No spendthrift, state has ballooning health care bill

By J. Patrick Coolican

Monday, Aug. 10, 2009 | 2 a.m.

Few places have more at stake in the health care reform debate than Nevada.

The central aims of the reform movement pushed by President Barack Obama, congressional Democrats and a few Republicans are to extend coverage to the uninsured and stop spiking costs before they consume the entire economy.

Nowhere are those two problems more acute than in Nevada.

To wit:

Nevada has long had the nation’s stingiest Medicaid program, with some especially restrictive eligibility requirements.

In part because of the tougher eligibility standards, just 6.7 percent of the population is enrolled in Medicaid, a federal-state health insurance program for the poor. That enrollment is second lowest in the nation, according to the most recently available data.

Nevada has created eligibility rules that meet the bare minimum for receiving federal money. The program does not include optional groups such as the so-called “medically needy,” who have income well above the poverty line but have burdensome medical expenses due to chronic illness or injury.

Because Medicaid is a key method for covering the uninsured, the low enrollment rate means the state has some of the highest rates of uninsured in the nation, nearly one in five Nevadans, according to the most recent data available from the Kaiser Family Foundation.

Nevada also gets everything that accompanies high rates of the uninsured — emergency rooms packed with people who have no means of paying, and Nevadans whose lack of medical attention leads to expensive, long-term chronic illness.

“There’s long-term consequences,” said Mike Willden, director of the Nevada Health and Human Services Department. “If you put off health care, it may be more expensive down the road. If you don’t treat diabetes early on, you wind up with very expensive chronic treatment.”

Indeed, most Medicaid money is spent on chronic diseases, roughly 70 percent, Willden said.

One way Congress is considering cutting the rate of uninsured is the fairly simple step of expanding Medicaid.

This has policymakers feeling some trepidation, said Assemblywoman Sheila Leslie, D-Reno, a longtime key player on health policy and budgets. Though Congress has pledged to pay for the entirety of the new enrollment, it could just as easily shift the new costs to the states down the road.

Even without that kind of cost-shifting, Nevada is experiencing a surge of Medicaid spending despite the general flintiness of its program. The rise in unemployment, home foreclosures and personal bankruptcies has led to a sharp spike in Medicaid enrollment.

Enrollment dipped to about 170,000 in the summer of 2007 just as the local economic bubble began swiftly deflating. Medicaid enrollment has been rising swiftly ever since.

The July enrollment was 25 percent higher than two years earlier, at 215,000, already 5,000 ahead of what the Legislature forecast when it recently passed its two-year, $6.9 billion budget.

Robin Rudowitz, principal policy analyst for the Kaiser Family Foundation, said that while other states are seeing enrollment increases, the effects of the recession appear to have been more severe and more broadly felt in Nevada.

Because Medicaid consumes roughly 15 percent of the state budget, this enrollment overrun threatens to break a hole in the state budget, which has led to speculation that Gov. Jim Gibbons will call a special legislative session to fix it.

The problem cannot be easily fixed, for, as Willden noted, a condition of Nevada’s accepting $125 million in federal stimulus money for Medicaid this fiscal year was that the state could not create more restrictive eligibility requirements.

Dealing with the rising number of uninsured is just half the effort of reformers in Washington, however.

The other is finding a way to stem rapidly rising costs.

More than one in six American dollars goes to health care. And although the United States spends $6,000 per capita on health care, or often as much as double the rest of the industrialized, developed world as a percentage of our gross domestic product, those other nations often have higher life expectancies.

Costa Ricans live as long as Americans, even though that Central American country spends less than one-tenth what the United States does on health care per capita.

On this score, Nevada also has much at stake.

To begin with, rapidly rising medical costs drive up the cost of Medicaid, which takes resources from other priorities, such as improving education.

“We cannot sustain the system we have now. We can’t keep going in this direction,” Leslie said.

“We need federal reform,” she said.

Medicaid costs per eligible user in Nevada increased 20 percent from 2003 to 2008, and that was after a significant cut during 2008.

Inpatient hospital costs for Medicaid have increased 87 percent since 2000, or more than three times the rate of inflation.

Nevada’s relatively low rate of Medicaid spending compared with other states is due to its program being no-frills and limiting eligibility, and not because Nevada is a low-cost health care state, Willden said.

In fact, Nevada, despite mediocre outcomes, has some of the highest health care costs in the country, according to a recent study. Providers billed $9,527 per Medicare enrollee in 2006, 15 percent more than the national average, according to the Dartmouth Institute for Health Policy & Clinical Practice.

(Billings for Medicare, which is the government-run health insurance program for people 65 and older and the disabled, are considered a good barometer of a region’s overall health care costs.)

What is driving this cost?

Health care policy experts call it “premium utilization” — expensive tests, procedures, surgeries and medications, all of which offer questionable — and perhaps even deleterious — outcomes.

These expenditures drive up the cost of public programs such as Medicaid, but also private health insurance premiums, forcing businesses to drop coverage or forgo wage increases in the face of the premium increases.

The U.S. Senate, led by Nevada Democratic Majority Leader Harry Reid, will take up health care when it returns from the August recess next month.