Medicaid and Medicare

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					       Medicaid and Medicare
• Who do they cover?
• How do they function?
• How much do they affect the extension of
  health care coverage to the uninsured?
• How efficient are they?
Meicaid and Medicare are public
  Changing Public (Federal And State) And Private Financing of
                  National Health Expenditures
             1960       1970        1980     1990         2003
                                (in percent)
               25        38          43        41          46
               75        62          57        59          54
          Source: National Health Expenditures, loc. cit.
           Government statistics
• Medicare is a social insurance program that serves more
  than 44 million enrollees (as of 2008).
• Medicare costs about $432 billion, or 3.2% of GDP, in 2007.
• Medicaid is a social welfare (or social protection) program
  that serves about 40 million people (as of 2007)
• Medicaid costs about $330 billion, or 2.4% of GDP, in 2007.
• Howard (2007): Medicaid is largest social program for the
  poor in the US welfare state
• Together, Medicare and Medicaid represent 21% of the FY
  2007 U.S. federal government.
Medicaid, Medicare started in 1966
    Sources of Financing of Personal Health Care, 1960 and 2003
                                 1960                  2003
                                      Percent funded by:
  Private insurance               21                     36
  Out of pocket                   55                     16
  Medicare                        ---                    19
  Medicaid*                       ---                    17
  Other private                    2                      4
  Other Federal                    9                      4
  Other State and local           13                      3
             Source: National Health Expenditures, loc. cit
             * Consists of both federal and state funding.
Medicaid (US Department of Health and
      Human Services website)
•   Medicaid available only to some low-income individuals and families who fit into
    an eligibility group that is recognized by federal and state law.
•   Medicaid is a state administered program and each state sets its own standards for
    eligibility and services.
•   Each State is then reimbursed for a share of their Medicaid expenditures from the
    Federal Government. This Federal Medical Assistance Percentage (FMAP) is
    determined each year and depends on the State's average per capita income level.
    Richer states receive a smaller share than poorer states, but by law the FMAP must
    be between 50% and 83%.
•   Many groups of people are covered by Medicaid. Even within these groups,
    though, certain requirements must be met. These may include your age, whether
    you are pregnant, disabled, blind, or aged; your income and resources (like bank
    accounts, real property, or other items that can be sold for cash); and whether you
    are a U.S. citizen or a lawfully admitted immigrant.
•   The rules for counting your income and resources vary from state to state and
    from group to group. There are special rules for those who live in nursing homes
    and for disabled children living at home.
• Patients are restricted when selecting who will take
  care of their needs by selecting from pre-approved
  physicians and other providers of medical care.
• Because physicians are not fully reimbursed for
  services provided to Medicaid patients, many of them
  limit the number of Medicaid patients they see.
• Reinhardt: NJ state gives compensation of $30 to
  pediatrician for medicaid patient, but same doctor gets
  $90 for treating a patient with insurance
• If pricing is signal of value, understood by dr.s – many
  refuse to treat Medicaid patients
                      Eligible include
• Individuals who meet the requirements for the Aid to Families with
  Dependent Children (AFDC) program that were in effect in their state on
  July 16, 1996
• Children under age 6 whose family income is at or below 133% of the
  Federal poverty level (FPL)
• Pregnant women with family income below 133% of the FPL
• Supplemental Security Income (SSI) recipients
• Recipients of adoption or foster care assistance under Title IV of the Social
  Security Act
• Special protected groups such as individuals who lose cash assistance due
  to earnings from work or from increased Social Security benefits
• Children born after September 30, 1983 who are under age 19 and in
  families with incomes at or below the FPL
• Certain Medicare beneficiaries
           Other potential recipients –
              determined by state
• Infants up to age 1 and pregnant women whose family income is not more
  than a state-determined percentage of the FPL
• Certain low-income and low-resource children under the age of 21
• Low-income institutionalized individuals
• Certain aged, blind, or disabled adults with incomes below the FPL
• Certain working-and-disabled persons with family income less than 250
  percent of the FPL
• Some individuals infected with tuberculosis
• Certain uninsured or low-income women who are screened for breast or
  cervical cancer
• Certain "medically needy" persons, which allow States to extend Medicaid
  eligibility to persons who would be eligible for Medicaid under one of the
  mandatory or optional groups, except that their income and/or resources
  are above the eligibility level set by their State.
• about 60% of America's poor are not covered by the program
                               NY State
•   What do I need to apply for Medicaid?
•   Proof of age, like a birth certificate
•   Proof of citizenship or alien status*
•   Recent paycheck stubs (if you are working)
•   Proof of your income from sources like Social Security, Supplemental
    Security Income (SSI), Veteran's Benefits (VA), retirement
•   If you or anyone who lives with you is 65 years old or older, certified blind,
    or certified disabled, you need to give information on bank accounts,
    insurance policies and other resources
•   Proof of where you live, like a rent receipt, landlord statement, mortgage
    statement, or envelope from mail you received recently
•   Insurance benefit card or the policy (if you have any other health
•   Medicare Benefit Card (the red, white and blue card)
• If I think I am eligible for Medicaid, should I cancel any other
  health insurance I might already have?
• No. If you currently pay for health insurance or Medicare coverage
  or have the option of getting that coverage, but cannot afford the
  payment, Medicaid can pay the premiums under certain
• Even if you are not eligible for Medicaid benefits, the premiums can
  still be paid, in some instances, if you lose your job or have your
  work hours reduced. If you need help with a COBRA premium, you
  must apply quickly, to determine if Medicaid can help pay the
• You may be eligible for the Medicare Savings Program. This program
  pays your Medicare premiums and deductibles.
• If you have Acquired Immune Deficiency Syndrome (AIDS),
  Medicaid may be able to help pay your health insurance premiums.
*Effective January 1, 2010

                             NY Rules for eligibility
                                                             2010 Income & Resource Levels*
                                            Medicaid Standard for Singles
                                              People, Couples without            Net Income for Families; and
                                              Children & Low Income                     Individuals who
                                                      Families                  are Blind, Disabled or Age 65+     Resource Level
                                                                                                                  (Individuals who
                                                                                                                 are Blind, Disabled
                                             Annual             Monthly          Annual             Monthly      or Age 65+ ONLY)

                             1            $8,479          $707              $9,200             $767              $13,800

                             2            $10,584         $883              $13,400            $1,117            $20,100

                             3            $12,593         $1,050            $15,410            $1,285            $23,115

                             4            $14,622         $1,219            $17,420            $1,452            $26,130

                             5            $16,719         $1,394            $19,430            $1,620            $29,145

                             6            $18,253         $1,522            $21,440            $1,787            $32,160

                             7            $19,869         $1,656            $23,450            $1,955            $35,175

                             8            $21,943         $1,829            $25,460            $2,122            $38,190

                             9            $23,131         $1,928            $27,470            $2,289            $41,205

                             10           $24,321         $2,027            $29,480            $2,457            $44,220

                             For each                     $99               $2,010             $168              $3,015
What is a Medicaid managed care program?
Enrollment in a Medicaid managed care program through a Health
Maintenance Organization (HMO), clinic, hospital, or physician group is
available at any local department of social services. You may be required to join
a managed care plan. When you join a managed care program, you will choose
a personal doctor who will be responsible for making sure all your health care
needs are met. The doctor will send you to someone else if you need more
help than the doctor can provide.
What does managed care cover?
Managed care covers most of the benefits recipients will use, including all
preventive and primary care, inpatient care, and eye care. People in managed
care plans use their Medicaid benefit card to get those services that the plan
does not cover.
Do I have to join a managed care plan?
In many counties you can join a plan if there is one available and you want to.
However, there are some counties where families will have to join a plan. In
these counties there are some individuals who don't have to join. Please check
with your local social services department to see if you have to join a plan.
 US Department of Health and Human
• Medicaid does not pay money to you; instead,
  it sends payments directly to your health care
  providers. Depending on your state's rules,
  you may also be asked to pay a small part of
  the cost (co-payment) for some medical
•  The basic benefit package provides all mandatory Medicaid services with
  the addition of age appropriate services that focus on wellness.
• The basic package for children includes: inpatient hospital services (with
  limitations on certain services); outpatient services (with limitations on
  certain services); physician services; home health (limited); durable
  medical equipment (limited); family planning; transportation; hospice;
  ambulance; prescriptions (limited); vision (limited); dental (limited); Early
  and periodic screening, diagnostic, and treatment (EPSDT) services for
  children under age 21
• hearing (limited) and tobacco cessation.

•   The enhanced package for children includes all of the above services
    without the limitations. In addition, it provides services such as weight
    management, podiatry, skilled nursing care and nutritional education.
• The basic package for adults includes inpatient hospital
  services; outpatient services (with limitations on certain
  services); emergency dental; physician; home health
  (limited); durable medical equipment (limited); nursing
  home; family planning; transportation; hospice; emergency
  ambulance and prescriptions (limited).
• The enhanced packed for adults include all of the above
  services without the limitations. It also provides services
  such as inpatient psychiatric services; weight management;
  cardiac rehabilitation; podiatry; chiropractic; tobacco
  cessation; diabetes care; nutritional education and
  chemical dependency and mental health (limited).
1            ALABAMA                812,220      540,093     66.50%
2            ALASKA                 101,702      0           0.00%
3            ARIZONA                1,223,271    1,096,365   89.63%
4            ARKANSAS               645,389      511,014     79.18%
5            CALIFORNIA             6,955,761    3,632,547   52.22%
6            COLORADO               467,556      444,819     95.14%
7            CONNECTICUT            455,878      342,784     75.19%
8            DELAWARE               170,562      126,089     73.93%
9            DISTRICT OF COLUMBIA   153,779      150,406     97.81%
10           FLORIDA                2,426,010    1,600,550   65.97%
11           GEORGIA                1,385,721    1,274,823   92.00%
12           HAWAII                 235,203      228,174     97.01%
13           IDAHO                  198,000      166,524     84.10%
14           ILLINOIS               2,320,700    1,278,200   55.08%
15           INDIANA                961,986      711,636     73.98%
16           IOWA                   397,823      329,897     82.93%
17           KANSAS                 297,290      257,464     86.60%
18           KENTUCKY               768,777      638,083     83.00%
19           LOUISIANA              1,006,842    692,048     68.73%
20           MAINE                  280,148      178,353     63.66%
21           MARYLAND               787,366      620,024     78.75%
22           MASSACHUSETTS          1,227,109    731,123     59.58%
23           MICHIGAN               1,629,959    1,447,373   88.80%
24           MINNESOTA              675,149      426,009     63.10%
25           MISSISSIPPI            673,630      512,796     76.12%
26           MISSOURI               895,077      883,423     98.70%
27           MONTANA                84,785       56,434      66.56%
28           NEBRASKA               214,699      179,512     83.61%
29           NEVADA                 213,440      178,711     83.73%
30           NEW HAMPSHIRE          124,498      96,553      77.55%
31           NEW JERSEY             968,598      725,614     74.91%
32           NEW MEXICO             464,852      344,977     74.21%
33           NEW YORK               4,422,121    2,926,950   66.19%
34           NORTH CAROLINA         1,442,396    1,012,474   70.19%
35           NORTH DAKOTA           60,111       40,605      67.55%
36           OHIO                   1,951,511    1,374,520   70.43%
37           OKLAHOMA               625,546      553,385     88.46%
38           OREGON                 474,835      418,096     88.05%
39           PENNSYLVANIA           1,920,134    1,576,523   82.10%
40           PUERTO RICO            1,013,486    977,648     96.46%
41           RHODE ISLAND           177,981      110,584     62.13%
42           SOUTH CAROLINA         763,225      763,225     100.00%
43           SOUTH DAKOTA           107,196      85,476      79.74%
44           TENNESSEE              1,230,750    1,230,750   100.00%
45           TEXAS                  3,343,241    2,161,210   64.64%
46           UTAH                   238,358      204,793     85.92%
47           VERMONT                156,503      137,385     87.78%
48           VIRGIN ISLANDS         7,728        0           0.00%
49           VIRGINIA               814,820      520,773     63.91%
50           WASHINGTON             1,103,291    949,263     86.04%
51           WEST VIRGINIA          325,653      149,694     45.97%
52           WISCONSIN              1,004,704    606,509     60.37%
53           WYOMING                64,489       0           0.00%
TOTALS       50,471,859             36,202,281   71.73%
• Coverage designed to cover those eligible for AFDC
• And pregnant women and children who were not eligible
  but needy
• Can still be very poor and not eligible for medicaid
• Or – see readings – non eligible by fliing out forms
• Yet many who are eligible are not covered
• Reasons:
• Own insurance
• Lack of awareness
• Stigma involved
• Despite flaws, Medicaid is most successful social
  program aimed at aiding the poor
• Why?
• Risky – no strong political capital gained from helping
  the poor
• But worked because of ’deserving’ targets
• Children, pregnant women
• Because partly financed and driven by federal
• Avoids redistribution problems
• And other problems from federalism
      Political reasons (Howard)
• Medicaid was antiabortion measure
• Increasing resources to pregnant women
  could reduce need/desire for abortion
• Medicaid reduced pressure for universal
  health care
• Medicare is a Federal health insurance program that pays for
  hospital and medical care for elderly and certain disabled
• Medicare Part A, Hospital Insurance (HI), helps pay for hospital
• Includes: meals, supplies, testing, and a semi-private room. Also
  pays for home health care such as physical, occupational, and
  speech therapy provided on a part-time basis and deemed
  medically necessary.
• Care in a skilled nursing facility and certain medical equipment for
  the aged and disabled (walkers and wheelchairs) also covered by
  Part A.
• Part A is generally available without having to pay a monthly
  premium since payroll taxes are used to cover these costs.
                          Medicare Part B
•   also called Supplementary Medical Insurance (SMI). Helps pay for medically necessary physician
    visits, outpatient hospital visits, home health care costs, and other services for the aged and
•   For example, Part B covers:
•   Durable medical equipment (canes, walkers, scooters, wheelchairs, etc.)
•   Physician and nursing services
•   X-rays, laboratory and diagnostic tests
•   Certain vaccinations
•   Blood transfusions
•   Renal dialysis
•   Outpatient hospital procedures
•   Some ambulance transportation
•   Immunosuppressive drugs after organ transplants
•   Chemotherapy
•   Certain hormonal treatments
•   Prosthetic devices and eyeglasses.
•   Part B requires a monthly premium ($96.40 per month in 2009), and patients must meet an annual
    deductible ($135.00 in 2009) before coverage actually begins.
•   Enrollment in Part B is voluntary.
                    Additional services
•   Medicare Advantage Plans (sometimes known as Medicare Part C, or Medicare +
    Choice) allow users to design a custom plan that can be more closely aligned with
    their medical needs.
•   These plans enlist private insurance companies to provide some of the coverage.
•   Details vary based on the program and eligibility of the patient.
•   Some Advantage Plans work with health maintenance organizations (HMOs) or
    preferred provider organizations (PPOs) to provide preventive health care or
    specialist services.
•   Others focus on patients with special needs such as diabetes.
•   In 2006, Medicare expanded to include a prescription drug plan known as
    Medicare Part D.
•   Part D is administered by one of several private insurance companies, each
    offering a plan with different costs and lists of drugs that are covered.
•   Participation in Part D requires payment of a premium and a deductible. Pricing
    designed so that 75% of prescription drug costs are covered by Medicare if you
    spend between $250 and $2,250 in a year.
•   The next $2,850 spent on drugs is not covered, but then Medicare covers 95% of
    what is spent past $3,600.
    Who is eligible for Medicare?
• To be eligible for Medicare, an individual must either
  be at least 65 years old,
• Or under 65 and disabled,
• or any age with End-Stage Renal Disease (permanent
  kidney failure that requires dialysis or a transplant.)
• In addition, eligibility for Medicare requires that an
  individual is a U.S. citizen or permanent legal resident
  for 5 continuous years
• and is eligible for Social Security benefits with at least
  ten years of payments contributed into the system.
        Who pays for Medicare?
• Payroll taxes collected through FICA (Federal Insurance
  Contributions Act) and the Self-Employment
  Contributions Act are a primary component of
  Medicare funding.
• The tax is 2.9% of wages, usually half paid by the
  employee and half paid by the employer.
• Moneys set aside in a trust fund that the government
  uses to reimburse doctors, hospitals, and private
  insurance companies.
• Additional funding for Medicare services comes from
  premiums, deductibles, coinsurance, and copays.
Per-Capita Health Care Spending by the Aged Compared to that
               of the Rest of the Population, 1999
                                  Per Capita Personal Health Care
         Age grouping
            All ages                          $3,834
           Under 65                            2,793
         65 and older                         11,089
             19-44                             2,706
             45-54                             3,713
             55-64                             5,590
             65-74                             8,167
             75-84                            12,244
         85 and older                         20,001
 Source: Age Estimates in the National Health Accounts, Sean P.
  Keehan, Helen C. Lazenby, Mark A. Zezza, and Aaron C. Catlin,
       Health Care Financing Review, December 2, 2004
The Importance of Governmental Sources in
   Financing Medical Care for the Aged
                Sources Of Personal Health Care Financing
            For Medicare And Non–Medicare Populations, 2000
                                       Non-Medicare Population
                                   Percent funded by:
     Medicare         52.3                        ---
     Medicaid         12.2                       19.2
                      12.2                       47.7
                      19.4                       15.8
       Other*          3.9                       17.3
            Source: Medicare Current Beneficiary Survey, loc. cit.
          * Consists of a mix of governmental and private sources
Awareness of public funding
• Medicaid cost about $340 billion in 2008
• 57 % paid by the federal government and 43 % by state
• With rise in Medicaid costs, have consumed a greater portion of
  government budgets, on average nearly 22% of state expenditures.
• next 10 years, expenditures are expected to increase by about 8%
• When states cut costs, they use traditional cost-cutting measures:
  reductions in eligibility, benefits, and provider payments.
• These strategies may decrease access to and quality of care, and
  cause an increase in the use of more costly treatments.
           Currie and Gruber
• Currie and Gruber found increase in doctor
• Can reduce costly use of hospital visits
• Also found that as Medicaid coverage
  increased, child mortality decreased
• Cost per child roughly $902
• Estimated saving of $1.61m per life saved
• But still numbers not covered
• Lower administrative costs
• Higher spending on elderly
• Debates regarding tradeoff of saving elderly
  and expenses - QALY
• NBER results that Medicare provides too little
  in terms if inexpensive and effective care
      Financial challenges

Comparison of Per Person Growth of Medicare, Medicaid, and
            Gross Domestic Product, 1970-2003
               Average annual per person growth in percent
                   GDP          Medicare         Medicaid
 1970-2003          6.3            9.4               8.8*
 1980-2003          5.0            7.4               7.1
 1990-2003          3.8            5.6               6.0
        The Long Term Budget Outlook, CBO, loc. cit.
                *For the 1975-2003 period.