I began working in, I think, it was '72, '73, and I worked for an advocacy organization in liaising effectively advocating on behalf of low-income vulnerable populations with state government. From there, I took a job with the House Fiscal Agency, and effectively for about a decade was involved in heading up what they called the Social Services Budget at that time, which was spending by the state for welfare programs, Medicaid, and such. From there, I went and I was appointed the Director of the State Medicaid program in 1985, and stayed in the position heading up the Medicaid program till 1991 when I went to Blue Cross Blue Shield of Michigan and assume that position of vice president. Then became overtime President and CEO of their HMO Blue Care Network, and retired in 2010 as an Executive Vice President from Blue Cross Blue Shield. After retirement, I did some consulting and I did some teaching at the University of Michigan School of Public Policy and the School of Public Health, teaching basically a course on private and public health insurance. Medicaid is an insurance program. I'd call it a public insurance program because it is established by statute and effectively funded through state and federal government. The motivation actually began in the 1930s when Social Security was passed by Congress. At that time, there was some interests, particularly among progressives of having health needs also covered for the Medicare population. Unfortunately, there was opposition at that time. The opposition really came mostly from the American Medical Association, but also from people who were concerned that there was plenty on the plate of the Roosevelt administration, particularly with the Depression and World War II. It was never really raised to a priority by the Roosevelt administration. With the end of World War II, there was, again, interests of doing something about healthcare, particularly a political interest in providing Social Security members with some health care coverage. But there was again resistance from the American Medical Association, but also there was some reluctance from Southern Democrats who were particularly fiscally conservative and worried about taking on another public monies obligation. With that, eventually Congress passed something called the Kerr-Mills Act, which provided federal state partnership and an ability to provide some coverage for health care needs for Social Security beneficiaries. That began, I think it was 1956, '57, but didn't really catch on. When Kennedy and Johnson were presidents in the mid 1960s, there was, again, an interest in doing something to cure the problems with Kerr-Mills and to make a more viable system. Basically with Kerr-Mills, up to 1965, I think it was adopted by 40 states, but it was only a meaningful program in about six of the states who effectively used most of the resources that were provided. There was a real desire to make a larger program. That's where Medicare came from. Medicare was really viewed as a way of providing coverage to people who receive Social Security benefits and a few others who were added on. Also, there was a desire to do something for the most vulnerable low-income populations. Medicaid was attached to it but put together in a slightly different form. That was politically acceptable. Well, Medicare, first of all, and how it was set up was very different, and that Medicare was a program that offered health insurance coverage to pretty much anyone who is age 65 or older. They included, as I mentioned before, some other populations, particularly permanently disabled individuals, who had a significant previous work history. But over time, as it worked out, Medicare was over 80 percent of the beneficiaries were over 65 and social security basically retirees and that 15-8 percent tended to be the permanently disabled there and effectively, this was a federal program. This was funded through federal tax dollar and was pretty much guaranteed to you when you retired and you took your social security. The Medicaid program was viewed a little bit differently, was more viewed as an extension of the [inaudible]. It was a federal-state program. The funding came from state taxes and from federal taxes. It was administered by the states and it was geared at providing public health insurance coverage to the very, very poor and what I mean by that effectively, it was people who were significantly under the poverty line and it was people who had very, very low assets. But they also needed to meet a category which effectively said, for lack of a better term, that they were deserving of assistance. The aged, the blind, the disabled, and very, very low-income children were eligible. Also, the parents of these children were eligible. There were some restrictions based upon two-parent families. It mostly was geared to covering single parents and their children and again, very, very poor. Each state had the opportunity to administer the program and a state could choose whether or not it wanted to participate. In the late 1960s, when states could decide whether or not to opt-in or not. There were actually two states that did not initially opt in. One was Alaska that I think decided to participate in the program. I think it's in 1969. But Arizona held out until 1982 to actually provide Medicaid coverage and in doing so, I think it was a waiver to actually put it into mandatory managed care system as a way of implementing the program. By 1982, all 50 states were participating in Medicaid. You need to take a look at a few factors here. First is what did the system look like before Medicare, Medicaid came in and effectively, it was a system that pretty much, for people without means, they were relegated to a public hospital system and many of those hospitals now don't exist anymore. Some still do though or have been converted into non-profit types facilities. Effectively, before Medicaid, you really had a system where the poor needed to go to providers and ask for their help and they either accumulated large bills or they went to public medical facilities that saw it as their mission to effectively care for the poor and people without the means to pay and with the advent of Medicaid, these people who had limited ability to repay effectively were given an insurance card. When we're said okay, now you can go out and you can use the card to purchase your health care services that you may need. Initially, what that did is it provided pretty ready access to most any hospital in the country. Very few hospitals chose to not participate in Medicaid. But it provided a little bit less than perfect access to the physician community that had an ability to choose whether or not they wanted to participate in the program. It was significantly better access than people had before. You also need to remember that what happened in the 1950s, 1960s, 70s, and 80s is that there was an explosion of medical technology. Medical care became much more important to actually improving health status, improving longevity, improving quality of life. As the years progressed with Medicaid being in existence, effectively, an insurance card or ability to access coverage became more and more important to one staying healthy. It's something that's been studied, but I've never seen a really good simple explanation for. Let me go back to at least Michigan and how access to care was affected in the early years of the program. Effectively, what happened is that the physician community was the key to whether or not there was really significant access. I tried to measure this once and I estimated that somewhere around 20 percent of the physicians in the state in the 1970s were really participating in the program. A lot, particularly when I went to speak at medical societies and things like that, they were hostile to the program. They would say, "Look, if you're not going to pay us market rates, why should we participate?" It was as simple as that. In other communities though, there was more of an acceptance. I remember for example, going to Flint, Michigan and talking to their medical society and the physicians saw it as a community problem and ones that they all needed to contribute to resolving. Another key aspect of the early years is that the states were giving a responsibility here to administer a health insurance program to effectively set up and run an insurance company and they had absolutely no experience at doing this. So, you had money I was going to pay, may not be top dollar money but it was money. Whenever you have that happen and you have an inexperienced administrator, there are going to be some scandals and some problems. In the early years, you had significant problems with Medicaid maths. You had effectively doctors who would set up in highly poverty concentrated areas and would make a lot of money billing Medicaid for a lot of services. It was a pretty simple formula for how you make money in that if you do a lot of diagnostics and you see your patients for a very short period of time but many times, and you keep them out of the hospital, you effectively will be able to bring in a lot of money. It's like a low-per-visit rate, but lots of visits. Volume can make up for effectively a low-per-unit cost. The problem is that you're running a lot of volumes for your clinics but you're not giving high quality medical care. As a result, you may have a pretty happy patient because you're getting lots of attention from you but that patient is not getting the best medical care. There was a lot of work that was needed to effectively crackdown on the Medicaid mills. Quite interestingly, it came with a lot of pushback from the Medicaid recipient community because in trying to improve overall quality, we were effectively attacking the doctors that they relied on for care. But it wasn't just physician care. Medicaid was also the key insurer for nursing home care within most states. Medicare covered skilled nursing care. But most of the people needed a basic maintenance care and that was not covered by Medicare. All of the basic care people fell into the Medicaid bucket and it became a very large expenditure within Medicaid. The problem is that, again you had a state that really didn't know how to administer all this and you had nursing homes, some of which were, let's say in the business to make money. Not all, but some and as a result, there was a lot of cutting of corners by nursing homes and questions about the quality of care. I remember quite often having to actually have inspections of nursing homes and close off Medicaid to these homes, and move the patients. It was always a very traumatic experience and actually very dangerous for the people who had to be moved. But something that was very necessary in order to effectively assure longer term quality of care for the nursing home population. Lots of challenges. I talked a little bit about the physician community before. Clearly, there was a problem and the problem probably continues today in terms of access to physician care, the overtime access to primary care, I think it's overall improved in Medicaid. A lot of this has to do with also the introduction of managed care and the use of mid-level practitioners. But the key problem, I think in terms of access has been specialty care, which tends to be something that is controlled by the physician community and getting specialty care has always been a challenge in Medicaid, and probably pretty much remains so today. But there are other challenges. The key challenge was that states had to come up with their funding for Medicaid. The funding formula for Medicaid worked based upon average per capita income in a state relative to national average per capita income. The lower a state's per capita income, the higher the federal share of the funding of Medicaid. I think back then, the federal share went up to 83 percent. If you're a very poor state like let's say Mississippi, you would have your Medicaid dollar funded 83 cents of it by the federal government, and you'd have to come up with 17 cents. The richer states have been New York back in the 1970s, Michigan would have a per capita income that was higher than the national average. They got 50 cents on the dollar for most Medicaid Services and that need each year to get state dollars to match unlimited federal dollars was always a challenge for state because the Medicaid program was not very politically popular in most every state legislature. Health care costs, particularly during the 70s and 80s, were probably the fastest growing expense of state government. Each year you're sitting there looking at a Medicaid program that just inflation in it, in order to keep up and keep your access for your recipients who was going up probably 5-8 percent and state revenue might be going up 4-5 percent. You were faced with having to ask for an increasing portion of the state funding pie each year. Of course, when you're coming up against then K through 12 education, prisons, tax relief, other spending priorities that were much more politically popular. It was a struggle each year to get enough votes to get what was needed to adequately fund the Medicaid budget and literally each year and this happened in virtually every state, there was discussions of how do you cut back? Can you cut hospital payments? Should you cut eligibility? Should you add additional, optional eligibility groups or not? Literally, it wound up as pretty much Medicaid against other state funding needs as the battle in the legislature. Quite honestly, the breakdown, at least in Michigan and probably in most of the states broke down along party lines. There were years for the budget that contain Medicaid that we would have maybe one or two Republicans voting, yes. It was the Democrats that often represented the urban areas that effectively created the critical mass to get votes to pass it. Again, there was always a price to pay and the compromise that was part of politics. That became I think, one of the major challenges and led to some very interesting accounting or funding tricks once you got into the '90s in terms of keeping the program going. Also, it's important to note that hospitals were particularly vulnerable in the fight, because I think everyone knew that hospitals were really committed here. They would probably accept less than a dollar for a dollar's worth of hospital service. That was one of the areas that states looked to cut back. What the hospitals did is, they went to Congress. In, I think it was 1980 or '81, the Bond Amendment was passed which effectively mandated that Medicaid programs pay hospitals the full cost it would take for an efficient hospital to care for an individual. That effectively provided a ground floor that states couldn't go under. But then during the 1980s, the states took efforts to try to define what an efficient hospital was and found ways to cut under it. Over a decade, you had a period where hospitals gradually began suing state Medicaid programs to get adequate reimbursement. There was a lot of interesting conflict, particularly political conflict that came out of the challenge of getting funding each year. Is that I mentioned before that to a certain extent, states could control their eligibility and states did that. So you had very different income standards from state to state in terms of who was eligible for Medicaid. Some states allowed coverage of populations that had initial income higher than the Medicaid threshold, but then had medical expenses that allowed them to spend down to become Medicaid eligible. Other states, I think there were 12 states that had no medically needy program that fit this categorization. You had a lot of inequity between and among the states in terms of who is eligible for Medicaid. Also, over time, there was political desire in Congress to add groups to those who were categorized as eligible for Medicaid. Particularly, there was a desire in Congress to cover pregnant women and children up to a higher percentage of the federal poverty line. I think they went as an option up to over a 133 percent of the poverty line. Each state could choose whether or not they took in these optional categories. As a result, after 20, 30 years, you had a total mosaic of different eligibility requirements state-by-state. I don't know, I tend to think of healthcare as a universal need. Something that if you've got a broken arm, you need a certain type of medical care and it shouldn't differ by from state to state. Unfortunately, the program evolved into one with significant disparities on terms of what was covered for population who had really no other avenue to get their medical expenses paid for. Let me go back to fundamental structure because I really do believe that even though it was politically necessary to effectively make Medicaid a partnership between state and federal governments, the partnership led to significant disparities between states. As I mentioned before, the taking of a universal need and allowing it to be carved up in different ways by different states, I think that it really needed and does still need to become a single platform for funding by the government. Probably the funding should be provided simply through the federal government, rather than relying on state governments, where there is uneven willingness to adequately fund programs, and also uneven ability to actually raise the revenue that's needed for escalating health care costs. To me, what makes most sense to do to really even out the disparities and to eliminate them, is to effectively include low income as a sub-component of the Medicare program rather than keeping it as a separate program, with separate rules and everything else. That I think is the key thing that's needed here. I think this reminds me of a legislator who I used to work with, who talked about the art of politics. He always talked about there's a real tendency to want it all in politics. But the art of a good legislator is being being able to get half-a-loaf rather than a full loaf of bread because that's better than nothing, and to keep on moving ahead on this. It reminds me a little bit of the original passage of Medicaid. Actually the original passage of Medicaid was a compromise. It was a compromise that was actually supported by liberals for one reason and supported by conservatives for a different reason. It was supported by liberals because they saw Medicaid, even though they knew it was imperfect, as being a key critical first step to universal coverage. It was supported by conservatives because they felt that if they took this step it would mitigate the desire, the energy to push for universal coverage. They view it as blocking action. Whether or not it's a blocking action or it's a step in the right direction, it does make progress to the goal of getting health care access to people who need it. In some ways, as we've learned from the recent polarization of the political parties, even though the motivations may be different, maybe having the parties not so polarized is really critical to making any progress in democracy. I think people who are dedicated to the goal of providing healthcare coverage for people who need it in this country, I think they need this keep your eye on the long-term goal and you be willing to take steps in the right direction. I think that's exactly what the Affordable Care Act did. For that reason, I supported it. I think it is actually moving to help reduce some of the disparities and to improve overall access to care in this country.
