Understanding Medicaid

1. Understanding Medicaid N226 Winter 2003 Professor: Joanne Spetz 29 January 2003

2. Medicaid in a nutshell • Insurance for low-income and needy • Children • Elderly • Blind/disabled • Receiving federal financial assistance • Federal-State partnership • 36 million individuals

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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)

9. 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

10. Who is eligible? (continued) • States can expand eligibility further • They pay for other enrollees only with state funds • Undocumented immigrants are an ongoing debate

11. 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

12. 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

13. 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)

14. 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

15. 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

16. Who provides the care? • Programs must allow freedom of choice of providers • HMOs allowed • California’s Medi-Cal has several permutations of Medicaid managed care • Recent study finds CA doctors less willing to take Medi-Cal patients

17. 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 Medicare • Disproportionate share hospitals • Hospice care has different payment

18. Federal-state cost-sharing • No cap on Federal payment – Feds must match whatever the state provides • Portion 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%

19. Do recipients pay? • States may have deductibles, copays • No payments from patient for: • Emergency care • Family planning services • No payments from: • Pregnant women • Children • Hospital/nursing home patients • Categorically needy HMO enrollees

20. Oregon’s controversial plan • Oregon wanted to allocate their Medicaid dollars more effectively • Prioritized services and procedures • Cost-effectiveness analyses • Community and professional rankings • Offered coverage for services, according to priority, until money ran out

21. Effects of Oregon’s plan • Oregon could afford to offer Medicaid to all people in poverty • Reduced unmet need for care in the state • Big improvement in access for people in poverty, despite rationing

22. 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

23. 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

24. What about Medicaid HMOs? • Gold, Sparer, & Chu (cont.) • Increased reliance on private plans may reduce funds to safety net providers

25. What about the Medicaid expansions? • Until 1988, Medicaid was tied to AFDC eligibility • After 1988, Medicaid expanded to other poor and near-poor children and pregnant women

26. What effect did Medicaid expansions have? income Employment income AFDC 0 Hours worked

27. What effect did Medicaid expansions have? income AFDC+Medicaid Employment income AFDC 0 Hours worked

28. 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

29. State Children’s Health Insurance Plans (SCHIP) • Created in 1997 • Targeted at near-poor families • State-federal partnership • Subsidized purchase of health insurance • Some states purchase through Medicaid • Some states purchase separately

30. Problems with SCHIP implementation • Getting the word out • Application process • Immigrant fears • Enrollment grew very slowly • But… 3.8 million children enrolled 2nd qtr FY02!

31. 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

32. 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/