Medicaid: The Basics

1. Medicaid: The Basics Diane Rowland, Sc.D. Executive Director Kaiser Commission on Medicaid and the Uninsured and Executive Vice President Kaiser Family Foundation June 2005KaiserEDU.org Tutorial

2. Medicaid’s Origin • Enacted in 1965 as companion legislation to Medicare (Title XIX) • Established an entitlement • Provided federal matching grants to states to finance care • Focused on the welfare population: • Single parents with dependent children • Aged, blind, disabled • Included mandatory services and gave states options for broader coverage

3. Medicaid Today • Medicaid provides health and long-term care coverage for over 52 million low-income people: • Comprehensive, low-cost health coverage for 39 million people in low-income families • Acute and long-term care coverage for over 13 million elderly and persons with disabilities, including over 6 million Medicare beneficiaries • Guarantees entitlement to individuals and federal financing to states • Federal and state expenditures of $300 billion—with federal government funding 57% • Pays for nearly 1 in 5 health care dollars and 1 in 2 nursing home dollars

4. Medicaid’s Role for Selected Populations Percent with Medicaid Coverage: Poor Near Poor Families All Children Low-Income Children Low-Income Adults Births (Pregnant Women) Aged & Disabled Medicare Beneficiaries People with Severe Disabilities People Living with HIV/AIDS Nursing Home Residents Note: “Poor” is defined as living below the federal poverty level - $14,680 for a family of three in 2003. SOURCE: KCMU, KFF, and Urban Institute estimates; Birth data: NGA, MCH Update.

5. Minimum Medicaid Eligibility Levels, 2004 Income eligibility levels as a percent of the Federal Poverty Level: Note: The federal poverty level was $9,310 for a single person and $15,670 for a family of three in 2004. SOURCE: Cohen Ross and Cox, 2004 and KCMU, Medicaid Resource Book, 2002.

6. Medicaid Benefits “Mandatory” Items and Services “Optional” Items and Services • Physician 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 • Rural and federally-qualified health center (FQHC) services • Nurse midwife services • Nursing facility (NF) services for individuals 21 or over • Prescription drugs • Clinic services • Dental services, dentures • Physical therapy and rehab services • Prosthetic devices, eyeglasses • Primary care case management • Intermediate care facilities for the mentally retarded (ICF/MR) services • Inpatient psychiatric care for individuals under 21 • Home health care services • Personal care services • Hospice services

7. Medicaid Expenditures by Service, 2003 DSH Payments 5.4% Inpatient Hospital 13.6% Home Health and Personal Care 13.0% Physician/ Lab/ X-ray 3.7% Mental Health 1.8% ICF/MR 4.4% Long-Term Care 36.0% Outpatient/Clinic 6.7% Acute Care 58.2% Drugs 10.0% Nursing Facilities 16.8% Other Acute 6.3% Payments to MCOs 15.6% Payments to Medicare 2.3% Total = $266.1 billion SOURCE: Urban Institute estimates based on data from CMS (Form 64), prepared for KCMU.

8. Medicaid Enrollees and Expendituresby Enrollment Group, 2003 Elderly 9% Elderly 26% Disabled 16% Adults 27% Disabled 43% Children 48% Adults 12% Children 19% Total = 52.4 million Total = $252 billion Note: Total expenditures on benefits excludes DSH payments. SOURCE: KCMU estimates based on CBO and OMB data, 2004.

9. Medicaid Payments Per Enrolleeby Acute and Long-Term Care, 2003 $12,800 $12,300 Long-Term Care Acute Care $1,900 $1,700 SOURCE: KCMU estimates based on CBO and Urban Institute data, 2004.

10. Federal Medical Assistance Percentages (FMAP), FY 2005 71 + percent (9 states) 61 to <71 percent (15 states & DC) 51 to <61 percent (13 states) 50 percent (13 states) SOURCE: Federal Register, December 3, 2003

11. Medicaid’s Role for Children and Adults, 2003 Poor (<100% Poverty) Children Near-Poor (100-199% Poverty) Poor (<100% Poverty) Parents Near-Poor (100-199% Poverty) Adults without children Poor (<100% Poverty) Near-Poor (100-199% Poverty) Note: Medicaid/Other Public includes SCHIP and other state programs, Medicare, and military-related coverage. The federal poverty level was $14,680 for a family of three in 2003. SOURCE: KCMU and Urban Institute analysis of March 2004 Current Population Survey.

12. Medicaid’s Impact on Access to Health Care Percent Reporting No Regular Source of Care Did Not Receive Needed Care No Pap Test in Past Two Years Adults Women Children SOURCES: The 1997 Kaiser/Commonwealth National Survey of Health Insurance; Kaiser Women’s Health Survey, 2004; Dubay and Kenney, Health Affairs, 2001.

13. Medicaid Enrollees are Poorer and Sicker Than The Low-Income Privately Insured Population Percent of Enrolled Adults: Low-Income and Privately Insured Medicaid Poor Health Conditions that limit work Fair or Poor Health SOURCE: Coughlin et. al, 2004 based on a 2002 NSAF analysis for KCMU.

14. Average Annual Medicaid Spending Growth Compared to Growth in Private Health Spending, 2000-2003 Monthly Premiums For Employer- Sponsored Insurance2 Medicaid Acute Care Spending Per Enrollee Health Care Spending Per Person with Private Coverage1 SOURCES: 1 Strunk and Ginsburg, 2004. 2 Kaiser/HRET Survey, 2003.

15. Medicaid Status of Medicare Beneficiaries, FFY 2002 Total Duals = 7.2 million Total Medicare Beneficiaries = 40 million SOURCE: KCMU estimates based on CMS data and Urban Institute analysis of data from MSIS.

16. Medicaid Eligibility & Benefits for Medicare Beneficiaries, 2005 Mandatory Populations

17. Medicaid Eligibility & Benefits for Medicare Beneficiaries, 2005(cont’d) Optional Populations *Medicaid benefits may be more limited than for SSI.

18. Dual Enrollees are Poorer and Sicker ThanOther Medicare Beneficiaries *Community-residing individuals only. SOURCE: KCMU estimates based on analysis of MCBS Cost & Use 2000.

19. 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) Total Spending on Benefits = $232.8 Billion SOURCE: Urban Institute estimates prepared for KCMU based on an analysis of 2000 MSIS data applied to CMS-64 FY2002 data.

20. National Spending on Nursing Home and Home Health Care, 2003 Nursing Home Care Home Health Care Other 6% Other 5% Private Insurance 8% Private Insurance 21% Medicaid 25% Medicaid 46% Out-of-Pocket 28% Out-of-Pocket 17% Medicare 32% Medicare 12% Total = $40 billion Total = $110.8 billion SOURCE: CMS, National Health Accounts, 2005.

21. Growth in Medicaid Long-Term Care Expenditures, 1991-2003 $84 $82 $75 In Billions: Home & community-based care 33% 31% Institutional 29% $52 21% $34 14% 67% 69% 71% 79% 86% SOURCE: Burwell et al. 2004, HCFA-64 data.

22. Average Annual Growth in Medicaid Expenditures, 1991-2003 SOURCE: Urban Institute, 2005; data from HCFA Financial Management Reports, 2004 (HCFA-64/CMS-64).

23. Growing Pressure on Government Spending Federal Outlays State General Fund Spending Total = $2.3 Trillion Total = $499 Billion SOURCE: CBO, Baseline Budget Outlook, January 2005; National Association of State Budget Officers, 2003 State Expenditure Report, 2004.

24. What’s at Stake in Medicaid Reform Health Insurance Coverage 25 million children and 14 million adults in low-income families; 6 million persons with disabilities Assistance to Medicare Beneficiaries 7 million aged and disabled — 18% of Medicare beneficiaries Long-Term Care Assistance 1 million nursing home residents; 43% of long-term care services MEDICAID Support for Health Care System 17% of national health spending State Capacity for Health Coverage 43% of federal funds to states