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Jeb Bush Defends His Medicaid Overhaul Plan

JANUARY 27, 2006 -- There are two words most politicians won't say in front of health care reporters: Defined Contribution.

But the president's younger brother, Gov. Jeb Bush, R-Fla., did just that at a Friday forum hosted by the Galen Institute and the Council for Affordable Health Insurance to discuss his plan to overhaul Florida's Medicaid program.

Bush said his initiative, which begins on a limited basis July 1, will not only control state spending on the program but also increase beneficiaries' choices for medical care while improving the quality of care they receive. Critics predict it will give too much flexibility to insurers to decide what is covered and how much beneficiaries will have to pay for it, which will mean beneficiaries are likely to pay more and get less.

Insurers will have the power to design benefits packages, including the amount, duration, and scope of services offered as long as they meet an "actuarial equivalence" test to assure benefits offered by private plans have the same dollar value as the previous combination of mandatory and optional benefits.

"There are huge unanswered questions about it," said Joan Alker, a senior program director at the Georgetown University Center for Children and Families.

Bush said he is determined to apply "needed fiscal restraint" on his state's Medicaid spending, which has been growing 13 percent a year and takes up 25 percent of Florida's budget.

"This is a defined contribution plan," Bush told the reporters and health analysts gathered at the City Club of Washington. What is allotted will be spent—the defined contribution—instead of spending going beyond that specific amount, which often happens to pay for a defined benefit.

"The way we've been operating, we appropriate a 13 percent increase (for Medicaid) then it hits 16 percent," Bush said.

In October, the Department of Health and Human Services approved the Florida plan, which will enroll an estimated 212,000 Medicaid beneficiaries in the state's Broward and Duval counties in its first phase.

In its current form, the state's Medicaid program is "a mess," Bush said. "Costs aren't contained. Health care outcomes aren't working ... it can be done better."

Bush said he believes that, with the proper counseling (which the state will provide), beneficiaries will be able to pick a health insurance plan that's best for them.

"To suggest people of lower incomes on Medicaid can't make decisions for themselves" is wrong, he said.

Health plans will be paid a "risk-adjusted" premium to reflect a beneficiary's health status and history of health care use. Funds from "enhanced benefit accounts" can be used to offset health related costs, such as over-the-counter drugs and weight reduction programs.

"There will be ample choices" for Medicaid beneficiaries to choose from, Bush said, and beneficiaries also can take their premium money to purchase coverage from an employer or from Florida's State Children's Health Insurance Program.

Alker and other critics of Bush's plan have their doubts that it will work as envisioned. Alker said Medicaid costs less than private insurance, so she doubts relying on the private market will save Florida money.

Ron Pollack, executive director of the consumers group Families USA, said last month that the "harmful impacts of this waiver should not be underestimated and should be carefully analyzed before this proposal is extended to other Florida counties or other states across the country."

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