The Ohio Commission to Reform Medicaid will split into subcommittees to delve into specific program areas with a goal of generating proposals to present to the full commission by late June. Dr. Bernadine Healy, the commission chairwoman, said subcommittees could better focus on specifics of the program that have fed the trend of skyrocketing costs and an ever-increasing burden to government coffers. She said these include an open-ended budget unlike social health programs in other countries; excess costs spurred by administrative complexity; questions of quality and accountability, and; the high cost of prescription drugs.

In regards to the accountability of the system, for instance, Ms. Healy said she was stunned to discover that the state auditor's office could not conduct financial reviews of Medicaid agencies without the agencies' permission.

Vice Chairman David Brennan said the group as a whole had to meet an October deadline to produce recommendations applicable to Governor Bob Taft's next two-year budget plan for fiscal years 2006-2007.p> Mr. Brennan said a recent study indicating a relatively high tax burden for Ohioans underscored the need to rein in the growth of the Medicaid system. "This program is one of the principal reasons that's true," he said.p> The first group of presenters Monday included representatives of conservative-minded groups that support more privatization in the system. All of the first four panelists in general spoke in support of giving consumers more control of the program and choice of services through direct grants. Some of their concepts would require changes in federal laws, while others could be achieved through more aggressive pursuit of waivers to implement reforms, according to the proponents.

Highlighting the need for reforms at both the state and federal levels, Michael Bond, a Cleveland State University professor speaking on behalf of the Buckeye Institute for Public Policy Solutions, said the cost of the Medicaid program has doubled every 13 years and would double as a percentage of state spending every 27 years.

Jim Frogue, director of the Health and Human Services Task Force of the American Legislative Exchange Council, noted that while poverty declined 29% in Ohio from 1994-2000, Medicaid spending still rose 18%. "Perverse incentives" inherent in the system are mostly to blame, he said. These include the system's open-ended nature of matching reimbursements from the federal government that have led to abuses of the system. He cited recent studies from the General Accounting Office of Congress and other groups that point to "match gaming" by states. These methods have undermined the system as federal regulators can't be sure reimbursements are all going to Medicaid, he said.

Mr. Bond spurred some debate among the commissioners when he suggested Ohio take bold steps to change a system based on flawed "Karl Marx" economics. Moving to a pure grant system for consumers, would in effect create a market within Medicaid, he said. "Put the money in the hands of the beneficiaries."

Mr. Brennan said that under such an approach, "You don't have to know what the market is going to charge, you have to know what you want to spend."

But Greg Browning, a consultant and former state budget director, questioned whether such diminished "aggregation" of Medicaid funds would impair states' abilities to leverage buying power for reduced costs of drugs and services.

Mr. Bond said, "I don't think the disaggregation argument works." But Richard Browdie, president and CEO of the Benjamin Rose Institute of Cleveland, called the professor's theories "a provocative application of economic principles to a different reality." Mr. Browdie said most data has shown a higher cost for managed care systems than the fee-for-service basis on which Medicaid relies.

John Goodman, of the National Center for Policy Analysis, prompted some similar debate with his presentation on bringing more private industry involvement to the Medicaid system. "We should open the door and let the private sector in to see if they can save money," he said.

Kathy Tefft-Keller, state director of AARP-Ohio, noted that managed care was touted highly for Medicare, only to see private insurers flee the market shortly after they entered. "I worry about stability," she said.

James Verdier, of Mathematica Policy Research, Inc., held up "health savings accounts" and a "cash and counseling" pilot program in three states that allows consumers to pay for and chose their own home-based services through Medicaid as "promising approaches" to system reforms.

National Federation of Independent Business Midwest Region Vice President Roger Geiger agreed the consumers should be more involved and responsible in the process. Mr. Brennan said primary care could be an area in which the state could test the market-based theory. "There are pieces to which this could apply," he said.

Program Advocates: Several supporters of programs, most of which entail long-term care for the elderly and disabled, testified later in the afternoon during two panel discussions.

Jane Taylor, executive director of the Ohio Association of Area Agencies on Aging, outlined how the 12 regional AAAs provide screening, assessments, case management functions and other administrative services for the elderly. "We know that, when faced with long-term care needs, older adults want choices about where and how those services are secured," she said, noting that home- and community-based care is less expensive than nursing home care. Among other recommendations to the commission, Ms. Taylor said the nursing home industry should be "right-sized" and existing long-term care funds should be reinvested in "less costly" programs such as PASSPORT.

Bonnie Walson of the Ohio Association of Adult Day Health, said, "Adult day services are underutilized and underfunded due to the lack of a statewide policy on home- and community-based services." She said adult day care is one-third the cost of institutionalized care and the average time of attendance in such programs is two years.

Holly Novak, director of Interim HealthCare and speaking on behalf of the Ohio Council for Home Care, provided the commission with some examples of clients, employees and the care provided by home care agencies. OCHC maintains that Medicaid costs to serve the aged, blind and disabled population would decrease if "freedom of choice were upheld."

Mary Butler, a disabled Ohioan who works at one of the state's 11 Centers for Independent Living and serves as co-chair of the Ohio Olmstead Task Force, said a key problem with the state's Medicaid system is the automatic rate increases provided to nursing homes. "In Ohio, we have a very serious situation because the institutional reimbursement formula is set in the Ohio Revised Code, therefore nursing facilities have no checks and balances," she said. "They receive increases without needing to ask for them, even when all other state departments are receiving a 3-7% cut in operational funding."

Beverly Johnson, executive director of the Cerebral Palsy Association of Ohio, said her group believes that true reform involves alternatives such as "Medicaid Buy-In, a program that will help people with disabilities work and still have health coverage." She said the program, which has been expanded since its 1997 creation by Congress to include Ticket to Work, serves as an incentive for people on Medicaid to work and help pay for their health coverage. Ms. Johnson noted Governor Bob Taft has signaled support of such programs through his Access Report, a blueprint of Medicaid reforms released recently.

In other testimony submitted to the panel, Dan Loyer, of the CHOICES Project administered by Arc of Ohio, described how the group has helped some disabled nursing home residents apply for Ohio Homecare Waivers. He gave the commission data reflecting the large number of nursing facility residents that would prefer home care. "The Medicaid system creates barriers when you have to live in a nursing facility to get the medication you need because the spend-down is so high it forces you into an institution to live," Mr. Loyer said, referring to income restrictions applied to Medicaid recipients.

Others providing similar testimony on behalf of home-based services included Pat Luchkowsky, director of public affairs for Easter Seals of Ohio and John Hannah, president of People First of Ohio.

Jonathan Beard, president and CEO of Columbus Compact Corporation, submitted testimony in support of "telemedicine" as a way to cut Medicaid costs. Dawn Gleason, president and CEO of Columbus Speech and Hearing Center and representing the Ohio Speech and Hearing Government Affairs Coalition, asked the commission to increase Medicaid funding for hearing aids and audiology services.

Also Monday, Secretary of State J. Kenneth Blackwell, a 2006 gubernatorial aspirant who has often held forth on reforming the Medicaid program as part of his overall theories of reducing state spending and taxation, submitted written testimony to that effect. The state needs to overhaul the Medicaid long-term care system by putting more of an emphasis on PASSPORT and other home- and community-based programs, he said. "It is evident that nursing homes, whose residents are largely Medicaid residents, have no incentives to control costs because they will be fully reimbursed by the Ohio Department of Job and Family Services."

Mr. Blackwell said the panel should also consider reforms that improve care and disease management, improve disease prevention, create a "pay for performance" model and tighten oversight of prescription drugs.