State Budgets and Medicaid Financing
•Joy Johnson Wilson, Health Policy Director
National Conference of State Legislatures June 24, 2008
Quick Medicaid Facts
Enacted in 1965, Medicaid is the nation's major public
health coverage program for low-income people. Medicaid accounts for nearly 20% of all personal health care spending and almost 45% of nursing home care spending.
Quick Medicaid Facts - Financing
Medicaid is jointly financed by the federal government
and the states. States administer the program under federally established guidelines. The federal contribution to Medicaid spending in each state ranges between 50% and 76%, depending on state per capita income. Nationally, the federal government pays 57% of Medicaid costs and states pay 43%.
Quick Medicaid Facts - Financing
State federal matching rates (FMAP) are adjusted
annually based on a three-year rolling average. There is no mechanism, under current law, that adjusts the annual updates differently during an economic downturn or natural disaster.
Quick Medicaid Facts - Eligibility
To qualify for Medicaid, individuals must meet
financial criteria (income and resources) and be ―categorically eligible‖ for the program. Eligible individuals are ENTITLED, by federal law to Medicaid benefits and services. Categorically eligible groups include: children, parents of dependent children, pregnant women, people with disabilities, and the elderly.
Quick Medicaid Facts – Dual Eligibles
―Dual eligibles,‖ are low-income Medicare
beneficiaries who also receive Medicaid. Medicaid ―wraps around‖ Medicare
◦ pays Medicare premiums and cost- sharing; and ◦ covers critical benefits that Medicare does not cover,
such as long-term care.
Dual eligibles about account for 40% of Medicaid
spending. Medicaid accounts for nearly half of national longterm care spending and finances care for 60% of nursing home residents.
Quick Medicaid Facts - Benefits
States are required to cover:
inpatient and outpatient hospital services; physician, midwife, and certified nurse practitioner
services; laboratory and x-ray services; nursing home and home health care for individuals over age 21; early and periodic screening, diagnosis, and treatment (EPSDT) for children under age 21; family planning services and supplies; and rural health clinic/federally qualified health center services.
Quick Medicaid Facts - Benefits
States can also receive federal matching funds for
many ―optional‖ services, including prescription drugs, prosthetic devices, hearing aids, and dental care.
Impact of Increase in Unemployment on Medicaid/SCHIP
A one percent rise in the nation's unemployment rate is
projected to increase the number of uninsured by 1.1 million and result in an additional 1 million (600,000 children and 400,000 adults) enrolling in Medicaid, increasing state Medicaid spending by $1.4 billion.
Source—Kaiser Commission on Medicaid and the Uninsured, 2008.
Primary State Options to Reduce Medicaid Expenditures
Reduce reimbursement to
providers; Reduce/eliminate optional benefits (primarily to adult beneficiaries); and Reduce/eliminate optional eligibility categories.
Federal Fiscal Relief
In 2003, the Jobs and Growth Tax Relief
Reconciliation Act provided $20 billion in temporary federal fiscal relief to states.
$10 billion through increasing the federal matching rate
(FMAP) for Medicaid expenditures. $10 billion in general revenue assistance.
The prospect for similar relief this fiscal year appear
poor.
Medicaid Challenges 2008-2009
Raising state matching funds
Economic downturn (lower state revenue collections,
higher energy costs, higher unemployment, distressed local governments)
Federal initiatives (legislative/regulatory) to reduce
growth in the Medicaid program Continued increase in health care costs Reduced federal funding for discretionary health programs