September 26, 2005 | WebMemo on Health Care
Donna Shalala, Secretary of the Department of Health and Human Services (HHS) under President Clinton, says that all Katrina survivors should be enrolled in Medicaid, the federal-state health care entitlement program for the poor. Says Shalala, "This should be done even for those who don't fit into one of Medicaid's current eligibility groups and regardless of whether they were previously on Medicaid or were insured."
Congress should not support any such effort. Putting Katrina survivors into Medicaid goes directly against the goals of restoring stability and normalcy and encouraging personal independence-as opposed to greater government control and dependence. Moreover, Medicaid, already financially troubled, is simply another government program that directs dollars to a bureaucracy rather than to people. There are very few Americans who would voluntarily give up their private insurance to enroll in Medicaid.
Instead of expanding Medicaid, Congress and the Administration should consider ways to assist hurricane survivors directly by helping them maintain their existing private health care coverage or obtain private coverage of their own. Such an approach is a far better way for the federal government to help get individuals and families back on their feet and enable them to keep and get the kind of coverage they want.
The Grassley-Baucus Proposal
Sens. Charles Grassley (R-IA) and Max Baucus (D-MT) recently introduced S. 1716, the "Emergency Health Care Relief Act." The legislation would provide emergency health care and other assistance to the victims of Hurricane Katrina. Under the terms of the bill, for a 5-month period that could be extended by the President, Congress would expand Medicaid eligibility for Katrina survivors. The bill would also increase federal contribution payments to Medicaid and establish an emergency fund for other health related expenditures. With respect to Medicaid, the Grassley-Baucus proposal would:
While the Grassley/Baucus bill does not go as far as former Secretary Shalala's proposal, it does establish an unprecedented and radical entitlement expansion. Even the 9/11 economic recovery plan did not go so far, only providing states with a temporary bump in the federal Medicaid matching rate. Members of Congress, as well as state policymakers, should be wary of a major Medicaid expansion as the primary vehicle for the delivery of care to Hurricane Katrina survivors for at least four reasons:
A Better Solution
Congress can do much better than simply expand Medicaid. Members of Congress should build on the potentially more promising aspects of the bill, such as the Disaster Relief Fund, which would give state greater flexibility to address the health needs stemming from the hurricane and complement existing efforts by the Bush Administration. Specifically:
Congress should be cautious and refrain from expanding Medicaid eligibility at the expense of allowing individuals and families to keep or purchase the private health coverage options of their choice. The Grassley/Baucus bill creates a dangerous precedent for a massive Medicaid expansion. Instead, Members of Congress should build upon provisions of the bill that thus far have received less attention, but have the greatest potential. This is particularly true of the Disaster Relief Fund concept. The Disaster Relief Fund would empower hurricane survivors to secure high quality health care for themselves and their families, bringing stability and normalcy back to their lives.
Owcharenko is Senior Policy Analyst in the Center
for Health Policy Studies at The Heritage Foundation.
 Donna E. Shalala, "For Fast Federal Action on the Katrina Health Crisis," The Washington Post, September 20, 2005, p. A23.
 Not all states have the same eligibility requirements, and many do not cover 100 percent FPL for all groups. For example, neither Texas nor Arkansas cover working parents up to 100 percent FPL. For state-specific information, see http://www.statehealthfacts.org.
 The legislation requires states to provide "categorically needy" coverage, which entitles an enrolled individual to all mandatory and option services. A state does not have to provide the full scope of benefits to groups designated "medically needy."
 The legislation requires that a state only "make a good faith effort to verify the status…" See S. 1716, p. 22.
 Under current law, the federal government pays a portion of states' total Medicaid expenditures. The matching rate is based on a formula and ranges from 50 percent to 80 percent, depending on the state. According to the bill, at the end of the emergency designation, states would return to their current state-specific federal/state matching rate and eligibility rules.
Advisory Commission, "2002 Survey of Physicians about Medicare
Program," p. 2 at
 Lindsey Tanner, "Study Says Uninsured Lack Follow-Up Care," Associated Press, September 13, 2005, at http://www.washingtonpost.com/wp-dyn/content/article/2005/09/13/AR2005091301221_2.html.
 "Survey of Hurricane Katrina Evacuees," The Washington Post/Kaiser Family Foundation/Harvard University, September 2005, p. 19 at /static/reportimages/46963AE4714872AA23D58F1F6ECAEB1B.pdf.
 A system for administering a health care tax credit already exists as a result of Trade Adjustment and Assistance (TAA) Act, which enacted health care tax credit for certain individuals. Policymakers could build upon such a model for the hurricane survivors.
 For example, the Commissioner of Insurance in the state of Louisiana issued emergency rulings and regulations in regards to health insurance matters due to Hurricane Katrina; see http://www.ldi.state.la.us/whats_new/Emer_Rule_17FinalRule.pdf.
 Jennifer N. Edwards, Michelle M. Doty, and Cathy Schoen, "The Erosion of Employer-Based Health Coverage and the Threat to Workers' Health Care," The Commonwealth Fund Issue Brief, August 2002, p. 7 at /static/reportimages/F0F2556AE8616E4756A5261444B6D403.pdf.