Thompson Tackles Medicaid

Tommy G. Thompson left the Bush Cabinet nearly two years ago, but the former secretary of health and human services is trying to keep a hand in the policy mix in Washington.

The former Wisconsin governor, who garnered national attention in the 1990s for his state's welfare-to-work efforts, these days has his eye on another large entitlement program -- Medicaid.

Jointly funded by the state and federal governments, the 40-year-old program pays medical bills for low-income, elderly and disabled people. Thompson, who now trades on his Washington access and expertise while working for two law and consulting firms, is set to release a white paper Friday in which he calls for overhauling Medicaid by shifting responsibility for long-term care of the burgeoning elderly population to the federal government, while leaving states to focus on acute care for those under 65, particularly children.

"The federal government is the only one large enough to handle this growing problem," said Thompson, who will address the National Governors Association on Saturday in Charleston, S.C. "The states are going broke right now under the Medicaid system. Who else is going to be able to handle the elderly?"

Thompson also calls for helping Medicaid recipients take a more active role in their care through new health literacy and disease-prevention efforts. As the program becomes more efficient, he argues, states could use the savings to help cover the nation's 45.8 million uninsured people, in some cases by subsidizing access to commercial health insurance. Medicaid also should adopt technology such as electronic medical records to help manage cases and improve public health information-gathering.

Jeff Nelligan, a spokesman for the Centers for Medicare and Medicaid Services, said agency officials were reviewing Thompson's ideas.

Thompson said that his proposals would probably increase spending initially because of start-up costs but that overall spending would be likely to decrease over time as officials learned to operate more efficiently.

The federal government would not be called upon to shoulder a greater share of total Medicaid spending, he said, and states should not expect to see a decrease in their share. Rather, for both sides, savings would derive from operating more efficiently in the new system, he said. Thompson acknowledged that Medicaid funding formulas would have to be tweaked to prevent some states from reaping financial windfalls.

"You want to set up almost a competitive environment where the states will strive to improve upon the healthfulness of their populations, and that will result in less costs for the states at the acute level," he said. "And as these people get older and they move over into the federal responsibility, they will be less expensive for the federal side as well, because you're inheriting a healthier population."

Diane Rowland, executive director of the nonprofit Kaiser Commission on Medicaid and the Uninsured, said that much of what Thompson is proposing is not radical or new. She credited him, however, with taking on the "third rail" of Medicaid politics by acknowledging, albeit without specifics, that funding formulas would have to change.

"What any proposal lives and dies on is what the numbers look like, and there are no numbers in this proposal," Rowland said. "Who pays and how much they pay is the critical issue in any Medicaid reform discussion."

Kathleen Stoll, director of health policy for the advocacy group Families USA, agreed that Medicaid has problems, particularly rising costs for states. But a simpler solution would be for the federal government to do more, she said.

"Medicaid could do more if there were more money from the federal level. It's a matter of federal priorities," she said.