Policy shifts and their impact on health care for elderly persons

THREE MAJOR SHIFTS IN FEDERAL POLICY HAVE BEEN INITIATED RECENTLY THAT WILL DIRECTLY AFFECT THE MEDICAL CARE OF THE ELDERLY: (1) A significant reduction in federal expenditures for domestic social programs; (2) decentralization of program authority and responsibility to states, particularly through block grants; (3) deregulation and greater emphasis on market forces and competition to address the problem of continuing increase in the costs of medical care. The federal policy shifts come at a time when many state and local governments are experiencing fiscal strain or fiscal crisis due, in part, to the rapid rise in expenditures for medical care for the poor and the imposition of limitations on, and even reductions in, tax revenues. In the short term, changes at the state level, particularly limitations on Medicaid expenditures, are likely to have the most profound effect on medical care for the elderly. These changes will most likely include reductions in Medicaid eligibility and in scope of benefits as well as tight controls on hospital, nursing home and physician reimbursement.