Gregoire relaxes rules on Medicaid

OLYMPIA — Gov. Christine Gregoire yesterday ordered the state Department of Social and Health Services to ease its Medicaid rules by requiring recipients to prove their eligibility once a year, instead of every six months.

Though a seemingly minor tweak, the state estimates the eligibility change will bring nearly 20,000 additional children into the Medicaid program. That will cost about $33 million in state and federal funding over the next two years.

Gregoire's order was also a political jab at former state Sen. Dino Rossi, her opponent in last fall's contentious election. As Senate budget chief two years ago, Rossi helped to establish the stricter Medicaid-eligibility rules.

"We were delighted she responded so quickly," said Jon Gould, deputy director of the Children's Alliance, which for months had been pressing then-Gov. Gary Locke to ditch the six-month eligibility rule.

Gregoire also said yesterday she is shelving indefinitely a plan to require some Medicaid recipients to pay monthly premiums.

The announcements came during a news conference where Gregoire — flanked by Democratic lawmakers, labor leaders and health-care advocates — rolled out a package of health-care bills she plans to push for this year. Most are proposals that Democratic lawmakers have discussed for several years.

Gregoire's package includes legislation that would allow private employers, especially small businesses, to purchase health insurance through the state government's insurance programs.

Gregoire said 600,000 Washington residents are uninsured and that an ever-increasing number of private employers offer no coverage.

"It's not because the employers don't want to, it's simply they can't afford it," she said.

Gregoire also proposed a prescription-drug-purchasing consortium that would allow businesses and other private entities to get better prices by pooling their drug purchases with the state.

And she plans to push legislation aimed at clearing the way for Washington residents to purchase prescription drugs from Canada, where prices are significantly lower than in the United States.

As they have in the past, the proposals are likely to meet stiff opposition from the Republican minorities in the House and Senate, and from the pharmaceutical industry.

Republican Sen. Linda Evans Parlette, a pharmacist from Wenatchee, said she is alarmed by Gregoire's proposal to import prescription drugs from Canada. She said she opposes Canada's reliance on price controls and questions whether the state can assure the quality of imported drugs.

Gregoire's changes to the Medicaid program do not need legislative approval.

Medicaid is a state-federal program that provides health coverage for children in families with incomes up to 200 percent of the federal poverty level — about $37,000 for a family of four.

Prior to 2003, once a child qualified for Medicaid, the coverage lasted a full year — even if the child's family's income rose above the eligibility limits.

In 2003, with the state facing a record $2.7 billion budget shortfall, lawmakers set their sights on the state's fast-growing Medicaid program. State auditors had discovered that some state medical-assistance programs were paying millions of dollars in benefits to people who did not qualify.

Rossi teamed up with Locke, a Democrat, in pushing through budget language instructing DSHS to tighten its procedures for checking Medicaid eligibility. And they eliminated the 12-month eligibility period.

Under the new rules, families had to verify their eligibility every six months. And if their incomes rose above the eligibility limits prior to the six-month review, families were required to notify the state and their coverage was dropped. Gregoire's action yesterday reversed all of that and put Medicaid back on its original 12-month cycle.

Two years ago, Senate budget writers projected their eligibility changes would reduce the state's Medicaid caseload by about 19,000. But the decline has been more than double that.

"It was way more than anyone expected to happen," said Liz Arjun, a health-policy analyst for the Children's Alliance.

It's unclear, however, what role the six-month eligibility rule played in pushing people from the program — or how many were truly no longer eligible.

"I don't think we've been able to pin it down," said Jim Stevenson, spokesman for the state's Medicaid program.

Stevenson said a state study due out later this spring should answer those questions.

But health-care advocates are convinced that thousands of eligible children have lost coverage simply because of bureaucratic backlogs at DSHS and because their parents didn't want to deal with the administrative hassles.

Ree Sailors, a health-policy adviser in the Governor's Office, said she believes the state study will show that the extra paperwork posed a big problem for Medicaid recipients, many of whom speak very little English.

"You have a population that is semiliterate," Sailors said. "They drop off not because they're not eligible but because they can't jump the hurdles."

Gregoire said she had considered waiting to include the Medicaid changes in her budget proposal, which is due out late next month and won't go into effect until July 1. But she said thousands more children would have fallen off Medicaid if she had delayed.

"I decided I could not wait."

Ralph Thomas: 360-943-9882

or rthomas@seattletimes.com