Katrina Changes Congressional Health Policy Landscape

Published November 1, 2005

In a matter of weeks, the aftermath of Hurricane Katrina has dramatically altered not only the landscape of the Gulf Shore but also the political dynamics of Washington health care policy.

Before the storm, Congress was on track to make modest changes to slow the annual growth of Medicaid costs from 7.1 percent to 6.9 percent through reconciliation, a way for Congress to facilitate difficult-to-pass legislation. Regarding the uninsured, Republicans said there was “no money” to enact new solutions such as health care tax credits.

Since then, graphic images of devastation and loss and the emerging portraits of urban poverty have propelled Congress forward with relief packages, already spending $60 billion in the first package.

Relief Proposals in Flux

The second round of hurricane relief legislation will likely include health coverage and care issues for those who have lost so much. Challenges loom for policymakers as conservatives and liberals square off on how much to spend, how to finance those efforts, and how to design the proposals.

Republicans support aid packages, but fiscal conservatives are expressing concern that the politics of the situation are pushing too many members to spend too much with too little attention to effectiveness.

In the Senate, freshman Mel Martinez (R-FL), a veteran of four hurricanes last year, said, “all of us Republicans have a sense of great responsibility to help those impacted by the storm in a responsible way. But we need to do so in a manner that is consistent with our core sense of values.”

The concerns of Martinez and others regarding the design of relief proposals are gaining traction for several reasons. First, it is the nature of government programs to expand with far greater ease than to contract, so whatever is put in place has a good chance of becoming permanent in some form. Second, whatever is passed creates a precedent for the federal response to future disasters.

Long-Term Improvements Considered

Many Democrats have publicly blamed Republicans for what they consider to be too-slow responses to the storm and for considering moving forward with planned Medicaid changes that would shave $10 billion off the program over the next five years.

The Medicaid cuts, however, do not impact poor beneficiaries. Instead, the changes propose paying drug companies and pharmacies a more realistic price for drugs and making it more difficult for those seeking Medicaid reimbursement for nursing home care to hide assets.

Taking the long view on recovery, President George W. Bush appears to want to use the affected area to showcase new ways to ameliorate poverty.

“The President strongly believes that out of this tragedy will come an opportunity to address those who have lived in poverty far too long. He wants to see ‘Enterprise Zones’ that promote independence,” said Tim Goeglein, director of the White House Office of Public Liaison. Ideas under consideration include encouraging home ownership and job training and placement. In the short term, the White House is providing health assistance by granting waivers to the affected states and paying 100 percent of the health care costs of affected Medicaid beneficiaries, instead of requiring state matching funds.

In looking at the people affected by Hurricane Katrina, the only data currently available is a survey of 680 evacuees in a handful of shelters. The most striking statistic related to health care is that 52 percent of those surveyed said they had no health insurance. (See table.)


Market-Based Approach Offered

A comprehensive market-based approach for Katrina victims would have Congress ensure that the 19 percent who had private health insurance before the storm were able to maintain their coverage, thus avoiding expanding the number of uninsured persons or moving more people into Medicaid.

Congress stands ready to do this, with two bipartisan bills on the table in the Senate. The one that appears to have the greatest support, S. 1769, was authored by Sen. Michael Enzi (R-WY) and Sen. Edward Kennedy (D-MA), chairman and ranking minority member, respectively, of the Senate Health, Education, Labor, and Pensions Committee.

The bill proposes to pay 100 percent of the premiums for individuals, employers, and employees affected by the hurricane for three months, with the secretary of the Department of Health and Human Services having the authority to extend that three months. Employer assistance would be limited to businesses with fewer than 50 employees.

Four Principles Important

Like the physician’s ethical code, the proposed assistance embodies the “first, do no harm” philosophy by keeping what is in the private sector in the private sector.

Second, Congress also should help ensure continued Medicaid assistance to those affected by the storm who already relied on that program (15 percent), and it should help the affected states’ governments pay their share of the cost of care. That is occurring through Bush’s waivers and is also part of the Senate proposal.

Third, Congress should ensure that those who were previously uninsured (52 percent) and are eligible for Medicaid get enrolled in the program. One thing the Katrina aftermath is teaching anecdotally is that many of the poor were completely unconnected to any facet of the health care system. Sen. Robert Bennett (R-UT) said of the evacuees that ended up in his state, “A good number of the 500 evacuees who stepped off the plane in Utah went straight to the hospital because of poor health. The hospitals report that many of those coming though the door had health problems that had never been diagnosed, let alone treated.”

Those persons were totally unconnected to the health care system and are likely to end up in emergency rooms at some point with costly and potentially fatal conditions.

Fourth, Congress should help the chronically ill gain insurance coverage, by strengthening existing high-risk pools in the states affected by Katrina.

Laura Clay Trueman ([email protected]) is executive director of the Coalition for Affordable Health Coverage and senior director of Jefferson Government Relations, LLC.