Understanding Medicaid Rodney L. Whitlock Health Policy Advisor Senate Finance Committee

1. Understanding MedicaidRodney L. WhitlockHealth Policy AdvisorSenate Finance Committee Briefing sponsored by The Alliance for Health Reform & The Kaiser Commission on Medicaid and the Uninsured

2. The Structure of Medicaid • Medicaid is a federal-state partnership to provide health care services for certain populations. • It is administered largely by the states with federal direction and funded from both state and federal funds.

3. Who is Covered under Medicaid • States are required to cover certain populations. To receive federal funds, states must provide coverage to these groups. These are referred to as mandatory populations. • States can then cover people beyond those required and receive federal funds as well. These are referred to as optional populations.

4. Mandatory Populations* Children below federal minimum income levels Adults in families with children (Section 1931 and TMA) Pregnant women ≤133% FPL Disabled SSI beneficiaries Certain working disabled Elderly SSI beneficiaries Medicare Buy-In groups (QMB, SLMB, QI-1, QI-2) * Source: Kaiser Commission on Medicaid and the Uninsured Optional Populations Children above federal minimum income levels Adults in families with children (above Section 1931 minimums) Pregnant women >133% FPL Disabled (above SSI levels) Disabled (under HCBS waiver) Certain working disabled (>SSI levels) Elderly (>SSI; SSP-only recipients) Elderly nursing home residents (>SSI levels) Medically needy Populations Covered

5. Who Pays for What in Medicaid • Essentially, the amount of money a state receives from their ‘federal partner’ is determined by how much money the state itself spends. • The federal government ‘matches’ the amount of money a state spends on its Medicaid program.

6. Federal Share v. State Share • A statutory formula known as the Federal Medical Assistance Percentage (or more commonly FMAP) determines for each state what share of a state’s Medicaid program is paid by the federal government and what is paid by the state.

7. FMAP: How It Is Calculated • The FMAP is calculated by taking a rolling three-year average of a state’s per capita income. In theory, this is supposed to accurately capture the fiscal health of a state.

8. FMAP: How Much Is It • The average FMAP is 57%; that means for every 43 cents a state spends, the federal government sends the state 57 cents. • Mississippi has the highest FMAP at 76%. • 12 states have the minimum FMAP of 50%.* * 2006 Estimates from HHS

9. FMAP: How It Works • Since the FMAP represents a state’s fiscal health, when a state is doing poorly economically, it should received increased funding from the federal government. When a state is doing better economically, it should receive less funding from the federal government.

10. FMAP: 2006 Projections • Current projections for 2006 show that 29 states will see FMAP decreases.* This is a reflection of improving economies over the past several years in those states. * Source: Current HHS estimate

11. Growth in Federal Medicaid Spending 2006-2015 • The Congressional Budget Office (CBO) estimates that the federal share of Medicaid will grow from $190.7B in 2006 to $387.7B in 2015. • The average annual growth is 7% per year and just over 100% growth for the ten year span.

12. Federal Medicaid Spending 2006-2015 CBO Forecast

13. Growth in Medicaid Enrollment2006-2015 • The Congressional Budget Office (CBO) estimates that the enrollment in Medicaid will grow from 58.6 million people in 2006 to 63.9 million people in 2015. • The average annual growth is 1% per year and 9% growth for the ten year span.

14. Medicaid Enrollment 2006-2015 CBO Forecast

15. Medicaid and the MMA • One area where states will, eventually, not be paying for coverage is in drugs. The Medicare Modernization Act (MMA) transfers the responsibility for paying for prescription drugs for those people eligible for both Medicare and Medicaid solely to the federal government.