health Safety Net, that he’s eligible. He has since gone to work for Starbucks and has insurance. They will not fine my son, for not being enrolled, I will make sure of that. The thousands of others, that are in my sons’situation could perhaps be helped by those organizations Jennifer Chow is referring to.