By Suevon Lee
ProPublica

Medicare and Medicaid, which provide medical coverage for seniors, the poor and the disabled, together make up nearly a quarter of all federal spending. With total Medicare spending projected to cost $7.7 trillion over the next 10 years, there is consensus that changes are in order. But what those changes should entail has, of course, been one of the hot-button issues of the campaign.

With the candidates slinging charges, we thought we'd lay out the facts. Here's a rundown of where the two candidates stand on Medicare and Medicaid:

The candidates on Medicare

Big picture
Earlier this year, the Medicare Board of Trustees estimated that the Medicare hospital trust fund would remain fully funded only until 2024. Medicare would not go bankrupt or disappear, but it wouldn't have enough money to cover all hospital costs.

Under traditional government-run Medicare, seniors 65 and over and people with disabilities are given health insurance for a fixed set of benefits, in what's known as fee-for-service coverage. Medicare also offers a subset of private health plans known as Medicare Advantage, in which roughly one-quarter of Medicare beneficiaries are currently enrolled. Obama retains this structure.

The Obama administration has also made moves that it says would keep Medicare afloat. It says the Affordable Care Act would extend solvency by eight years, mainly by imposing tighter spending controls on Medicare payments to private insurers and hospitals.

In contrast, Rep. Paul Ryan, Mitt Romney's running mate, has proposed a more fundamental overhaul of Medicare, which he says is on an "unsustainable path." On his campaign website, Romney says that Ryan's proposals "almost precisely mirrors" his ideas on Medicare. But he's been fuzzy on other aspects of the plan.

A Romney-Ryan administration would replace a defined benefits system with a defined contribution system in which seniors are given federal vouchers to purchase health insurance in a newly created private marketplace known as Medicare Exchange. In this marketplace, private health plans, along with traditional Medicare, would compete for enrollees' business. These changes wouldn't start until 2023, meaning current beneficiaries aren't affected – just those under 55.

Under the Romney-Ryan, the vouchers would be valued at the second-cheapest private plan or traditional Medicare, whichever costs less. Seniors who opt for a more expensive plan would pay the difference. If they choose a cheaper plan, they keep the savings.

Who's covered
In the current system, people 65 and over are eligible for Medicare, which Obama has said he would keep for now. 

Romney has proposed raising the eligibility age for Medicare beneficiaries from 65 to 67 in 2022, then increasing it by a month each year after that. In the long run, he would index eligibility levels to "longevity." Ryan's budget plan proposesraising Medicare eligibility age by two months a year starting in 2023, until it reaches 67 by 2034.

Many others looking to keep Medicare solvent have also proposedraising the age of eligibility.

The Congressional Budget Office estimates that raising the minimum age from 65 to 67 would reduce annual federal spending by 5 percent. But it would also result in higher premiums and out-of-pocket costs for seniors who would lose access to Medicare.

Obama's health care law also adds some benefits for seniors, such as annual wellness visits without co-pays, preventive services like free cancer screenings and prescription drug savings.

Proposed savings
The Affordable Care Act is projected to reduce Medicare spending by $716 billion over the next 10 years. These reductions, as detailed by Washington Post's Wonkblog, will come mostly from reducing payments to hospitals, nursing homes and private health care providers.

While Ryan criticized such spending cuts in his speech at the Republican National Convention, his own budget proposed keeping these reductions.

"The ACA grows the trust fund by giving more general revenue to the Treasury, which then gives the trust fund bonds. But it then uses the money from those bonds to expand coverage for low- and middle-income people," explains Dylan Matthews on Washington Post's Wonkblog.

Romney hasn't really come up with a solid answer: he previously said he would restore the $716 billion savings that the health care law imposes. Per this New York Times story, the American Institutes for Research calculates this would increase premiums and co-payments for Medicare beneficiaries by $342 a year on average over the next 10 years.

For more on where the candidates stand on the $716 billion, the private health policy Commonwealth Fund offers this helpful explanation.

Caps on spending
Both Obama and Ryan have set an identical target rate that would cap Medicare spending at one-half a percentage point above the nation's gross domestic product.

But they have different ideas on mechanisms to achieve it.

The Affordable Care Act establishes a 15-member Independent Payment Advisory Board that, starting in 2015, would make binding recommendations to reduce spending rates. As Jonathan Cohn points out in the New Republic, the commission is prohibited from making any changes that would affect beneficiaries.

Ryan has proposed hard caps on spending and derided this panel of appointed members as "unelected, unaccountable bureaucrats." When laying out his plan in a 2011 memo, Ryan wrote that to control spending, "Congress would be required to intervene and could implement policies that change provider reimbursements, program overhead, and means-tested premiums."

Romney hasn't stated clear proposals for imposing a cap on spending.

The candidates on Medicaid

Big picture
Though, it's far less discussed on the campaign trail, Medicaid actually covers more people than Medicare. The joint federal-state insurance program for the poor, the disabled, and elderly individuals in long-term nursing home care currently covers about 60 million Americans.  The Affordable Care Act has expanded Medicaid coverage further. Beginning 2014, Medicaid will include people under 65 with income below 133 percent of the federal poverty level (roughly $15,000 for an individual, $30,000 for a family of four). This was estimated to cover an additional 17 million Americans as eligible beneficiaries.

In June, however, the U.S. Supreme Court ruled that states could opt out of the Medicaid expansion. A ProPublica analysis estimated that the 26 states that challenged the health care law, and thus may possibly opt out, would account for up to 8.5 million of those new beneficiaries.

Romney and Ryan would overhaul this current system by turning Medicaid into a system of block grants: the federal government would issue lump sum payments to the states, who would determine eligibility criteria and benefits for enrollees. These grants would begin in 2013.

Effects on spending
The Congressional Budget Office estimates that Medicaid expansion under the new health care law would cost an additional $642 billion over the next 10 years.

Under the Ryan plan, federal Medicaid grants would be adjusted only for inflation, but not health care costs, which grow at a much higher rate. The CBO estimates Ryan's plan would save the federal government $800 billion over the next 10 years. Another study conducted by Bloomberg News shows that the block-grants could decrease Medicaid funding by as much as $1.26 trillion over the next nine years.

Actual impact                                                                                                     
The New York Times points out that more than half of Medicaid spending goes toward the elderly and disabled. An Urban Institute analysis estimates the Ryan plan would result in 14 million to 27 million fewer people receiving Medicaid coverage by 2021.

Though rarely mentioned by any of the candidates, Medicaid costs are soaring to cover the elderly who require long-term nursing care. As the Times' details how, states saddled by high Medicaid costs have begun turning to private managed care plans to blunt the cost.

By Lauren Hasler
Wisconsin Center for Investigative Journalism

Donovan Richards first attempted to take his own life at age 4. The Wisconsin boy, who has bipolar disorder and autism, already had been kicked out of three day care programs, and his doctors were sure he would be in an institution before he turned 10.

To get the intensive treatment her son needed, but she could not afford, Paula Buege, Donovan’s mom, had to win approval from a review board made up of Dane County officials.

“I had 10 minutes to present his case. And my argument was, ‘If we don’t help him now, you’re going to read about him in the paper one day,’ ” said Buege, of Middleton, who now helps the parents of mentally ill children with a Madison-based nonprofit, Wisconsin Family Ties.

After years of treatment, Donovan is now a 17-year-old who plays in a band and wants to be a music teacher. While he continues to struggle, he has not been hospitalized for mental health problems in 10 years.

What saved Donovan from suicide or another tragic fate was a mother’s perseverance and taxpayer-funded mental health services.

But those public mental health systems in Wisconsin and across the nation increasingly face cuts as they compete for scarce resources, according to an investigation by the Center for Public Integrity, prepared in collaboration with the Wisconsin Center for Investigative Journalism and other nonprofit newsrooms.

States, desperate to close cavernous budget gaps, have cut $2.1 billion from their mental health budgets over the past three fiscal years, according to a study from the National Association of State Mental Health Program Directors’ Research Institute, an independent nonprofit that collects and analyzes mental health services data.

The problems go beyond money. In interviews with mental health advocates and county and state officials, the Wisconsin Center for Investigative Journalism found that Wisconsin’s public mental health system — once viewed as a national model — has become fragmented and underfunded.

And many experts fear that as Gov. Scott Walker moves to close the state’s budget deficit, the mental health system will be weakened even further. One county official predicted Walker’s changes could “devastate” taxpayer-financed mental health care in Wisconsin.

Among the problems facing the state’s public mental health system:

• The Wisconsin Council on Mental Health, the governor’s mental health planning council, estimates 232,932 adults and 106,149 children in Wisconsin have serious mental health conditions.
• Overall, 100,238 people received taxpayer-subsidized mental health services through their local county in 2009, according to the nonpartisan Legislative Fiscal Bureau.
• Walker warned in his March 1 budget address that a “serious and long-term solution” is needed for Medicaid. Demand for existing Medicaid-funded services is expected to create shortfalls of $150 million by June 30 and $1.8 billion in Wisconsin over the next two years as federal stimulus funding ends.
• The state Department of Health Services (DHS) plans to replace $1.3 billion of that gap with state funds and make up the difference with $500 million in cuts to the Medicaid program —possibly by cutting eligibility, benefits or reimbursement rates.

“Services have been underfunded with the current budget, and now we’re going to see a $500 million cut to providing essential services to vulnerable populations,” said state Rep. Sandy Pasch, D-Whitefish Bay, a member of the Assembly’s committee on public health.

Pasch estimates Medicaid cuts could leave 65,000 Wisconsin residents without subsidized health insurance to pay for mental health treatment.

Untreated mental illness isn’t just a personal hardship; it’s a major driver of Wisconsin homeless and prison populations. Nearly one-third of all inmates in the state prison system are classified as mentally ill, the state Department of Corrections estimates.

Wisconsin DHS secretary to make big changes
As part of Walker’s controversial budget-repair measure, Dennis Smith, the Republican governor’s DHS secretary, has been given a mandate to reshape Medicaid-funded services to close the budget gap.

Smith hinted that big changes may be coming. In a statement, Smith said the state will focus its mental health care dollars on models that are centered on people’s needs, are community-based and are statistically proven to work. Mental health experts say such programs are in short supply in Wisconsin.

Smith said state officials will “examine the entire continuum of care at every age” and coordinate mental health care with other medical needs —a move long sought by mental health advocates.

Integration of mental health care with physical health care would help identify and prevent mental illnesses and reduce social stigma, said William Greer, president and CEO of the Mental Health Center of Dane County, a nonprofit agency that provides mental health and substance abuse services.

“The human mind and body are one and the same,” Greer said at a February symposium, adding that treatment should be available “under one roof.”

The new health secretary vowed to work with legislators, consumers, advocates and taxpayers in an “an open and deliberative process,” to identify ideas that will improve health while controlling spending, DHS spokeswoman Beth Kaplan said.

But some advocates are still leery about how Smith will manage a $500 million cut to the state’s health services for the poor. In a previous position as a senior fellow at the Heritage Foundation, a conservative think tank in Washington, D.C., Smith encouraged states to opt out of Medicaid to save money and shed federal control over health care spending.

In one of his first moves, Smith announced on March 18 that enrollment for the BadgerCare Basic program, which covers adults without dependent children who were unable to enroll in BadgerCare Core, is now frozen.

Buege is worried about how her family may be affected by changes to Medicaid. Losing the benefit would leave her son without his medications and access to psychiatrists — the tools, she said, that have kept him mentally well instead of mentally ill.

“We’re going to still go to the hospital, we’re still going to go to the doctor,” Buege said. “People can’t afford to pay the bill. So who’s it going to impact? It’s going to impact everybody.”

Jane Pedersen of Menomonie in northwest Wisconsin has watched someone suffer needlessly because of a lack of affordable health insurance.

Pedersen has traveled to Madison seven times to protest Walker’s budget repair bill. She said she knows a person with a mental health disability and no insurance who stopped taking medication when he could no longer afford it. When he began to hallucinate, he spent several days in a hospital’s intensive care unit, she said.

“These people without health insurance tend to wait until they’re very sick to get help. ER care is the most expensive,” Pedersen said.

Counties run mental health programs
In Wisconsin, unlike in most other states, county governments run the publicly funded mental health care system, which is supported primarily by three funding streams: Federal Medicaid dollars matched by the county, state funding and local property taxes.

Walker has proposed cuts to Medicaid and funding to local governments. He also is seeking to freeze local property taxes to prevent officials from making up for the loss of state funding by raising taxes.

Some local officials are alarmed by Walker’s plan.

“This could significantly devastate mental health and substance abuse (services),” said William Orth, director of the Sauk County Department of Human Services.

While many states have cut funding in recent years, Wisconsin has maintained support for mental health services — although advocates say the system still falls far short of meeting the state’s needs.

Mental health expenditures in Wisconsin at the county level actually increased by about 16 percent between 2005 and 2009, to more than $428 million, according to the Legislative Fiscal Bureau.

But those increases may not mean more services, considering that “the cost of doing business has gone up” in health care, according to Ted Lutterman, director of research analysis for the National Association of State Mental Health Program Directors Research Institute in Alexandria, Va.

It’s not clear what’s in store for mental health care in the current budget. The few broad categories in the governor’s budget that mention mental health care, including operation of the state’s two mental health institutes, show small increases from current funding levels, but little detail is available.

“Funding is being cut everywhere and mental health is getting increases. I think that shows where Walker’s priorities are. It clearly displays he has compassion for the mental health community,” said state Sen. Mary Lazich, R-New Berlin, a member of the Senate public health committee.

But Pasch said she is “very concerned” how well services for the mentally ill will fare when local governments start cutting their budgets.

“When resources start becoming more and more scarce, my experience being a psychiatric nurse for 30 years is that mental health services are one of the first things to get cut,” Pasch said.

If fewer poor people are insured under Walker’s proposed budget, counties still will be on the hook to pay for core mental health services, including hospitalization, according to Kathy Roetter, director of Wood County Unified Services, which provides mental health care to residents in central Wisconsin. But counties would lose federal Medicaid matching funds for those newly ineligible people, she said.

DHS statement on mental health care
The Wisconsin Center for Investigative Journalism asked Smith to comment on the future of the state’s public mental health care system.

On the state's overall mental health funding: We are concerned that some individuals with mental illness are under-served in the current system or must navigate through a complex delivery system on their own. We will examine the entire continuum of care at every age. Our approach will be to identify models of care that work, support them, and replicate them. These models should be person-centered, community-based, and use evidence-based practices. Individuals will benefit from the coordination of their mental health services with other acute care medical services they need. We have already met with a variety of partners in the mental health community and have heard directly from consumers themselves. We look forward to working with everyone who is involved with improving the care to individuals in need of mental health services.

On how the governor’s plan for $500 million in cuts is reflected in the budget: The Medicaid program faces a $1.8 billion shortfall, largely because of the expiration of more than $1 billion of federal American Recovery and Reinvestment Act (ARRA) funds on July 1. We are replacing those funds for DHS with $1.3 billion in new state General Purpose Revenue (GPR). To make up the rest of this federal shortfall, we will be looking for $500 million in savings in our Medicaid program. To bend this cost curve, and reduce expenditures by the projected amount, the Department will commence an open and deliberative process with legislators, stakeholders, advocates and taxpayers to identify and implement ideas aimed at improving health outcomes and controlling spending growth.

Care for mentally ill shifts, leaving gaps
Over the past 50 years, public mental health care in the United States has moved away from locked hospitals to community-based programs. Shifting federal budget priorities, a movement that advocated for the least-restrictive environment for the mentally ill, and a new generation of drugs for psychiatric disorders allowed more people to remain in the community.

In 1955, psychiatric hospitals in the U.S. housed more than 550,000 people, according to research by Dr. E. Fuller Torrey, a research psychiatrist and founder of the nonprofit Treatment Advocacy Center, which is based in Arlington, Va. By 1994, that number had dropped by 87 percent to 71,619 people.

But as hospitals emptied out, the funding didn’t necessarily flow to those community programs. Much of it simply disappeared.

A recent study from the federal Substance Abuse and Mental Health Services Administration (SAMHSA) found that when adjusted for population and increased medical costs, the United States spent $261.7 billion in 1955 and only $30.9 billion in 2006 in funding for mental health care.

Wisconsin lacks services for young
Hugh Davis, executive director of the nonprofit Wisconsin Family Ties, says funding isn’t the only problem afflicting Wisconsin’s public mental health system. One of the greatest problems he and other advocates see is the lack of adequate mental health care for children and teenagers.

“There is ample evidence that that system has been neglected by our state for a long time,” said Davis, whose organization helps families with children who have emotional, behavioral and mental disorders.

He points to data that show Wisconsin is last among all Midwestern states in the percentage of children with serious emotional disturbance who are served by the public mental health system.

In an investigation of rural health care last year, the Wisconsin State Journal found the state has just 90 child psychiatrists, forcing some children in northern Wisconsin to wait up to two years to get counseling or medication.

System ‘just too complicated’
Lori Krinke of Madison, who has three children with disabilities, said it took her a long time to get help for her youngest son. Krinke is associate director of Wisconsin Family Ties.

Krinke said last year, it was nearly two months before she could find a bed at a state-run mental health facility for her teenager, who was no longer safe at home because he was chronically suicidal.

“Honestly, if he hadn’t gone to Winnebago (Mental Health Institute), he would not have made it to his 14th birthday,” she said.

Krinke says people with serious mental illnesses in Wisconsin have to jump through too many hoops to get the help they need.

“When it came to looking for resources for mental health for children, I didn’t even know where to turn. Frequently, the people who work within the system don’t know how to navigate the system. It’s too complicated,” Krinke said. “And the funding isn’t there.”

Smith, the new health secretary, acknowledged the complexity and gaps in the system.

“We are concerned that some individuals with mental illness are underserved in the current system or must navigate through a complex delivery system on their own,” he said.

Community-based programs underfunded
The outpatient programs that partly replaced hospitalization — including drugs, counseling, case management and day programs — are cheaper and more effective for maintaining mental health for all but the most serious cases. But in some parts of Wisconsin, they’re hard to come by.

About 30 years ago, Wisconsin was seen as having one of the top mental health systems in the country because of its strong county system, according to Shel Gross, director of public policy for Mental Health America of Wisconsin, a Milwaukee-based nonprofit advocacy group. But in recent years that system has actually become a liability, he said.

There is significant variation from county to county in the quality of mental health care because county boards decide what to offer and how many people they can afford to help.

As one measure, Shawano County spent the least on each person receiving services in 2009 at $1,534, while Jackson County spent $9,571 on each client — six times as much, according to figures provided by DHS and analyzed by the Center.

“It’s not fair that residents get different services depending on where they live,” said Roetter from Wood County.

Demand, cost up; community aid down
State funding for human services, including mental health care, comes to counties primarily in what are called community aids. While medical costs have risen and demand has increased, the state’s community aids funding has remained nearly flat for more than 20 years, according to a report by the Wisconsin Council on Mental Health.

Community aids funding for the current year is $257.6 million. If adjusted for inflation, the amount of community aids has actually fallen by more than $185 million in 20 years, according to the council.

Another stream of funding from the state to counties is shared revenue, which usually goes to pay for highways and other county services. The governor’s budget cuts shared revenues to counties by $36.5 million in calendar year 2012, from an estimated $183 million in 2011.

If the cuts in shared revenue and freeze in property taxes proposed by Walker are approved by the Legislature, counties will need to cut somewhere.

“How do you choose?” said Sarah Diedrick-Kasdorf, a senior legislative associate with the Wisconsin Counties Association. “How do you pick? Children or the elderly? Someone with a mental illness or a mother who needs help?”

Buege is glad that when her son needed it the most, the help was there.

“My kid is living proof; he would be costing us all a lot of money right now if we didn’t get those services,” she said. “And instead he’s going to be a taxpaying member of society.”

Reporter Kate Golden of the Wisconsin Center for Investigative Reporting contributed to this report. The nonprofit center (www.WisconsinWatch.org) collaborates with Wisconsin Public Television, Wisconsin Public Radio and the UW-Madison School of Journalism and Mass Communication and other news media. Lauren Hasler is at lhasler@wisconsinwatch.org.

While Rep. Michele Bachmann has forcefully denounced the Medicaid program for swelling the "welfare rolls," the mental health clinic run by her husband has been collecting annual Medicaid payments totaling over $137,000 for the treatment of patients since 2005, according to new figures obtained by NBC News. 

The previously unreported payments are on top of the $24,000 in federal and state funds that Bachmann & Associates, the clinic founded by Marcus Bachmann, a clinical therapist, received in recent years under a state grant to train its employees, state records show. The figures were provided to NBC News in response to a Freedom of Information request. 

The clinic, based in Lake Elmo, Minn., describes itself on its website as offering "quality Christian counseling" for a large number of mental health problems ranging from "anger management" to addictions and eating disorders.

The $161,000 in payments from the Minnesota Department of Human Services to her husband's clinic appear to contradict some of Michelle Bachmann's public accounts this week when she was first asked about the extent to which her family has benefited from government aid. Contacted this afternoon, Alice Stewart, a spokeswoman for Bachmann, said the congresswoman was doing campaign events and was not immediately available for comment.

Questions about the Bachmann family's receipt of government funds arose this week after a Los Angeles Times story reported that a family farm in which Michelle Bachmann is a partner had received nearly $260,000 in federal farm subsidies.

When asked by anchor Chris Wallace on "Fox News Sunday" about the story's assertion that her husband's counseling clinic had also gotten federal and state funds, Bachmann replied that it was "one-time training money that came from the federal government. And it certainly didn't help our clinic."

At another point, she said, "My husband and I did not get the money," adding that it was "mental health training money that went to the employees."

Read more reporting by Michael Isikoff in 'The Isikoff Files'

But state records show that Bachmann & Associates has been collecting payments under the Minnesota's Medicaid program every year for the past six years. Karen Smigielski, a spokeswoman for the state Department of Human Services, said the state's Medicaid program is funded "about 50-50" with federal and state monies. The funds to Bachmann & Associates are for the treatment of low-income mentally ill patients and are based on a "fee for service" basis, meaning the clinic was reimbursed by Medicaid for the services it provided.

Smigielski added that these were not the only government funds that Bachmann & Associates has received. The clinic also participates in managed-care plans that are reimbursed under a separate state-funded Minnesota Health Care program. But the state does not have any records of payment information to the individual clinics that participate. (During her Fox News appearance, Bachmann was not asked about Medicaid payments, and she made no mention of them.)

Another state official, Patrice Vick, communications manager for the Human Services Department, said she was puzzled by Michelle Bachmann's assertion on the broadcast that the funds under the state grant went to employees. While the grant was to train employees to help them treat chemical dependency, the money did not go directly to those being trained, she said. "It went to the clinic," Vick said. 

"The contract was with the clinic," Vick added later. But she  had no immediate information about whether the clinic passed it along directly to the employes being trained or used it to cover its costs of training.  

The issue of her receipt of government aid has gotten attention because Bachmann, a Tea Party favorite, has been a fierce critic of federal spending programs and has called for drastic cutbacks. This has especially been the case on health care, including the expansions of Medicaid called for under the new health care law.

When Minnesota Gov. Mark Dayton signed an executive order earlier this year expanding the state's Medicaid program for more than 95,000 state residents, Bachmann was joined state Republican lawmakers in denouncing the move.

"Right now, Governor Dayton is wanting to commit Minnesota taxpayers to add even more welfare recipients on the welfare rolls at a very great cost," Bachmann said at a news conference in St. Paul in January.

"She's giving hypocrisy a bad name," said Ron Pollock, executive director of Families USA, a consumer health care advocacy group, when asked about the Medicaid payments to Bachmann & Associates. "It's clear when it feathers her nest she's happy for Medicaid expenditures. But people that really need it — folks with disabilities and seniors — she's turning their backs on them."