The Role of Medicaid in a Restructured Health Care System Cindy Mann Executive Director Center for Children and Families Georgetown University Health Policy.

The Role of Medicaid in a Restructured Health Care

System

Cindy MannExecutive Director

Center for Children and FamiliesGeorgetown University Health Policy Institute

[email protected]

November 4, 2005

Medicaid’s Current Role in Illinois

Individual5%

Medicaid 20%

11%

Employer64%

Uninsured

Individual5%

18%

Medicaid 6%

Employer68%

UninsuredMedicare

2%

Sources of Coverage

All Children0-18

Non-Elderly Adults18-64

Source: Data based on pooled 2003 and 2004 Current Population Survey (CPS) data.

Slide 1

Medicaid’s Current Role

• Pays for more than one out of three (37%) births in the state

• Provides a broad set of benefits for elderly and disabled people with significant health care needs

• Single largest source of funding for long- term care

Slide 2

Elderly and People with Disabilities Account for 70% of

Medicaid Expenditures in Illinois

Adults11%

Elderly & Disabled

70%

Children 19%

Total Illinois Medicaid Expenditures in 2002 = $9.2 billion

Slide 3

Source: Georgetown Center for Children and Families analysisbased on FY 2002 CMS MSIS data.

Medicaid’s Current Role

• Vital support for safety net providers

• Supplements financing for other systems– Special education and early intervention

services for children– Child welfare system

• Largest source of federal funds to Illinois

Slide 4

Transportation1.6%

Education*22.5%

Public Assistance

0.9%

Medicaid56.7%

All Other*18.3%

Total = $8 billion

($4.53 billion)

Federal Medicaid Payments as a Share of Total Federal Funds to Illinois, FY 2003

*”Education” includes elementary, secondary and higher education. *“All Other” varies by state. It includes federal funds for the State Children’s Health Insurance Program and may include a range of other federal funds such as economic development, housing, parks and recreation. Source: Georgetown Center for Children and Families analysis based on National Association of State Budget Officers (NASBO), 2003 State Expenditure Report, Fall 2004.

Slide 5

Under Reform, How Will

• Coverage be financed? • Coverage for people with disabilities and

other high medical costs be financed?• Affordability for low- and moderate-income

people be achieved?• Costs be contained? • Quality be assured?• Portability, continuity of coverage & a

more seamless system be achieved?

Slide 6

Key Issues To be Addressed

Medicaid offers

Adequate financing Open-ended federal financing

Automatically adjusts with costs, caseload

Coverage for people with disabilities and other high cost cases

Comprehensive benefits - services beyond those typically available through commercial plans, no lifetime cap, etc.

Coverage for people with limited incomes

Comprehensive coverage with limited beneficiary costs

Cost containment Broad state discretion to set provider payment rates, establish disease management & incentives to encourage efficient and effective care management

Slide 7

Key Issues To be Addressed

Medicaid offers

Assure quality Broad state discretion/authority to establish, and monitor quality standards

Portability, continuity of coverage, a more seamless system

Coverage not tied to job status; broad control over delivery system, administration, payment rates

- Can merge Medicaid coverage and financing with other systems under a restructured system

- Can design the system to work in tandem with employer-based coverage while also filling in the gaps that will arise in an employer-based system

Slide 8

Slide 9

MassHealth

(One application, one eligibility determination

process)

Medicaid financing for some groups of children and adults

SCHIP financing for a smaller group of

children

Premium Assistance component

Slide 10

Dirigo applications

sent to Dirigo by employer

Dirigo Agencydetermines employee discount

Contracts with private insurer to provide

coverage to all Dirigo

participants

All participants receive the

same card and see the same

providers*

Medicaid Can Be Integrated into Broader Reform: Dirigo

100% discount for Medicaid eligible employees and

families

Sliding income discount for employees/families

between Medicaidand 300% FPL

*Note: Medicaid-eligible Dirigo enrollees eligible for some additional “wrap-around” services.

Medicaid Coverage/Financing Limitation

• No financial participation for childless adults– Eleven states and the District of Columbia

have waivers allowing some Medicaid financing for this group

– Budget neutrality constraints

Slide11

Other Medicaid Considerations

• Limits on premiums and cost sharing that can be charged

• Provider payment rates often lower than commercial insurance

• Relatively low administrative costs

Slide 12

Medicaid vs. Private Insurance Costs,Per Capita

$3,145

$719

$4,410

$795

Adults Children

Medicaid Private Insurance

Source: Hadley and Holohan, Inquiry, 2004

Slide 13

Slide 14

Medicaid Federal Reforms that Could Help States Meet Their Coverage Goals

• Automatic “FMAP” adjuster– To require federal share of costs to rise during

economic downturns

• Coverage permitted without regard to “categories”– Option to cover childless adults

• Reduce cost shift of Medicare costs to state Medicaid programs

Slide 15

Dual Eligibles Account for More than One-Fourth of Total Medicaid

Expenditures in Illinois

Dual Eligibles28%

Source: Urban Institute estimates based on data from the Medicaid Statistical Information System (MSIS) and Medicaid Financial Management Reports preparedfor the Kaiser Commission on Medicaid and the Uninsured, 2003.

Slide 16