COST OF THE MEDICAL ASSISTANCE FOR THE AGED PROGRAM Evaluation of MAA expenditures and forecasts of prospective expenditures is a somewhat clouded task. Determination of the exact amount of "new" money expended under MAA is complicated by the transfer of many tens of thousands of aged persons from OAA medical care programs to MAA, as well as by the transfer of funds from other programs to MAA in order to take advantage of more favorable matching provisions. And, any computation of "new" money for "new" people would have to be decreased by the amounts expended in behalf of recipients, who, while not previously enrolled in OAA, would have been eligible for some help under OAA or other relief program had Kerr-Mills not been enacted. These considerations should be borne in mind in evaluating table V, which indicates, by State, total MAA expenditures of $372 million from the inception of Kerr-Mills through December 1962. The Federal share in these payments was $189 million--some 51 percent. of the total. State and Federal MAA payments in August 1963-almost 3 years after passage of Kerr-Mills-total $29,042,000. (See table VI.) This is at an annual rate of about $350 million. TABLE V.-Medical assistance for the aged: Total payments and Federal share of payments for medical or remedial care, by jurisdiction, calendar year 1962, and from inception of program through December 1962 1 Includes money payments to recipients not subject to Federal matching as follows: Total, $1,672,000; TABLE VI.-Medical assistance for the aged (MAA): Vendor payments by State and Federal share, August 1963 Includes money payments to recipients not subject to Federal matching: Connecticut, $564; Massachusetts, $97,720; New Jersey, $11,382; New York, $47,326; North Dakota, $2,242. Less than 0.05 percent. 3 No payments made in August. Estimates of future MAA expenditures are complicated by the lack of certainty with regard to the number of States which will ultimately implement Kerr-Mills-and, of even greater significance, whether implementation will be meaningful rather than token. Additionally, it is impossible to determine how many States may further restrict their programs in attempts to control or reduce expenditures, or just how many States may liberalize their programs. As the States' share of funds for MAA plans are usually dependent upon periodic appropriations by legislatures, with all the uncertainties inherent in that procedure, forecasting suffers a further handicap. Nonetheless, some reasonable estimates are possible. NEGATIVE ASPECTS OF KERR-MILLS EXPENDITURES Based upon estimates of expenditures submitted by the various jurisdictions to the Bureau of Family Services, 35 jurisdictions expect to make total MAA payments of $343 million in fiscal year 1964. The Federal share of this total is estimated at $179 million. Unquestionably, the Kerr-Mills program has enabled States to inject millions of "new" dollars into their medical care plans. Three significant negative factors, however, combine to reduce the extent to which MAA funds are "new" funds and the extent to which the "new" funds are most beneficially expended: (a) Use of the Kerr-Mills MAA program as a means of financing benefits for people who were eligible for some help under Old-Age Assistance program or other relief programs The Federal Government will match vendor payments under MAA without limitation as to maximum amount, while matching payments under OAA-both "Federal percentage," and "Federal medical percentage"-are available up to specified maximums only. For example, a State whose "Federal percentage" and "Federal medical percentage" in the matching formulas (see app. B) are both at the 50-percent level, and whose average OAA monthly assistance payment is $80, including vendor payments of $15 for medical care, would receive $51.50 per month in Federal funds for each OAA recipient. If its nursing home payments under OAA are $200 monthly per person, the Federal share of this cost is $51.50. But, if the nursing home patient is transferred to MAA the Federal grant then becomes $100 instead of $51.50. Thus, instead of the State spending $148.50 of its funds for this nursing home care, it will have to spend only $100 of its own funds, with the Federal Government paying the difference. We have previously noted the wholesale transfer of recipients of OAA, whose primary need is for medical care, from the relief program to MAA. The foregoing paragraph explains the motivation for the transfer-more Federal money. Somewhat unusual confirmation of this attitude of regarding Kerr-Mills as a prime device for securing new Federal funds for an "old" program is contained in a very recent report to the Congress of the Comptroller General. The report takes the government of the District of Columbia to task for delay in implementation of MAA. But, the prime fault of the District, according to this study, was not that its delay prevented medical care from being made available to a new category of recipients the medically indigentbut that the District had not taken timely advantage of an opportunity to secure millions of Federal dollars for its existing program. In the words of the Comptroller General: Our review disclosed that, at the time the legislation was enacted, low-income aged residents of the District of Columbia were already being provided the type of basic care and services contemplated under the medical assistance for the aged program. However, to become eligible for Federal grants, the District needed to obtain legislative authority to change certain of its residency requirements. We found that the District delayed seeking necessary legislative authority and did not adequately prepare for participation in the program. We estimate that as a result, the District did not receive about $1,800,000 in available Federal grants. [Emphasis supplied.] There is nothing illegal about States using MAA to increase Federal grants to them. However, it was clearly not the intent of the Congress when it authorized MAÁ that new Federal funds be used to the extent they have been in relieving the States and communities of payments which they were already making. The Congress intended that this help be extended to an entirely new group of citizens-not those already on relief or eligible for it. Congress was assuming a new responsibility-not relieving the States of an existing burden. 1 Report to the Congress of the United States on "Delay in Development and Implementation of Medical Assistance for the Aged Program, District of Columbia Government," July 1963. (b) The more favorable Federal matching available under MAA has diverted State funds which might otherwise be employed in reducing or eliminating the presently "unmet needs" of the most indigent elderly-those people on relief Consideration of the Kerr-Mills Act as "a sensible workable solution" to the broad and complex problem of provision of care for the medically needy aged, implies that all States have the financial capacity prerequisite to establishment of meaningful MAA plans. Such thinking, however, overlooks the fact that many States are unable-even with substantial help from the Federal Governmentto adequately finance the health needs or even the basic living requirements of their most indigent aged. In the context of this fact, those States which have implemented MAA and have not as yet adequately provided for their people on relief, have built a shaky superstructure upon a weak foundation. The urgency to construct a facade has bypassed the necessity of considering "first things first." Inadequate attention has been paid to the limited financial resources of many States, and to the competing claims of other needseducation, roads, housing, etc.-on those limited resources. A State that cannot now provide for even the most basic needs of its OAA recipients-with "basic" defined according to the State's own standards and disregarding special needs such as medical care-is unlikely to reach very far beyond its OAA rolls to encompass people who are medically indigent. The recent report to the Senate of the Special Committee on Aging 2 highlighted this problem: The inability of the States to allocate adequate funds to Kerr-Mills is not surprising in view of the fact that most States cannot even provide appropriations adequate to meet the basic needs of their admittedly completely indigent citizens. In 1960, most of the States failed to meet their own standards of needs for the aged on their old-age assistance rolls-people on relief. Obviously, a State that cannot adequately provide basic necessities for its most disadvantaged people cannot be expected to give priority to a new medical assistance program for people who are better off. [Emphasis supplied.] Recipients of old-age assistance, as a group, are much older than the general population aged 65 and over. (The median age of all persons receiving OAA in 1960 was 76.4 years as compared with 72.1 for all persons 65 and over.) They have especially heavy medical needs. This is partly due to their advanced ages-but it is also due to the fact that many are on the OAA rolls as a result of illness with continuing need for medical care. Despite this greater need, 27 jurisdictions are providing less than $15 a month in vendor medical payments per OAA recipient. There are some 1,430,000 OAA recipients in these 27 jurisdictions. Even after subtraction of 320,000 OAA recipients in the States of California, Idaho, and Michigan where average vendor payments were lowered by virtue of the transfer of high-cost nursing home cases to MAA, the remaining 1,110,000 in the 27 jurisdictions represent one-half of all OAA recipients in the Nation. "Developments in Aging, 1959 to 1963," S. Rept. 8, Feb. 8. 1963. p. 25. Source: Bureau of Family Services. Data for February 1963. The 27 jurisdictions are: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Georgia, Guam, Idaho, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, North Carolina, Pennsylvania, Puerto Rico, South Carolina, South Dakota, Tennessee, Texas, Utah, Virgin Islands, West Virginia, and Wyoming. 2 If the levels of payment for vendor medical care were to be increased to $15 a month per recipient-the maximum amount of vendor payments subject to Federal sharing under OAA-the total vendor payments in the 27 jurisdictions would be approximately $21,500,000 monthly, 71 percent higher than the $12,600,000 expended in February 1963.4 The $15 base ($180 a year) does not seem an unreasonable minimum for the older, sicker than average aged on OAA, in view of the fact that the average medical costs for persons 65 and over were estimated at $315 for 1961. The $15 per month is less than three-fifths of the average in 1961-the current average would be higher. There would appear little doubt that a State's primary obligation is to provide more adequately for its OAA recipients before moving into new areas of need. It would seem logical that they should give priority to closing the gaps in their OAA programs before attempting to cope with new areas of need. (c) The superior ability of the wealthier States to generate matching funds has resulted in a marked uneven and inequitable distribution of MAA money among the several States a result contrary to congressional intent Unlike a social security-financed program of hospital and related benefits, which would assure everyone 65 and over of the same benefits wherever he might live in the United States, assuming that a medically indigent individual resides in a State that has an MAA program, his ability to qualify for aid, and the amount of assistance available, will depend upon which State he lives in rather than upon the extent of his health needs or the cost of the necessary care. Payment of Federal matching funds to a State depends upon whether that State has a program and how extensive its program is. As a result of the open-ended formula for Federal matching in the MAA program, the wealthier States most able to generate funds toward their portion of the cost of a comprehensive program with liberal eligibility requirements are able to secure greater amounts in Federal matching funds. The relatively greater ability of the wealthier States to raise money despite the advantage offered to the lower income States in the matching formula, means that the aged in the lower income States are placed at a disadvantage due to the limited abilities of their States to raise matching funds. The formulas for Federal participation in public assistance grants are predicated upon the basic assumption that the States with the lowest per capita income need the greatest Federal help in financing their programs. The less wealthy States would, thus, if they provided Some States provide medical care to their recipients of OAA outside of the vendor payment mechanism. Such provision may include a combination of money and vendor payments or care provided in govern mental facilities. In the main, however, evaluation of State programs predicated upon average vendor payments per OAA recipient constitutes a reasonable index of the extent to which medical needs are being met. |