Date: 1985-07-23
Speaker: RUDOLPH G. PENNER (republican)
Chamber: S

Director. Congressional Budget Office House Annex No. 2. Washington. DC. DEAR RUDY: I recently Introduced legislation. S. 7. which would require that Medicaid coverage be extended to all pregnant women who meet the AFDC income and assets eligibility standards for the State in which they reside. During the last session of Congress. provisions were enacted in Public Law 98369 which extended Medicaid coverage to women in this category whose husbands are unemployed. The effect of S. 7. if enacted. would be to extend Medicaid coverage to similarlysituated women whose husbands are employed. Essentially this coverage was included in the Housepassed version of H.R. 4170 but was deleted during the conference. Although CBO has not prepared a formal budget estimate for 8. 7. my staff has been informally advised that the cost of enactment of this legislation would be assumed to be that of the provision which was dropped during last years conference on H.R. 4170. That provision had been costed by CBO as producing a federal share of approximately $175 million in the first year (FY 1988 under the Housepassed bill). I have been advised that CBOs estimates have been based upon an assumption of a 100percent participation rate of the estimated 100.000 pregnant women who would be made eligible for coverage by this provision. I am writing to request a new CBO costestimate and to raise with you several concerns I have about the basis for last years cost estimates. First. I question strongly the reliability of assuming a 100percent participation rate for this category since the employed status of the spouse would suggest that some portion of the eligible women would have employersponsored health insurance coverage. thereby reducing the extent of new Medicaid costs. Second. although there may be some justification in assuming that the eligible individuals without other sources of care would seek reimbursement for the hospital costs of delivery. it is doubtful that 100 percent of those eligible will seek prenatal medical assistance before the time of delivery. Accordingly. the assumption that each eligible woman would seek reimbursement for full prenatal as well as delivery health care seems to me to overstate. the per individual cost of expanding coverage. Third. I am concerned about the assumption of 100percent participation in the first effective year. In the past CBO has assuned a much more gradual participation for this type of Medicaid expansion. and I am advised that the Administration assumes a much slower expansion under the 1984 amendments than CBO estimated. Fourth. rarely do all eligible persons participate in any program. What is estimated to be the general Medicaid participation rate among eligibles? Fifth. and most importantly. I am deeply concerned that CBOs cost estimates do not include any offsetting savings to the Medicaid program as a result of providing prenatal services to highrisk pregnant women. Numerous studies. including a detailed one done in the State of California. have shown an immediate reduction in Medicaid expendItures for neonatal intensive care for each Medicaid dollar spent on prenatal services. A report from the National Academy of Sciences released on February 25. also documents savings. Since Public Law 98369 mandated Medicaid eligibility for the infants whose mothers would be covered under 8. 7 during their pregnancy. it is clear that additional Medicaid expenditures for the care of highrisk infants could be reduced by providing Medicaid services during the pregnancy rather than only after birth itself. I would appreciate your response to these concerns and a new cost estimate for 8. 7 at the earliest possible time since - I wish to press ahead with this legislation as soon as we receive a new cost estimate from CBO. Please have your staff contact Susanne Martinez (2243553) for any additional information or data relating to costsavings. Cordially.