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Medicaid Today
Health Insurance Coverage
29 million children & 15 million adults in low-
income families; 14 million elderly and persons with
disabilities
State Capacity for Health Coverage
Federal share ranges 50% to 76%; 44% of all federal funds
to states
MEDICAID
Support for Health Care System and Safety-net
16% of national health spending; 41% of long-term care services
Assistance to Medicare
Beneficiaries
8.8 million aged and disabled — 21% of
Medicare beneficiaries
Long-Term Care Assistance
1 million nursing home residents; 2.8 million
community-based residents
SOURCE: Kaiser Commission on Medicaid and the Uninsured, 2010
Enrollees Expenditures on benefits
Medicaid Enrollees and Expendituresby Enrollment Group, 2007
Children 20%
Elderly 25%
Disabled 42%
Adults 12%
Children 49%
Elderly 10%Disabled 15%
Adults 25%
Total = 58 million
Total = $300 billion
SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on 2007 MSIS and CMS64 data.
Medicaid Payments Per Enrolleeby Acute and Long-Term Care, 2007
$2,135 $2,541
$14,481
$12,499
Long-Term Care
Acute Care
SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on 2007 MSIS and CMS64 data.
Per Capita Spending For Medicaid Enrollees vs.
Low-Income Privately-Insured
$1,752
$749
$2,253
$1,098
MedicaidLow-Income Privately-Insured
Adults Children
SOURCE: Hadley and Holahan, “Is Health Care Spending Higher under Medicaid or Private Insurance? “ Inquiry, Winter 2003/2004.
Samples adjusted for health differences
AZAR
MS
LA
WA
MN
ND
WY
ID
UTCO
OR
NV
CA
MT
IA
WIMI
NE
SD
ME
MOKS
OHIN
NY
IL
KY
TNNC
NH
MA
VT
PA
VAWV
CTNJ
DE
MD
RI
HI
DC
AK
SCNM
OK
GA
TX
IL
FL
AL
< 70% (11 states including DC)
100%+ (11 states)
70-84% (7 states)85-99% (21 states)
NOTE: Tennessee does not have a fee-for-service component in its Medicaid programSOURCE: S. Zuckerman, AF Williams, and KE Stockley, “Trends in Medicaid Physician Fees, 2003-2008,” Health Affairs, 28 April 2009.
U.S. Average = 72% of Medicare fees
Medicaid-To-Medicare Provider Fee Ratios for All Services
16% 17%
41%
8%13%
Total HealthServices and
Supplies
Hospital Care ProfessionalServices
Nursing HomeCare
PrescriptionDrugs
Note: Does not include spending on CHIP.SOURCE: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Expenditure Accounts, January 2010.
Total National Spending(billions)
$2,181
$718 $731 $138
$234
Medicaid as a share of national health care spending:
Medicaid in the Health System, 2008
Medicaid’s Role for Selected Populations
SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute analysis of 2009 ASEC Supplement to the CPS; Birth data from Maternal and Child Health Update: States Increase Eligibility for Children's Health in 2007, National Governors Association, 2008; Medicare data from USDHHS.
70%
44%
21%
56%
17%
20%
30%
42%
41%
24%
Nursing Home Residents
People Living with HIV/ AIDS
People with Severe Disabilities
Medicare Beneficiaries
Births (Pregnant Women)
Low-Income Adults
Low-Income Children
All Children
Near Poor
Poor
Percent with Medicaid Coverage:
Families
Aged & Disabled
National Spending on Nursing Home and Home Health Care, 2006
Medicare17%
Private Insurance
7%
Other 6%
Medicaid43%
Out-of-Pocket26%
Total = $124.9 billionNote: Medicaid percentage includes spending through SCHIP. Other includes private and public funds SOURCE: Kaiser Commission on Medicaid and the Uninsured, based on Health Affairs January/February 2008, CMS, National Health Accounts.
Out-of-Pocket11%
Other* 6%Private
Insurance11%
Medicare38%
Medicaid34%
Total = $52.7 billion
Nursing Home Care Home Health Care
Medicaid’s History and Purpose Passed with Medicare, but means tested unlike
Medicare The AMA wanted to means test Medicare, and the
legislation ended up with a means tested program for the non-elderly poor rather than for the elderly poor
More than just health insurance—private health insurance is typically geared toward acute care services, while Medicaid also includes coverage of long-term care services and other supportive services Purpose is “to furnish rehabilitation and other services
to help such families and individuals attain or retain capability for independent or self care” 42 U.S.C. 1396
Statute refers to Medicaid as “medical assistance,” not “health insurance”
Includes coverage for nursing home care, home health services, durable medical equipment, prosthetic devices, transportation to doctors’ offices
Medicaid’s History and Purpose
Safety net funding in several ways Health care coverage for poor
children and their families Long-term care coverage for the poor
(and many non-poor become poor because of long-term care costs)
“Bonus” payments to support safety net providers
Public hospitals, rural clinics, community clinics, academic medicine
Medicare gap filler Coverage of out-of-pocket Medicare costs
for the elderly poor
Medicaid Financing of Safety-Net Providers
Total = $40 billion
SOURCE : Data for public hospitals from America’s Public Hospitals and Health Systems, 2008, National Association of Public Hospitals and Health Systems, February 2010. Health center data from 2008 Uniform Data System (UDS), Health Resources and Services Administration.
Medicaid37%
State/ Local/ Other20%
Federal Grants20%
Medicare6%
Private7%
Self-Pay7%
Other Public3%
Total = $10.1 billion
Public Hospital Net Revenues by Payer, 2008
Health Center Revenues
by Payer, 2008
Medicaid’s Limits
Medicaid is a federal-state partnership rather than a federal-only program (unlike Medicare) Since states have set eligibility thresholds,
eligibility has varied from state to state States also have varied in terms of optional
services covered PPACA brings more uniformity to Medicaid
As a federal-state partnership, the federal and state governments share funding, with the federal government paying a greater share for poorer states
Medicaid: 50% - 76% (Indiana – 67%) SCHIP: 65% - 82% (Indiana – 77%) PPACA brings more uniformity here as well
Medicaid Eligibility for Working Parents by Income, December 2009
AZAR
MS
LA
WA
MN
ND
WY
ID
UTCO
OR
NV
CA
MT
IA
WIMI
NE
SD
ME
MOKS
OHIN
NY
IL
KY
TNNC
NH
MA
VT
PA
VAWV
CTNJ
DE
MD
RI
HI
DC
AK
SCNM
OK
GA
TX
FL
AL
50% - 99% FPL (17 states)
< 50% FPL (17 states)
100% FPL or Greater (17 states, including DC)
Note: The federal poverty line (FPL) for a family of three in 2009 was $18,310 per year.SOURCE: Based on a national survey conducted by Kaiser Commission on Medicaid and the Uninsured with the Center on Budget and Policy Priorities, 2009.
235%
185%
75%64%
38%
0%
Children PregnantWomen
Elderly andIndividuals
withDisabilities
WorkingParents
Non-WorkingParents
ChildlessAdults
Note: Medicaid income eligibility for most elderly and individuals with disabilities is based on the income threshold of Supplemental Security Income (SSI).SOURCE: Based on a national survey conducted by the Center on Budget and Policy Priorities for Kaiser Commission on Medicaid and the Uninsured, 2009.
Median Medicaid/CHIP Income Eligibility Thresholds, 2009
Medicaid Eligibility underHealth Reform = 133%FPL
VA
Federal Medical Assistance Percentages (FMAP), FY 2010
AZAR
MS
LA
WA
MN
ND
WY
ID
UTCO
OR
NV
CA
MT
IA
WIMI
NE
SD
ME
MOKS
OHIN
NY
IL
KY
TNNC
NH
MA
VT
PA
WV
CTNJ
DE
MD
RI
HI
DC
AK
SCNM
OK
GA
SOURCE: Federal Register, February 2, 2010 (Vol. 75, No. 21), pp 5325-5328, at http://frwebgate6.access.gpo.gov/cgi-bin/PDFgate.cgi?WAISdocID=985592272797+0+2+0&WAISaction=retrieve .
TX
IL
FL
AL
71+ percent (6 states)
50 percent (15 states)
62 to <71 percent (20 states including DC)
51 to 61 percent (10 states)
VA
PPACA and Medicaid Eligibility
Expands Medicaid to cover almost all children and non-elderly adults with incomes up to 133% FPL (really 138%) Income is based on modified adjusted gross
income (which can be higher than adjusted gross income), with a 5 percent income disregard
No asset test (under Medicaid now, family of four may not have assets more than $26,000, with exemptions for home and one, sometimes two, cars—rules relaxed in 2008)
Citizens and legal immigrants
PPACA and Medicaid Eligibility Complexity maintained under PPACA
PPACA did not create a single new category of eligibility for all persons up to 133% of FPL
PPACA adds Subsection VIII to 42 U.S.C. §1396a(1)(2)(c), extending Medicaid eligibility by creating a new category for those with incomes up to 133% FPL who are Under 65 Not Medicare eligible Not pregnant Not in any in existing “mandatory categorical
needy” group New eligibles receive “benchmark
coverage,” which is like traditional health care coverage
PPACA and Medicaid Reform
People who lose Medicaid eligibility because of increased income no longer have to worry about becoming uninsured When their income exceeds 133% of FPL
(plus the 5% disregard), they will shift to the exchanges and receive generous subsidies
SCHIP will be phased out Children in families between 100-133% FPL
will receive their coverage through Medicaid Higher income children will be eligible for
health care exchange subsidies SCHIP continues until 2019 to allow time for
the health exchanges to become operational
Family Poverty LevelYearly/Monthly (Current Numbers)
Persons in Family
FPL (4)Annual
(Monthly)
100% FPL 133%FPL 200%FPL 300%FPL 400%FPL
1 10,830(903)
10,830(903)
14,404(1,200)
21,660(1,805)
32,490(2,708)
43,336(3,611)
2 14,570(1,214)
14,570(1,214)
19,378(1,615)
29,140(2,428)
43,710(3,643)
58,280(4,857)
3 18,310(1,526)
18.310(1,526)
24,353(2,029)
36,620(3,052)
54,930(4,578)
73,240(6,103)
4 22,050(1,838)
22,050(1,838)
29,3272,444)
44,100(3,675)
66,150(5,513)
88,200(7,350)
Other Benchmarks
Annual income of minimum
wage earner
working 40 hours a
week for 50 weeks is $7.25 per hour or
annually, $14,500
Starting salary of Iowa City
School Teacher is
about $28,000
Average salary of UI
Law graduate in first year is
about $55,000 for in-state and
$91,000 out-of-state
Premium Assistance Credit
Premium assistance credit equals cost of silver policy less amount taxpayer expected to pay for insurance. This runs between 2% to 9.5%, indexed. E.g., if income for a family of 4 about
$30,000 and cost of policy is $10,000, then family should pay 3% of income towards cost or $900. Credit is $9,100.
Same but family has income of $88,000. Here family pays 9.5% of income or $8,360 and credit is $1,640.
Why Keep Medicaid? Medicaid costs less than private insurance
Lower per person costs Lower administrative costs
5% in Medicaid Ability to set rates for managed care plans
provides more predictability than exchange subsidy costs and allows the government to exploit its market power
Existing, specialized systems of care that work Safety net providers
Public hospitals, rural clinics Community health centers, in particular
Medicaid managed care organizations (MCOs)
Reduced ER and hospital use But poor may be better off in same
system as wealthier persons
New Financing, Easier Enrollment Medicaid’s federal-state sharing of costs
becomes more favorable for states New PPACA eligibles: feds pay 100% for 3 years,
95%, 94%, 93%, 90% thereafter Old eligibles: old state match
50% - 75% (Indiana – 67%) Helps neutralize 10th Amendment argument
Preventing states from gaming the system Maintenance of effort requirements—States
cannot cut back their coverage rules to make more people eligible for the enhanced federal match
New simplified enrollment procedures Single, streamlined form states may use Enrollment online or by mail, phone, or in person Uniform income rules and no asset rules Electronic data matching
Addressing Provider Shortages Medicaid may provide coverage, but
beneficiaries may have trouble finding a doctor who will accept payment from Medicaid
PPACA increases funding for Primary care physicians (payment at Medicare
rates for two years) Community Health Clinics School based and nurse managed clinics Training health care and public health
professionals With focus on primary care physicians who will
practice in underserved areas Redistributes Disproportionate Share
Hospital (DSH) funds, favoring states with the highest percentage of uninsured
Medicare Spending as a Share of Total Federal Outlays, FY2010
Medicaid and SCHIP8%
Other16%
Nondefense Discretionary
19%
Defense Discretionary
19%
Social Security20%
Medicare13%
Net Interest5%
SOURCE: OMB, Fiscal Year 2010 Budget, February 2009. Budget Summary by Category.
2010 Total Outlays = $3.5 trillion
90%
37%
10%
63%
Total Number of Beneficiaries, 2005: 37.5 million
Total MedicareSpending, 2005: $265 billion
Average per capita Medicare spending
among bottom 90%: $2,934
Average per capita Medicare spending among top 10%: $44,220
NOTE: Analysis excludes Medicare Advantage enrollees. SOURCE: Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Cost & Use file, 2005.
Distribution of Total Medicare Beneficiaries and Spending, 2005
7%3%7%
13%
12% 25%11%
39%
73% 77%
40%
85%
4% 2%
2%
1%
Payroll Taxes
General Revenue
BeneficiaryPremiums
Payments fromStates
Taxation of SocialSecurity Benefits
Interest andOther
Estimated Sources of Medicare Revenue, 2010
SOURCE: 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
PART A$237 Billion
PART D$66 Billion
PART B$196 Billion
TOTAL$499 Billion
NOTE: Annual amounts for the components of total health care spending do not sum to total amounts because values shown are median, not mean, values.SOURCE: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey Cost and Use files, 1997-2005.
Median Out-of-Pocket Health Care Spending As a Percentage of Income AmongMedicare Beneficiaries, 1997–2005
11.9% 11.8% 12.0%12.8%
14.0%14.9%
15.6%16.1%
5.5% 5.3% 5.4% 5.5%6.0% 6.5% 6.7% 6.9%
7.4%
4.1% 4.2% 4.4% 4.9% 5.2% 5.5% 5.8% 5.6% 5.8%
15.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1997 1998 1999 2000 2001 2002 2003 2004 2005
Total health care out of pocket
Premium out of pocket
Nonpremium out of pocket
74%85% 83%
Medicare Typical Large Employer PPO Plan FEHBP Standard Option
Medicare is less generous than FEHB and other large employer plans
NOTE: The FEHBP (Federal Employees Health Benefits Program) standard option is offered through Blue Cross Blue Shield. NOTE: The FEHBP (Federal Employees Health Benefits Program) standard option is offered through Blue Cross Blue Shield. Employer plans include dental benefits. Employer plans include dental benefits. SOURCE: Hewitt Associates analysis for the Kaiser Family Foundation, 2008.SOURCE: Hewitt Associates analysis for the Kaiser Family Foundation, 2008.
Total Average Medical Spending = $14,270
Share of Total Spending Paid by Plan in 2007
39.746.8
62.3
79.2
4.0
3.5
2.9
2.4
0
10
20
30
40
50
60
70
80
90
2000 2010 2020 2030
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Number of beneficiaries (millions)
Number of workers per beneficiary
SOURCE: Kaiser Family Foundation based on the 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
Millions
Medicare Beneficiaries and The Number of Workers Per Beneficiary
Community Hospital Payment-to-Cost Ratios, by Source of Revenue, 1980-
2008
Note: Payment-to-cost ratios show the degree to which payments from each payer cover the costs of treating its patients. They cannot be used to compare payment levels across payers, however, because the service mix and intensity vary. Data are for community hospitals. Medicaid includes Medicaid Disproportionate Share payments.
Source: American Hospital Association and Avalere Health, Avalere Health analysis of 2008 American Hospital Association Annual Survey data, for community hospitals, Trendwatch Chartbook 2010, Trends Affecting Hospitals and Health Systems, Table 4.4, p. A-35, at http://www.aha.org/aha/trendwatch/chartbook/2010/appendix4.pdf.
0%
5%
10%
15%
20%
25%
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Medicare
Private Health Insurance Premiums
Per Enrollee Growth in Medicare Spending and Private Health Insurance Premiums (for
Common Benefits), 1970-2008
Notes: Per enrollee includes primary policy-holder plus dependents. Common benefits include hospital services, physician and clinical services, other professional services, and durable medical products; they exclude, for example, prescription drugs, home health care, non-durable medical products, and nursing home care.
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, Table 13, at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.
New Medicare Spending
But PPACA also cuts Medicare But PPACA also cuts Medicare spending. Hence, it is not so spending. Hence, it is not so popular among popular among seniors
Permanent reductions in Medicare reimbursement rates (§ 3401)
Applies to hospitals, nursing homes and other facilities
Every year, payment rates are adjusted to reflect increases in the operating costs of health care facilities The increases have been calculated from a “market
basket” of goods and services that the facilities purchase (with reductions for failure to file quality data and other “technical” adjustments)
Under PPACA, a productivity adjustment will be made based on economy-wide productivity gains (which are greater than in health care)—there also will be a ten-year further reduction in the update percentage (0.10 to 0.75 percent per year)
Estimated savings = $196 billion
Permanent reductions in Medicare reimbursement rates (§ 3401)
Note that PPACA provisions reflect a mix of policy and politics—see the annual reductions in update percentages:2010 0.25% 2015 0.20%2011 0.25% 2016 0.20%2012 0.10% 2017 0.75%2013 0.10% 2018 0.75%2014 0.30% 2019 0.75%
After 2019, IMAB recommendations due to kick in
Reduction in payment rates forMedicare Advantage program (§
3201) Medicare Advantage is an option for
Medicare recipients to enroll in a private health care plan rather than choosing traditional, fee-for-service Medicare (Part C of Medicare)
While the idea was to provide a more-efficient, lower-cost option, Medicare Advantage plans have turned out to be more expensive (up to 150% of traditional Medicare)
The low-hanging fruit of cost savings Estimated savings = $135 billion
114%113%
118%
112%
118%
116%
AllMedicare
AdvantagePlans
LocalHMOs
Local PPOs RegionalPPOs
PrivateFee-For-ServicePlans
SpecialNeedsPlans
NOTE: HMO is health maintenance organization; PPO is preferred provider organization.SOURCE: Medicare Payment Advisory Commission, December 2008.
Medicare Advantage Plan Types
Traditional Fee-for-Service
Medicare
100%
Medicare Advantage Payments Relative to Traditional Fee-for-Service Medicare, 2009
Part B Medicare premium calculation Part B Medicare premium calculation for high-income recipients (§ 3402)for high-income recipients (§ 3402)
Part B of Medicare covers physician fees, Part B of Medicare covers physician fees, laboratory fees and other outpatient laboratory fees and other outpatient servicesservices
Most Medicare recipients pay 25 percent Most Medicare recipients pay 25 percent of the Part B premium; currently, higher of the Part B premium; currently, higher income recipients pay between 35 and 80 income recipients pay between 35 and 80 percent of the Part B premium.percent of the Part B premium.
PPACA freezes the income thresholds for PPACA freezes the income thresholds for higher-income premiums at 2010 levels higher-income premiums at 2010 levels for ten years before resuming annual for ten years before resuming annual adjustments for inflation.adjustments for inflation.
Estimated savings = $25 billionEstimated savings = $25 billion
Reduction in disproportionate Reduction in disproportionate share hospital (DSH) payments (§ share hospital (DSH) payments (§
3133 )3133 ) DSH payments are made to hospitals DSH payments are made to hospitals
that treat a disproportionate share of that treat a disproportionate share of low-income patientslow-income patients
Originally introduced to compensate Originally introduced to compensate hospitals for higher costs of treating hospitals for higher costs of treating low-income patients; now justified as low-income patients; now justified as a way to maintain access to care for a way to maintain access to care for low-income patientslow-income patients
Estimated savings = $22 billionEstimated savings = $22 billion
Independent Payment Advisory Board (IPAB) (§ 3403)
IPAB will develop proposals to keep Medicare spending within statutory targets, and proposals will automatically take effect unless Congress adopts substitute provisions Proposals may not ration health care, raise
costs to recipients, restrict benefits or modify eligibility criteria
IPAB also will provide Congress with recommendations for slowing the growth of health care spending in the private sector.
Estimated savings = $16 billion by 2020, more substantial after that (assuming it works)
Independent Payment Advisory Board (IPAB) (§ 3403)
Concerns about IPAB Will IPAB focus on short-term fixes rather
than long-term changes that really can “bend the cost curve?”
Will Congress bypass the IPAB process and authorize increases in funding through independent legislation?
Are the limitations on the kinds of proposals that IPAB can develop too restrictive?
Will cuts in reimbursement reduce patient access to physicians?
Patient-Centered OutcomesResearch Institute (§ 6301)
Created to promote comparative-effectiveness research (CER) Research that evaluates and compares the
patient health outcomes and benefits of two or more medical treatments or services
Responsibilities include Setting priorities for CER and funding CER
studies Analyzing data from CER studies and
reporting to the public on the significance of the study results
Patient-Centered OutcomesResearch Institute (§ 6301)
The Institute may not recommend coverage changes or other policies based on its analyses, but
Medicare and Medicaid may consider the Institute’s analyses in determining coverage policies as long as: No denial of coverage “solely on the basis
of” CER Coverage decisions do not treat the lives of
elderly, disabled or terminally ill individuals as having lower value
Can the CER institute become our NICE? NICE evaluates the cost-effectiveness of medical
therapies and approves those that are sufficiently cost-effective for Britain’s National Health Service Treatments are cost-effective if they provide 1 QALY for
no more than £20,000 (now $31,250)
Sometime, NICE approves treatments up to £30,000
($46,900) per QALY
Rarely, NICE approves treatments beyond £30,000 per
QALY
NICE has approval authority, while the CER institute can only issue reports
CER institute “shall not develop or employ a dollars-per-quality adjusted life year . . . as a threshold” nor shall HHS employ such a measure as a threshold for coverage.
Can we make QALY-based decisions?
Cost-effectiveness decisions are controversial Prohibited under PPACA from being used as
sole basis for denying coverage in federal programs (§6301)
Oregon Health Care Plan Ended up with fairly generous “basic” coverage
Mammography screening guidelines in 2009 (even though cost wasn’t a factor)
US Preventive Services Task Force recommended that routine screening begin at age 50 instead of age 40
The “tragic choices” problem It’s difficult to make life-and-death decisions
openly
PPACA demonstration projects
Bundled payments for hospital care and for the month following discharge (capitation lite) (§2704 and §3023)
Capitation payments instead of fee-for-service reimbursement (§2705)
Incentives for doctors and hospitals to form accountable care organizations (financial rewards for higher quality and/or lower cost care) (§2706 and §3022) Will integrated systems exploit market
power to maintain revenues rather than to introduce efficiencies and reduce costs?
Quality-adjusted payments under PPACA
Incentive payments to hospitals that meet specified performance standards (§3001)
Adjustments to physician reimbursement based on quality and cost of care provided (§3001)
Expansion of reports to physicians that indicate how their use of resources in patient care compares to use by other physicians (§3003)
Lower payments to hospitals with high numbers of patients who become sicker because of their hospital care (§3008)
Lower payments to hospitals that have excessive numbers of patients readmitted to the hospital after discharge (§3025)
Quality-adjusted payments
Pay for performance so far has a mixed track record It’s difficult to assess quality of
care—did a patient do well because of or despite the doctor’s intervention?
Often, process-based measures are used, but those need continual updating
Impact has been modest to date
