Understanding Medicaid

N226 Winter 2003Professor: Joanne Spetz29 January 2003

Medicaid in a nutshell

Insurance for low-income and needy Children Elderly Blind/disabled Receiving federal financial assistance

Federal-State partnership36 million individuals

History of Medicaid

Introduced in 1965 Same time as Medicare

Originally tied to eligibility for federally funded income support Welfare (AFDC) Disability programs

Expanded in 1980s to more low-income people, especially children

State control is central

Each state: Establishes its own eligibility

standards Determines the type, amount,

duration, and scope of services Sets the rate of payment for services Administers its own program

Who is eligible?

Federal gov’t requires coverage of: Families with children qualified for

AFDC Supplemental Security Income (SSI)

Aged, blind, disabled Infants of Medicaid-eligible pregnant

women

Who is eligible? (continued)

Federal gov’t requires coverage of: Children under age 6 & pregnant

women in households with income <= 133% of poverty level (FPL)

Children under age 19 in families with income at or less than FPL

Recipients of adoption assistance & foster care under Title IV-E of Social Security Act

Who is eligible? (continued)

Federal gov’t requires coverage of: Certain Medicare beneficiaries Protected groups, such as…

People who lose SSI due to earnings from work

Families who get Medicaid coverage following loss of eligibility due to earnings

Who is eligible? (continued)

Federal gov’t allows coverage of: Infants & pregnant women up to 185%

of FPL Other low income children Aged, blind, disabled with income

above mandatory coverage level and below FPL

Institutionalized individuals (with specified limits)

Who is eligible? (continued)

Federal gov’t allows coverage of: Recipients of State supplementary

payments TB infected persons eligible

financially at the SSI level (only for TB care)

Low-income uninsured women diagnosed with breast or cervical cancer

Who is eligible? (continued)

States can expand eligibility further They pay for other enrollees only with

state funds Undocumented immigrants are an

ongoing debate

What is “medically needy”?

States can extend Medicaid eligibility to people who have too much income They can spend down to eligibility with

expenses that offsets excess income They can pay premiums to the state for

the difference between family income and income eligibility standard

What services are covered?

States must offer: Inpatient hospital services Outpatient hospital services Physician services Medical and surgical dental services Nursing facility services for adults Home health care

What services are covered?

States must offer: Family planning services & supplies Rural health clinic services Lab & x-ray Nurse practitioners, nurse midwives Early and periodic screening,

diagnosis, and treatment services for children (EPSDT)

What services are covered?

Medically needy program must offer: Prenatal care & delivery services Ambulatory services to those under

age 18 Ambulatory services to those entitled

to institutional services Some other specific things depending

on the groups covered

What services are covered?

State may offer: Clinic services Nursing facility to children Intermediate care/mentally retarded

services Optometry Prescribed drugs & prosthetics TB services Dental services

Who provides the care?

Programs must allow freedom of choice of providers HMOs allowed

California’s Medi-Cal has several permutations of Medicaid managed careRecent study finds CA doctors less willing to take Medi-Cal patients

What payments are made?

Medicaid providers must accept the Medicaid reimbursement as payment in full Payment methods vary across states

For institutional services, payment cannot be more than MedicareDisproportionate share hospitalsHospice care has different payment

Federal-state cost-sharing

No cap on Federal payment – Feds must match whatever the state providesPortion of Medicaid paid by Feds is determined annually for each state Formula compares state per capita

income with national average Ranges from 50% to 83%

Do recipients pay?

States may have deductibles, copaysNo payments from patient for: Emergency care Family planning services

No payments from: Pregnant women Children Hospital/nursing home patients Categorically needy HMO enrollees

Oregon’s controversial plan

Oregon wanted to allocate their Medicaid dollars more effectivelyPrioritized services and procedures Cost-effectiveness analyses Community and professional rankings

Offered coverage for services, according to priority, until money ran out

Effects of Oregon’s plan

Oregon could afford to offer Medicaid to all people in povertyReduced unmet need for care in the stateBig improvement in access for people in poverty, despite rationing

What about Medicaid HMOs?

Gold, Sparer, & Chu, Health Affairs 1996 Enrollment & marketing are

problematic Eligibility turnover stymies managed

care model Effective oversight is essential Capitation rates and risk adjustment

must be done properly

What about Medicaid HMOs?

Gold, Sparer, & Chu (cont.) Careful carve-outs can preserve

services “Enabling services” such as translation

must be considered Don’t rely entirely on commercial plans Access to care concerns greatest for

chronically ill & special needs

What about Medicaid HMOs?

Gold, Sparer, & Chu (cont.) Increased reliance on private plans

may reduce funds to safety net providers

What about the Medicaid expansions?

Until 1988, Medicaid was tied to AFDC eligibilityAfter 1988, Medicaid expanded to other poor and near-poor children and pregnant women

What effect did Medicaid expansions have?

income

Hours worked0

AFDC

Employmentincome

What effect did Medicaid expansions have?

income

Hours worked0

AFDC

Employmentincome

AFDC+Medicaid

What effect did Medicaid expansions have?

Increases in insurance coverage for children David Card, Janet Currie, Dubay, Kenney

Improvements in child health Janet Currie, Dubay

Increases in employment of women Aaron Yelowitz

Low costs per additional enrollee Gordon & Seldon

State Children’s Health Insurance Plans (SCHIP)

Created in 1997Targeted at near-poor familiesState-federal partnershipSubsidized purchase of health insurance Some states purchase through

Medicaid Some states purchase separately

Problems with SCHIP implementation

Getting the word outApplication processImmigrant fears

Enrollment grew very slowly

But…3.8 million children enrolled 2nd qtr FY02!

What about crowding out?

Crowding out is when private insurance is used less when public insurance expands People choose less-expensive public

insurance over private insurance Employers are less likely to offer

insurance when their employees can get public insurance

Has there been crowding out?

Medicaid crowd out Shore-Sheppard et al. finds less offer to

families of workers, less take-up Blumberg et al. & Yazici et al. find

“displacement”

Center for Studying Health System Change says SCHIP has caused some crowding out http://www.hschange.org/CONTENT/508/