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 govt 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 govt requires coverage of
• Children under age 6 pregnant women in
  households with income lt 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 govt 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 govt 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 govt 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
• Californias 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
Oregons 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 Oregons 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
• Dont 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
AFDCMedicaid
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 Childrens 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/