Ted Simons: 47 years ago president Lyndon Johnson signed Medicare and Medicaid into law. Tonight we take a look at how those programs have changed through the years and some of the challenges they face today. We should also note 2012 is the 30th anniversary of Arizona's Medicaid program, the Arizona health care cost containment system or AHCCCS. Here to talk about these programs is Arizona's AHCCCS director Tom Betlach and AARP Arizona state president Dr. Leonard Kirschner, who served as the state's director from 1987 to 1993. We'll start with AHCCCS and Medicaid. Give us a definition.
Tom Betlach: AHCCCS, health care cost containment system is the state's Medicaid system created in 1982, the last state into the Medicaid program. Medicaid is a program for low income individuals, so you have to meet a certain income threshold then you're eligible to receive services through that Medicaid program.
Ted Simons: Federal program administered by the state.
Tom Betlach: exactly. It's a partnership program created that way 47 years ago and so the state chips in part of the cost, federal government chips in part of the cost. Then the state is allowed to set some policy direction and the 8 federal government provides some of the overarching policies.
Ted Simons: Give me a definition for Medicare.
Dr. Leonard Kirschner: It was signed at the same moment by Lyndon Johnson at the Truman library in independence, Missouri. It was an afterthought. Medicaid was the afterthought. Medicare was a compromise crafted after decades of arguments, part A, with the hospitals, part B, with the doctors, signed into law at the Truman library. I have the first application here for Medicare is signed by Harry Truman and it's endorsed and witnessed by Lyndon Johnson.
Ted Simons: This is a federal health insurance program for folks 65 and over and certain medical conditions as well, correct?
Dr. Leonard Kirschner: Correct. It started by being an old blue cross blue shield model. Part A, for the hospitals, part B, for the doctors. Different definitions. Since then we have added part C, and part D, Medicaid covers some of the cost and it's a multitude of individuals. We have 47 million Americans, we have over 900,000 in Arizona on Medicare.
Ted Simons: I want to get the history to Medicare in a sect. As far as Medicaid, you mentioned 1982. If we go from '65 to '82 we're looking at 17 years of what?
Tom Betlach: 17 years in which the state made the decision that it was not going to participate in the Medicaid program. There came a point in time in which the counties at that point in time are responsible for providing indigent care. They came to the point where though couldn't afford it any more. They went to the legislature. The legislature said, well, we have a lot of concerns about an entitlement program but if the federal government will listen in terms of wanting creating something different, it's something we want to pursue. That's when AHCCCS was born. It was created in such a manner it mandated managed care, which was a completely different model than any other state.
Ted Simons: Was Arizona looking at other states or was Arizona looking to be different?
Tom Betlach: Arizona was looking to be different. It became a leader in terms of that managed care model. Since then it's grown to about 70% of Medicaid recipients nationally are now in some form of managed care. It really was a leader at that point in time. It's been a model that other states have pursued since then.
Ted Simons: As far as Medicare is concerned you've talked and written about this in the early days. An afterthought in a sense but you also --
Dr. Leonard Kirschner: That's right. Medicaid was the afterthought.
Ted Simons: But as far as Medicare was concerned it was considered a tribute to JFK.
Dr. Leonard Kirschner: Correct. It was 1965. Arizona had a part of that because Lyndon Johnson won a huge electoral victory over Barry Goldwater, our native son. When he came into office, he pushed very rapidly, which is something that other presidents have not done, FDR did it, moved rapidly to have legislation. There was lots of bickering, lots of compromise, there was lots of battles. When it passed if you look at the vote in the Congress and the Senate, you read some of the quotes from Barry Goldwater, Ronald Reagan, who opposed Medicare, very similar to today. Now, it was the summer of 1965 to be frank I was on my way to Vietnam. I got to Danang about a month later. I was more worried about SAM’s, MIG’s and incoming than health policy. Two years later I was at Harvard getting my master's in public health. Our professor said, don't worry about these programs. They are temporary programs. Here we're 47 years later, they cover 100 million Americans and they’re going to spend $1 trillion of taxpayer money this year.
Ted Simons: How has—I want to get to how Medicare has changed over the years—but how has AHCCCS evolved? We have had some changes in the past year or some of the give us a cliff notes history here.
Dr. Leonard Kirschner: Some significant milestones were 1989 we had long term care program. Those individuals that were living in institutions or at risk of living in an institution in 2000 we had a voter initiative, proposition 204, when the voters said we want to expand AHCCCS up to 100% of federal -- about $22,000 for a family of four through that initiative Arizona became a state, one of six, that expanded coverage to that level. The next major milestone was happened recently, that's with the affordable care act, then the Supreme Court decision that said no, Congress can't mandate and stipulate that states have to expand further their Medicaid program, it's really an option for the state to make that decision. So I imagine we'll be talking about that more over the next many months in Arizona. Those are the major milestones in the AHCCCS program.
Ted Simons: Major milestones in Medicare.
Dr. Leonard Kirschner: Medicare was a program that was temporary in place. I was at a meeting in New York with Joe Califano a number of years ago. He was the points person. He said he knew these programs were kind of strange but it doesn't matter. They weren't going to be around very long. They could be subsumed in a national health plan in the second Lyndon Johnson term, the first Hubert Humphrey term. That didn't happen. It's evolved over time but basically Medicare hasn't changed as much as Medicaid. Probably the biggest change was the prescription drug plan. That was always intended to be there. I have a document that said in 1967 eyes only, we need a prescription drug plan. Well, 40 years later we have one. Managed care has been added to Medicare. So we have Medicare advantage plans. Which are modeling what we did in Medicaid. The states have really been the laboratories for change, innovation. The federal government has really been laggards in doing that. That you have to give credit to Arizona and the other states like Minnesota and Oregon that really cut through some of the nonsense.
Ted Simons: With that in mind and the affordable care act, assuming it goes forward as planned, does AHCCCS continue to exist? How does that work?
Tom Betlach: AHCCCS continues to exist. The policy question for the governor and the legislature is at what level do we cover. So there's really two points to that policy decision. The first is the voters have already spoke through proposition 204, so we are currently have a freeze in that population because we don't have available resources but the state's great recession and all the challenges we faced. The second question becomes, okay, looking at proposition 204, is the state interested in going above and beyond that? That's the second policy question. That really needs to be addressed over the course of the next several months leading to the legislative session next spring.
Dr. Leonard Kirschner: There's one other policy question. That's kids care. We're the only state that has put a cap on kids care. Last I heard about 100,000 kids on a waiting list.
Tom Betlach: That's not the case any more. There's a lot of details around. That we have coverage for about 13,000 kids that have been added.
Dr. Leonard Kirschner: That's still been a problem in our Medicaid program.
Ted Simons: As far as the affordable care act and its impact on Medicare, what are you seeing?
Dr. Leonard Kirschner: It's improved a lot of things in the Medicare program in ways of preventive health care, women's health care. It's added some other preventive care, some of the good things you would want in a program. It isn't a huge change in Medicare per se. The Medicaid expansions and the changes in the insurance market for those who have employer based insurance are far more marked than for the Medicare program per se.
Ted Simons: I want to give you a last word. You were around for all this business. The impact on just the healthcare for the average American. Medicare and Medicaid. Got about a minute.
Dr. Leonard Kirschner: I think there's going to be tremendous improvement especially if we take the opportunity to get those federal dollars to expand health care. If you cover people under Medicaid and a study of the New England journal came out, you have much better results, death rates go down. The impact on people is impressive and so we ought to think about universal health care in this state. We're nowhere near. That I think these changes in the affordable care act can move in that direction.
Ted Simons: Good to have you here. Great discussion. Thanks for being with us.
Tom Betlach: Thank you.