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WEDNESDAY, July 16, 2003 (HealthDayNews) -- Wiping out the two-year waiting period for disabled people in line for Medicare could reduce the number of uninsured Americans and save states money, a new report says.
Since 1972, Medicare, the federal government's health insurance program for the elderly, has also covered certain younger people with chronic disabilities such as multiple sclerosis, kidney failure, emotional trouble and other conditions. But most of the disabled eligible for Medicare have to wait two years before the benefits start.
At any given time, about 1.26 million people are waiting for their Medicare benefits to begin. Roughly 40 percent receive health-care coverage through Medicaid, the state-federal program for low-income Americans, during this limbo period. Some have private plans through former employers or other sources. However, the new study estimates that as many as 400,000 of those in the queue are uninsured -- and could stay that way until their government benefits start.
Although that number's rough, Jim Verdier, a health policy expert at Mathematica Policy Research Inc., a Washington, D.C. research group, says it may be climbing. Employers now appear to be terminating workers with chronic disabilities more quickly, cutting off their easiest route to private coverage.
"There are going to be a larger number of these folks with no access to insurance at reasonable cost while waiting to be eligible for Medicare," says Verdier, who wrote the report with a colleague, Stacy Berg Dale.
Employers might welcome the policy change since it gives them cover. The move might also hold strong appeal for cash-starved states struggling in the weak economy. Verdier and Dale estimate that eliminating the waiting period would save states $1.8 billion a year in Medicaid costs. It also would slash federal Medicaid expenditures by $2.5 billion, though Medicare would see an increase of $8.7 billion -- $4.6 billion for former Medicaid enrollees and $4.1 billion for those previously uninsured or with private plans, the report says.
"It would be a form of much-needed fiscal assistance at a time when state budgets are under a lot of stress," says Karen Davis, president of the Commonwealth Fund, a non-profit group that sponsored the study.
Davis acknowledges the federal government will be less enthusiastic about the prospect of picking up an additional $8.7 billion tab for Medicare, especially since the Bush administration announced yesterday that the budget deficit will hit a record $455 billion this year. However, she adds, about $2.5 billion of that figure would be recouped through savings on the Medicaid side of the federal budget.
Congress enacted the waiting period for several reasons, including fear that the lack of a gap would discourage people from seeking private health coverage. Some legislators also worried about the cost of covering the disabled and that some people with only temporary disabilities would collect federal assistance.
As the new study points out, however, fewer than 30 percent of younger disabled people in Medicare in 2000 had supplemental private insurance. And fewer than 1 percent lose their benefits because they're able to work.
Lawmakers periodically try to eliminate or cut back the Medicare waiting period. Most recently, Rep. Robert Andrews (D-N.J.) in June introduced a bill in the House that would waive the Medicare waiting period for certain disabled people who lack health insurance.