Medicaid’s Catch-22
High-priced drugs can forestall the debilitating consequences of HIV/AIDS. But many low-income patients have to get very sick before they qualify for government health insurance.
By Leslie Laurence
The plight of AIDS patients in developing nations whose impoverished governments can't provide them with life-prolonging drugs has provoked global attention, if not assistance. Yet, for some patients in the world's richest nation, access is not much better. Without health insurance, few Americans with HIV/AIDS can afford the $12,000-a-year drug "cocktails" they need to keep their disease at bay. Though Medicaid, the joint federal/state program for those who are low income and meet other requirements, spent a whopping $4.1B in FY 2000 on AIDS care, eligibility requirements keep many low-income patients from receiving timely therapy. For pregnant women, children and adults raising children, low income -- generally limited to 133% and 200% of the federal poverty level or $23,474 to $35,300 for a family of four -- is generally enough to qualify them for Medicaid. However, the bar is set considerably higher for the childless. In addition to meeting low-income requirements -- generally less than $500 a month and as little as $120 in Alabama and Mississippi -- they must also be disabled according to the Social Security Administration's Supplemental Security Income (SSI) program definition, namely: a physical or mental impairment preventing "substantial gainful activity" and expected to last at least 12 months or result in death. Government officials acknowledge that this stringent standard excludes many needy people. "You can be HIV-positive, homeless on the street and have no income or assets, and if you're childless you generally can't get benefits," explains Tim Westmoreland, former director of the federal Medicaid program, administered by the Health Care Financing Administration (HCFA). "Medicaid is not the comprehensive safety net many people assume it is." As a result, many patients whose illness has not yet progressed to debilitating symptoms face a devastating Catch-22, says Terje Anderson, executive director of the National Association of People With AIDS. They need to get very sick before they qualify for Medicaid coverage of drugs that suppress the virus and treat HIV-related conditions. Once they receive the drugs, though, they may recover enough health to disqualify them again. "This is a cruel policy that does not support the goal of keeping people healthy but works against it,"says Anderson. In addition, the policy is possibly a shortsighted one. A 1998 report by the General Accounting Office concluded that timely intervention saves money. The report cited a two-year study of 173 Veterans Administration medical centers that found early treatment caused hospitalizations to drop 37%, saving the agency $18 million. In 1997, then-Vice President Al Gore urged reform of federal Medicaid regulations to cover non-disabled HIV/AIDS patients but the Clinton Administration decided against it. In 1999, Senator Robert Torricelli (D-N.J.) and Representatives Richard Gephardt (D-Mo.) and Nancy Pelosi (D-Calif.) tried again but their bill, too, was quashed. As the ongoing struggle over Medicare benefits makes clear, legislators aren't uniformly eager to saddle government with the cost of prescription drug coverage. Spending on AIDS drugs by Medicaid, the largest purchaser of prescription medicines in the world, soared to $950 million in 1997, according to the General Accounting Office, up 90 percent over the previous two years. Many states are desperate to set limits. A dozen, including Mississippi, Oklahoma and Texas, already restrict Medicaid beneficiaries to three prescriptions a month. "If you're following federal treatment guidelines, you may need four or five drugs a month," notes HCFA's Westmoreland. And that doesn't include medicines for AIDS-related infections or to treat the side effects of AIDS drugs and other medical conditions. Some drugs are available to HIV/AIDS patients through the federal Ryan White CARE Act, but not enough to meet demands. According to a 2000 report by the National Alliance of State and Territorial AIDS Directors, the AIDS Treatment Data Network and the Kaiser Family Foundation, 20 states capped enrollment in their drug assistance programs or restricted access to costly protease inhibitors and 11 states had waiting lists. "There are 425 people on a waiting list for AIDS drugs in Alabama," says Christine Lubinski, director of the HIV Quality Care Network at the Infectious Diseases Society of America. "When I have this discussion with people in New York, they think I'm talking about a Third World country. Very basic components of care are elusive to so many people with HIV." The Bush Administration's position on AIDS is unclear. President Bush has said he will maintain the President's Advisory Council on HIV/AIDS and the National Office of AIDS Policy, but he has not spelled out their duties or whether they'll have direct access to the President. Tommy Thompson, the new Secretary of the Department of Health and Human Services, has already demonstrated a strong commitment to HIV/AIDS and is expected to put staffers to work on the issue. As governor of Wisconsin, for instance, he sought increased state funds for treatment programs and supported Medicaid waivers, which allow states greater flexibility to help adults who don't yet show signs of AIDS. The hitch: these 1115 demonstration programs cannot cost the federal Medicaid program an extra penny. "It's tricky health economics," says Westmoreland. "States have to pay for expensive drugs upfront and hope that they save money on hospitalizations 10 or 15 years down the road." So far, at least nine states* and Washington, D.C., have stepped up to the plate, and HCFA has approved 1115 waivers in Maine, Massachusetts and D.C. Maine's plan, approved in February 2000, relied on additional drug discounts from drug makers, over-and-above Medicaid's usual hefty discount, to stretch government dollars. However, a separate law passed the following August, which authorized the state to negotiate steep discounts for all residents and ban the products of manufacturers that refused to comply, scuttled hopes of drug company cooperation. SmithKline Beecham -- now GlaxoSmithKline, which markets Trizivir, a tablet combining three previously available AIDS drugs -- threatened to stop shipping to Maine. The major pharmaceutical trade association sued the state and the demonstration project screeched to a halt. "Pharmaceutical companies were concerned that if they gave us an extraordinary discount, a lot of other states would want one too," says Frances Finnegan, Maine's Medicaid director at the time. "On the other hand, the Medicaid waiver was going to allow us to purchase another $17 million worth of drugs." A district court later ruled the Maine law unconstitutional, but drug makers haven't returned to the negotiating table. "They're holding Maine hostage to a larger economic agenda," charges a former top federal official, who spoke on condition of anonymity. (GlaxoSmithKline would not comment.) The Maine showdown mirrors the national tug-of-war over prescription drug benefits and portends problems for other states grappling with the issue. Massachusetts, whose waiver was approved in January, steers clear of drug pricing issues by using savings produced by its Medicaid managed care program to expand access to people with HIV, also tapping $13 million in state funds. Georgia, whose waiver is under review, hopes to maintain budget neutrality by using Ryan White funds to buy drugs for an anticipated 6,500 new enrollees, whose income must be within 235% of the poverty level. Mark Trail, the state's acting Medicaid director, says existing program benefits will have to "fill out the rest of the health care picture: hospital stays, physician care, laboratory tests, mental health counseling and all the other kinds of medication people might need." The complexity of reinventing Medicaid is one reason so few states have come forward. "States face several barriers to addressing these eligibility limitations," says Jennifer Kates, Senior Program Officer for HIV/AIDS Policy at the Kaiser Family Foundation. "It takes resources to prepare and submit waivers, and it's very, very difficult to meet budget neutrality requirements." Although expanded access to Medicaid is likely to result in savings to other programs, including Ryan White, SSI and Medicare, says Kates, states are prohibited from using these savings to meet budget neutrality in their 1115 programs. One hopeful sign: the recently enacted Ticket to Work and Work Incentives Improvement Act provides a total of $250 million over six years in demonstration grants to states to cover currently healthy workers with potentially disabling illnesses, such as HIV. So far, one state -- Mississippi -- has received a TWWIIA demonstration grant for people with HIV. Whether there will be enough money to go around remains to be seen but Georgia's Mark Trail is resolute. "We should help folks stay healthy for as long as possible. Who knows what technology will do while we're helping them stay well? Without care, their fate is pretty clear."
*California, Colorado, Florida, Georgia, Maine, Massachusetts, North Carolina, Texas and Wisconsin
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Leslie Laurence is a National Magazine Award-winning journalist specializing in women's health and health policy. Her work has appeared in Glamour, Town &Country, New York, Redbook and many other magazines.
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