The Basics of Medicaid

1
The Basics of Medicaid

• Julie Hudman, PhD
• Associate Director
• Kaiser Commission on Medicaid and the Uninsured
• March 3, 2004

2
Medicaid Today

• Provides health and long-term care coverage for
  over 50 million people
• Provides comprehensive, low-cost health insurance
  for 38 million people in low-income families,
  reducing the number of uninsured
• Finances care for over 12 million elderly and
  persons with disabilities, including over 6
  million Medicare beneficiaries
• Improves access to care and reduces disparities
• Guarantees entitlement to individuals and federal
  financing to states
• Provides 160 billion in federal and 120 billion
  in state and local funding for coverage of
  low-income populations
• Pays for nearly 1 in 5 health care dollars 1 in
  2 long-term care dollars in the U.S. and over
  half of public mental health spending

3
Percent of Residents Covered by Medicaid, by
State, 2001-2002
National Average 11
lt 9 (17 states)
9- lt 12 (17 states)
gt 12 (16 states DC)
SOURCE Kaiser Commission on Medicaid and the
Uninsured and Urban Institute analysis of
two-year pooled data from March 2002 and 2003
Current Population Survey, 2003. Based on total
population.
4
Medicaid Enrollees and Expendituresby Enrollment
Group, 2002
Elderly 9
Elderly 27
Blind Disabled 16
Adults 25
Blind Disabled 43
Children 50
Adults 12
Children 18
Total 50.9 million
Total 216 billion
Expenditure distribution based on CBO data that
includes only spending on services and excludes
DSH, supplemental provider payments, vaccines for
children, and administration. SOURCE Kaiser
Commission estimates based on CBO and OMB data,
2003.
5
Medicaid Expenditures Per Enrolleeby Acute and
Long-Term Care, 2002
13,100
11,800
Long-Term Care
Acute Care
2,000
1,500
SOURCE KCMU based on CBO and Urban Institute
estimates, 2003.
6
Federal Medical Assistance Percentages (FMAP), FY
2004, Including Temporary Fiscal Relief
74 percent (10 states)
64 to lt74 percent (15 DC states)
54 to lt64 percent (13 states)
NOTE The percentages listed reflect the
temporary increase in federal Medicaid matching
rates enacted in the Jobs and Growth Tax Relief
Reconciliation Act of 2003, which is effective
for the first 3 calendar quarters of FY 2004.
SOURCE Federal Register, June 17, 2003.
53 percent (12 states)
7
Medicaid Expenditures by Service, 2002
DSH Payments 6.4
Inpatient 13.2
Home Health and Personal Care 12.0
Physician 3.7
Mental Health 1.6
Outpatient/Clinic 6.9
Acute Care 56.1
Long-Term Care 37.5
ICF/MR 4.6
Drugs 9.4
Nursing Facilities 19.3
Other Acute 6.6
Payments to Medicare 2.3
Payments to MCOs 14.0
Total 248.7 billion
SOURCE Urban Institute estimates based on data
from CMS (Form 64).
8
Physical and Cognitive Limitations among
Low-Income Adults and ChildrenMedicaid and
Privately Insured, 1996-1999
Percent reporting any physical or cognitive
limitations
Adults
Children
Note All differences are statistically
significant at the 5 level. Low income
defined as those with incomes less than 200 of
the Federal Poverty Level. Adults defined as
age 19-64. Children defined as age
0-18. SOURCE Analysis of MEPS data from 1996,
1997, 1998, and 1999 Hadley and Holahan, Inquiry
(Winter 2003/2004).
9
Per Capita Expenditures for Non-Disabled
Low-Income Children and Adults
Per capita expenditures (in 2001 dollars)
Note Low income defined as those with incomes
less than 200 of the Federal Poverty Level.
Non-disabled defined as those not reporting any
limitations. SOURCE Holahan and Hadley analysis
of MEPS data from 1996, 1997, 1998, and 1999,
prepared for the Kaiser Commission on Medicaid
and the Uninsured.
10
Minimum Medicaid Eligibility Levels, 2003
Income eligibility levels as a percent of the
Federal Poverty Level
NOTE The federal poverty level is 8,980 for a
single person and 15,260 for a family of three
in 2003. Source Kaiser Commission on Medicaid
and the Uninsured, Medicaid Resource Book, 2002
11
Medicaid Benefits
Mandatory Items and Services
Optional Items and Services

• Physicians services
• Laboratory and x-ray services
• Inpatient hospital services
• Outpatient hospital services
• Early and periodic screening, diagnostic, and
  treatment (EPSDT) services for individuals under
  21
• Family planning and supplies
• Federally-qualified health center (FQHC) services
• Rural health clinic services
• Nurse midwife services
• Certified nurse practitioner services
• Nursing facility (NF) services for individuals 21
  or over

• Prescription drugs
• Medical care or remedial care furnished by
  licensed practitioners
• Diagnostic, screening, preventive, and rehab
  services
• Clinic services
• Dental services, dentures
• Physical therapy
• Prosthetic devices, eyeglasses
• TB-related services
• Primary care case management
• ICF/MR services
• Inpatient/nursing facility services for
  individuals 65 and over in an institution for
  mental diseases (IMD)
• Inpatient psychiatric hospital services for
  individuals under age 21
• Home health care services
• Respiratory care services for ventilator-dependent
  individuals
• Personal care services
• Private duty nursing services
• Hospice services

12
Health Insurance Coverageby Poverty Level, 2002
Other
Employer
Medicaid
Uninsured
251 million
42 million
44 million
41 million
125 million
Notes The federal poverty level was 14,348 for
a family of three in 2002. Percentages may not
total 100 due to rounding. SOURCE Urban
Institute and Kaiser Commission on Medicaid and
the Uninsured, analysis of the 2003 Current
Population Survey.
13
Improvements in Medicaid and CHIP Coverage, April
2003
Number of States Reporting
Eligibility
Enrollment
SOURCE Center on Budget and Policy Priorities
for the Kaiser Commission on Medicaid and the
Uninsured, July 2003.
14
Health Insurance Coverage ofLow-Income Adults
and Children, 2002
Children
Parents
Adults without children
Notes Adults age 19-64. Data may not total 100
due to rounding. SOURCE KCMU and Urban Institute
analysis of March 2003 Current Population Survey.
15
Medicaids Impact on Access to Health Care
Percent Reporting
Did Not Receive Needed Care
No Pap Test
No Regular Source of Care
Adults
Women
Children
SOURCES The 1997 Kaiser/Commonwealth National
Survey of Health Insurance Womens Health, The
Commonwealth Fund Survey, 1996 Dubay and Kenney,
Health Affairs, 2001.
16
Medicaid Status of Medicare Beneficiaries, 2000
Partial Dual Eligibles (1.0 Million)
3
15
83
Medicare Beneficiaries 38.8 Million
SOURCE Medicare data are from the CMS Office of
the Actuary. Medicaid data were prepared by the
Urban Institute based on the 2000 MSIS. Note
that full dual eligibles are eligible for
prescription drug coverage through Medicaid while
partial dual eligibles receive assistance with
Medicare premium and/or cost-sharing obligations.
Due to rounding, percentages do not total 100
and data do not sum to 38.8 million.
17
Spending on Dual Eligibles as a Share of Medicaid
Spending on Benefits, FY2002
Non-Prescription (82.7 Billion)
36
Spending on Dual Eligibles 42
Spending on Other Groups (136.7 Billion)
59
6
Prescription Drugs (13.4
Billion)
6
Total Spending on Benefits 232.8 Billion
NOTE Due to rounding, percentages do not total
100. SOURCE Urban
Institute estimates prepared for KCMU based on an
analysis of 2000 MSIS data applied to CMS-64
FY2002 data.
18
National Spending on Total Long-Term Care and
Nursing Home Care, 2002
Total Long-Term Care
Nursing Home Care
Other Private 3
Other Public 3
Other Private 3
Other Public 2
Private Insurance 10
Private Insurance 8
Medicaid 43
Medicaid 50
Out-of-Pocket 25
Out-of-Pocket 23
Medicare 17
Medicare 13
Total 139.3 billion
Total 103.2 billion
SOURCE CMS, National Health Accounts, 2004.
19
Percent of Medicaid Spending for Long-Term Care,
by State, 2002
lt 30 (10 states DC)
30-39 (23 states)
National Average 38
40-49 (11 states)
gt 50 (6 states)
SOURCE Urban Institute estimates based on data
from CMS (Form 64). Long-term care services
include nursing facilities, intermediate care
facilities for the mentally retarded, mental
health services, home health services, and
personal support services.
20
Average Annual Growth Rates of Total Medicaid
Spending
Annual growth rate
SOURCE For 1990-1999 Urban Institute estimates
prepared for the Kaiser Commission on Medicaid an
the Uninsured, 2000. For 2001-2003 Health
Management Associates, for the Kaiser Commission
on Medicaid and the Uninsured.
21
Sources of Medicaid Expenditure Growth

• Keeping pace with health care inflation
• Pressure to increase provider payments
• Escalating costs for prescription drugs
• Expanding enrollment
• Economic downturn
• Growth of the disabled population in Medicaid
• Gaps in Medicare
• Increase in prescription drug utilization
• Expanding home and community-based services
• Use of Medicaid maximization arrangements

22
Contributors to Medicaid Expenditure Growth by
Enrollment Group, 2000-2002
Disabled 35
Adults 15
36
61
Children 21
Other 2.3
DSH 0.7
Aged 24
Medicare Payments 2.1
Total 48.2 billion
SOURCE Estimates for KCMU prepared by the Urban
Institute, 2003.
23
States Undertaking Medicaid Cost Containment
StrategiesFY 2002 - FY 2004
Reducing/ Freezing Provider Payment
Reducing/ Restricting Eligibility
Increasing Co-Payments
Controlling Drug Costs
Reducing Benefits
SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, June and December 2002 and September
2003.
24
Medicaid and SCHIP Reductions Affecting Parents
and Children

• Significant reductions in parent coverage in
  several states
• A few states cut back on income eligibility for
  pregnant women or children
• TX reduced coverage of pregnant women from 185
  to 158 FPL
• AK reduced coverage of children from 200 to 175
  FPL
• States adopting other, more targeted eligibility
  cutbacks
• Some states are initiating or increasing premiums
• States are scaling back outreach and enrollment
• Some states are no longer enrolling all eligible
  children in separate SCHIP programs
• Seven states (AL, CO, FL, MD, MT, NC, UT) have
  frozen SCHIP enrollment at some point
• In addition, states are reducing benefits and
  increasing cost-sharing for parents

25
State Actions Affecting Persons with Disabilities
and Seniors Selected Examples

• Scaling back eligibility, especially for those
  who qualify because of high medical bills
• 3 states eliminated or restricted their
  medically needy programs
• Several states reduced spend-down period and
  changed asset rules
• Changes to home and community-based waivers
• While many states are expanding home and
  community-based care, others are reducing
  enrollment and benefits
• Benefit reductions for optional services
• Several states chose to eliminate or restrict
  occupational, physical and speech therapies as
  well as chiropractic, dental and podiatry
  services. Other restrictions include new limits
  on long-term care home therapies and limits on
  personal care hours
• Impact of new and increased cost-sharing
• Few states are exempting seniors or people with
  disabilities from co-payments. Potential impact
  is large because these groups use health care
  services, including prescription drugs,
  intensively

SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, June 2003 and September 2003.
26
Potential Implications of Some Medicaid and SCHIP
Cost Containment Strategies

• Increase the number of uninsured
• Limit access to needed services and drugs,
  especially for those with multiple chronic
  conditions
• Disrupt continuity of care
• Increase financial burden on individuals
• Limit provider participation
• Short-term savings could be eroded by increased
  costs in health care system
• Negative impact on state economies

• Eligibility Reductions
• Benefit Reductions
• Cost-Sharing Increases
• Changes to Enrollment Process
• Charging Premiums
• Provider Payment Reductions
• Pharmacy Cost Controls

27
Some States are Making Progress Despite Fiscal
Constraints

• A few states have made significant steps forward
• Illinois is expanding eligibility for parents and
  children
• Virginia simplified enrollment for children in
  Medicaid and SCHIP, expanded eligibility for
  children, and improved outreach
• The District of Columbia expanded eligibility for
  childless adults
• And other states are moving forward incrementally
• 31 states have implemented disease management
  programs since 2002
• States are becoming more aggressive purchasers of
  prescription drugs

28
Policy Concerns in Medicaid

• Coverage for low-income families
• Reduces uninsured
• Improves access to care
• Per enrollee costs low
• Assistance for the elderly and disabled
• Helps poorest and sickest
• Essential supplement to Medicare
• Primary users of prescription drugs and long-term
  care
• Per enrollee costs high
• Fiscal Pressure
• Pressure from declining state revenue and growing
  health costs
• Need to keep pace with private sector to assure
  access
• Most dollars in elderly/disabled and long-term
  care
• Restructuring proposals could put open-ended
  financing at risk much at stake for low-income
  families and the elderly and disabled