the state and federal governments real savings. More importantly, it will reduce the number of uninsured in my state, keeping health care costs low for businesses, particularly small businesses with less than 50 employees. So I watched with great interest as I learned that the Congress was looking to provide governors with more flexibility to implement their own solutions to health care problems in their states. I know that this is only the beginning of the process in designing the new program, but I must say I am very disturbed by what some of my friends, a few governors from other states, have been suggesting. I understand that some of my fellow governors here today think that this new program should lock-in the inefficiencies of the past program into a baseline and apply a one-size-fits-all growth rate for each state. It doesn't make a bit of sense that a state like Michigan or Wisconsin, with lower population growth than states like Florida, Texas and California, should receive the same growth rate under the cap. That kind of proposal would pose a real danger to kids, the disabled and the elderly in Florida and other growth states. This is serious business. Medicaid is the vital life support system for our most vulnerable citizens. While most think it's mainly for poor welfare families, the fact is that two-thirds of Medicaid funds are spent on the elderly and disabled. That is why Medicaid costs soar in states like Florida-the fastest growing group of Medicaid recipients in Florida are people over 85. And you all know that longterm care is the costliest of medical care. Middle-class families in America have become familiar with Medicaid when they seek care for parents who need home health or nursing home care. And in the growth states, population increases across-the-board in the program— among children, the elderly and the disabled-mean continued pressure on state budgets. Even under the most conservative scenarios, Florida's Medicaid program is estimated to grow between 10-12% per year over the next seven years. These increases reflect a growing and aging population. Some of these characteristics are currently unique to Florida but many states will be facing them in the future: Florida has the largest percentage of elderly people in the nation; The percentage of our uninsured is increasing. More than 20% of our non-elderly citizens have no health insurance; We have the second highest poverty rate (nearly 18%) among the large states; and Florida is a destination not only for thousands of migrants from other countries, but also from other states, particularly during periods of recessions. Many of these new arrivals require health, economic and other financial assistance from the state. When you factor in the certainty of recessions, the pressure on state budgets builds. Medicaid caseloads, that is the number of people on the program, typically peak about a year after a recession hits in Florida. In the year following our last recession, in the early 1990s we saw caseload increases of more than 25%. No amount of state flexibility can fully remedy that situation. Clearly, a proposal that ignores growth factors in the individual states would be disastrous. We need to be mindful of who we are affecting with these cuts. America's needy people-north or south, east or west-are the children living in poverty. They are the elderly-many from middle-class homes-the disabled and poor families. Their daily struggle would be nearly impossible without some help...the critical safety net of the federal/state partnership. What would a proposal to cap each state's Medicaid program at the same rate mean for the needy in our states? If you look at this first chart [see attached] in the first year of a block grant the differences would be startling. A needy person in Massachusetts would receive $4,800-two-and-a-half times as much as a needy person in Florida or Illinois-less than $2,100. And, a needy person in Wisconsin would receive $3,400-while a California needy person would receive $2,000. New York's per person poverty-allocation would be more than double that of Texas'. That level of inequity will never be acceptable to Florida or to other growth states. Again, Florida is willing to absorb a fair share of cuts-but I cannot let Florida families be treated with less regard than families in Massachusetts, Wisconsin or anywhere. Dollars must follow a path to needy people-wherever they live. When they move, the dollars should move, too. I hope that this subcommittee would not endorse a proposal to let a state use federal Medicaid dollars for non-health purposes-especially when some states will be receiving far less than they'll need to meet the needs of the elderly, disabled, and kids. You'll be sending federal funds for the Medicaid program to one state that will have the ability to divert those funds over to other programs while states like Florida, Texas and California will be cutting thousands off our Medicaid program. I think you've seen the results of that kind of gimmickry in the Disproportionate Share program. Shifting new responsibility to the states without a fair, equitable shifting of resources is not any kind of "New Federalism." It is an unwise attempt to balance the federal budget on the backs of high growth states-and, even worse, on the backs of children, the elderly, the poor and the sick. That's just plain wrong. And that is the issue that should trouble us all-how this proposal would disproportionately hurt the elderly, disabled and kids who live in growth states. I think this next chart [see attached] illustrates that point. Keep in mind these are conservative estimates. If, and it is a very big if, states could, with all the flexibility that has been promised, keep spending increases per recipient to no more than the inflation rate, we'd see dramatic reductions in the number of people served for the growth states, while some states would emerge relatively untouched. Michigan would have to reduce the number of elderly, disabled, pregnant women and kids by less than 4% but, Georgia would have to cut over 15% or 234,000 people off the program. New Jersey would have to reduce enrollment by a little more than 4%, while North Carolina would have to cut almost 20% off the rolls. And, Wisconsin would see about a 5% reduction in people served, while Florida's reduction would be over 15% or more than 430,000 of our elderly, disabled, kids and pregnant women. And as I said, these are conservative estimates. I think the Governor of Wisconsin and Governor Engler (I'll let him speak for himself) expect to get a windfall out of this. That kind of inequity should not be allowed. We need to look carefully at how this plan impacts the people in states like Florida and other growth states. I know this Committee does not want to endorse a proposal that: says the elderly in Florida are not valued as much as the elderly inMichigan; or that says children in Texas are not worth as much as children in Wisconsin; or that tells the poor and the sick in Virginia they won't receive the same level of care as the poor and the sick in Massachusetts; or that says federal support won't accompany the children and families, the elderly, the poor and the sick who move to Florida, or other growth states. I hope you will keep in mind three critical questions as you restructure the Medicaid program. 1. Does the program treat citizens in each of our states fairly with an equitable distribution formula, or does it favor some states over others? 2. Does the program reward those states making a real commitment to reform and improved management, or does it lock in the inefficiencies of the past and turn back the clock on reform? 3. Does the program set and maintain an appropriate, basic national standard for the care of children and others in need, or does it establish a new underclass in America? We need to be careful not to undo much of the gains we've made. I'm proud of the fact that Florida leads the nation in reforming Medicaid-we've cut the rate of growth in half and reduced the cost through managed care of Medicaid; we've imposed stringent price level controls on providers; we've encouraged alternatives to expensive long term care; and we've continued to use conservative standards for eligibility. These approaches are creating significant savings today. Florida already has more than 655,000 people or 40% of Medicaid eligibles enrolled in managed care. By next year we expect to have over one million of the state's 1.6 million eligibles enrolled. Only six other states have a higher percentage of their Medicaid recipients enrolled in managed care. We also have stringent price level controls on all our providers. The majority of providers receive no price level increases at all. Physicians, home health providers, and therapists are all capped at their current levels of reimbursement. Similarly, Florida's payment level to hospitals, nursing homes and other institutions is strictly controlled. For our hospital impatient services, we allow only the Medicare-approved rate of inflation. We've also maintained a tight rein on eligibility. Our AFDC payment standard is only 31% of the poverty level, ranking us 38th in the nation. We provide few optional services to the standard program. We have done much to control costs, eligibility, and benefits. And we've saved the state and federal government money while doing so. From 1991 to 1992, Florida's average spending per recipient actually declined 3% while there was a nearly 8% increase nationally. Our cost per recipient was under $2,400 in 1993, that ranked us 44th in the nation. But under the approach offered by some of my colleagues, we get penalized for these cost-savings efforts. Our base year for the block grant reflects the savings we've generated. States that have done nothing start out at a higher base. And, as they follow Florida with reforms, they'll get another windfall. Florida stands ready to share in the cuts-and we have already gone a long way to reduce our Medicaid costs. But, I will not stand by and let other governors, who are looking to catch a windfall, speak for my state and other growth states. If they are so intent on having the rest of us sacrifice to balance the budget, let them participate in the sacrifice, too. If Medicaid needs to be reduced by 20 percent to meet the goals, let every state receive the same level of cut. Now, I think the overall level of cut is too high. And I think we'll have a disagreement over that. But, if you do need to cut $185 billion out of this program you should at least do it equitably. I have a proposal to distribute these cuts fairly. It requires sacrifice for all states-including the low-growth states. It's a plan that would apply the cut fairly to all states. For years, Congress has been told by the General Accounting Office that funds in the Medicaid program are not targeted to areas of true need. The dollars, very simply, should go where the needy live. As the Congress looks at capping the program, it should account for the differences in population growth, poverty, uninsured rates and the percentage of elderly and disabled in each state. am not alone in sharing that view. Governor Wilson of California, Governor Symington of Arizona and others have expressed strong concerns about a block grant formula that does not take these factors into account. The United States was founded upon the simple but unwavering belief that "all people are created equal." That basic principle is undermined—and on the verge of being abandoned-through a block grant proposal that values people differently. Let me end by putting it simply: The debate in Congress should not be about developing a Michigan block grant, a Massachusetts block grant or a Florida block grant. care. We should be talking, instead, about a true federal-state partnership for health With a true federal-state partnership, a child, or a family in Florida, is worth as much as a child and a family anywhere else in the USA. Any proposal leaving Washington must recognize that truth. I want a program that enables me to address the particular needs and growth of Florida. I want a program that allows me to continue the reforms that show great promise for care-as well as savings. A true federal-state partnership for health care is one that has flexibility but it also recognizes the federal government's responsibility. Richard Nixon championed this approach as much as Ronald Reagan. Both argued that the federal government must share the fiscal burden and ensure equal treatment of those in need. Florida and other growth states are willing to share the load. But, we want the federal government to cooperate the way a partner should. Thank you. |