What is Medicaid and How does it Impact Communities of Color? Mara Youdelman National Health Law Program [email protected] Presentation at Families.

What is Medicaid and How does it Impact Communities of Color?

Mara YoudelmanNational Health Law Program

[email protected]

Presentation at Families USA’s Making Public Programs Work for Communities of Color meeting

January 25, 2006

What is Medicaid?

• Medicaid is a federal-state entitlement program for low-income individuals that covers basic health and long-term care services

• Medicaid serves four main groups of low-income Americans: the elderly, people with disabilities, parents and children – over 53 million individuals

• Medicaid pays for: over 37% of all births about 66% of all nursing home care

What do states receive from the federal government?

• Federal Gov’t reimburses states for a substantial portion of their costs Services: FMAP avg. 57% (varies from 50%

to 83% depending upon a state’s per capita income)

Administrative costs: FMAP varies from 50% to 100%, depending on the administrative activity (mostly 50%)

Who is covered?• Created to cover some low-income individuals

Eligibility depends on categories States set own income & asset eligibility criteria Does not cover childless adults and most parents

• Covers more individuals than Medicare or any other health insurer

• But covers only 25% of non-elderly with incomes below 200% FPL*

* 200% FPL is $35,000 for a family of four

Who is Covered?

• 18% of US population – over 51 million individuals (2004)

• Children – roughly 50% of all Medicaid beneficiaries; over 25 million or 1 in 4 U.S. children

• Parents – 8.6 million low-income adults in families with children, the vast majority of whom are women

• Elderly – more than 5 million adults 65 and over

• Individuals with Disabilities – over 7 million

Source: Kaiser Family Foundation, statehealthfacts.org

Who is Covered by Race/Ethnicity

In 2001, roughly one-half of Medicaid beneficiaries were minority. This reflects the relatively lower incomes of minorities and Medicaid’s focus on providing health insurance for low-income individuals.*

AI/AN2%African-

American, Non-Latino

24%

A/PI4%

White/Non-Latino48%

Latino22%

Source: Kaiser Family Foundation, Key Facts: Race, Ethnicity and Health Care, Figure 12.

* State data collection of race and ethnicity varies.

Mandatory v. OptionalEligibility and Services

• Eligibility Groups – mandatory and optional

• Services – mandatory and optional

Groups Services

Mandatory Eligibility

Optional Eligibility

Mandatory Services YES YES

Optional Services Depends on State Depends on State

Eligibility CategoriesMandatory

• Pregnant women and children up to 6 years at < 133% FPL

• Children 6-19 years, < 100% FPL• § 1931 – families deemed to be

receiving AFDC • Individuals receiving SSI and related

programs• Newborn children of Medicaid-

eligible women• Qualified Medicare beneficiaries &

Specified Low Income Beneficiaries• Women for 60 days post-partum• And other categories listed in the

Medicaid Act

Optional• Pregnant women & infants with inc. >

133% and < 185% FPL• Children 1-6 > 133% FPL; 6-19 > 100%

FPL• “Medically needy” - those with incomes

above the eligibility limit until qualifying medical expenses are considered

• Individuals receiving home and community based services - mostly elderly and disabled

• Women with breast or cervical cancer• Non-institutionalized children with

disabilities• And other categories listed in the

Medicaid Act

Mandatory and Optional Medicaid Recipients, 1998

Elderly13.4%

Disabled4.3%

Children10.3%

Parents9.3%

Disabled3.7%

Elderly5.7%

Children40.9%

Parents12.3%

Source: Urban Institute estimate, based on data from FY 1998 HCFA-2082 and HCFA-64 reports, 2001, reprinted with permission from the Kaiser Family Foundation

Mandatory – 71%

Optional – 29%

Expenditures by Enrollment Group

49.60%

16.90%

25.60%

11.00%

14.20%

10.50%

27.90%

39.70%

Enrollees Expenditures

Elderly

Blind &Disabled

Adults

Children

SOURCE: Kaiser Family Foundation, statehealthfacts.org, based on 2002 data

Expenditures by Racial/Ethnic Group

4,609

3,2972,836

1,924 1,842

$0

$1,000

$2,000

$3,000

$4,000

$5,000

W NA AA A/PI H

Race/Ethnicity

Medicaid Payments per Recipient - 1998

What services does Medicaid cover?

• Relatively few services are mandatory

• States have extensive flexibility to provide additional services

• Approx. 2/3 of total Medicaid spending is “optional” spending – on either optional beneficiaries or optional services for mandatory beneficiaries

ServicesMandatory

• Physician services• Laboratory/x-ray services• In-patient hospital services• Outpatient hospital services• EPSDT• Family planning services & supplies• Pregnancy related services• FQHC & rural health clinic services• Nurse midwife services• Certified nurse practitioner services• Nursing facility services for ind. > 21• Home health care services (for ind.

entitled to Nursing Facility care)

Optional• Prescription drugs• Home health services for ind. not eligible for

nursing facility• Private duty nursing services• Dental services • Vision care• Physical therapy• Institutional care for individuals with mental

disabilities• In-patient psychiatric hospital services for ind.

< 21• Hospice care• Case management services• Personal care services• Other services outlined in Medicaid Act

Services: Mandatory v. Optional

Optional Services for Mandatory

Groups21%

Mandatory Services for Mandatory

Groups35%

All Services for Optional

Groups44%

65% of spending is for optional services or groups

Note: Expenditures do not include DSH payments, admin costs, or accounting adjustments.

SOURCE: Urban Institute estimates based on data from FY 1998 HCRA-2092 and HCFA-64 reports; reprinted with permission from the Kaiser Family Foundation.

Distribution of Spending by Eligibility Group and Service, 1998

65%

15%20%

45%

14%

41%

34%32%34%

17%

10%

73%

Children, $24.5B Parents, $16B Disabled, $67.7B Elderly, $46.1B

Mandatory Services for Mandatory GroupsOptional Services for Mandatory GroupsAll Services for Optional Groups

SOURCE: Urban Institute estimates, based on data from FY 1998 HCFA-2082 and HCFA-64 reports; reprinted with permission from the Kaiser Family Foundation

Waivers• As if states didn’t have enough flexibility, they can

also apply for “waivers” allowing them to forego certain Medicaid requirements

• Home and Community Based Services waivers – Social Security Act § 1915

• Demonstration Waivers – SSA § 1115 Allows Secretary of HHS to waive compliance with

provisions of SSA § 1902 The proposed demonstration project must “assist in

promoting the objectives of” Medicaid or SCHIP

A (Short) History of Waivers

• § 1115 waivers predate both Medicaid and SCHIP

• § 1115 waivers allow focused demonstrations The Medicaid Act itself gives states broad latitude to

decide what optional groups to cover and services to provide

§ 1115 contemplates targeted waivers that further the objectives of the Medicaid Act

Cost-Neutrality of Waivers

• Longstanding federal policy – waivers must be cost neutral § 1115 does not require this Cost of the federal match for the waiver must

not exceed the amount that would have been paid without the waiver

Any additional costs from expansions of coverage must be offset with savings

Cost-Neutrality of Waivers (contd.)

• Where do the savings come from?Historically:

Moving enrollees into managed care Shifting DSH dollars from hospitals to coverage “Pass throughs” -- not counting new coverage that

didn’t require a waiver to implement Administration’s new policies (HIFA):

SCHIP fund transfers Cuts in existing coverage and/or benefits Increased cost-sharing for beneficiaries

Administration’s New Crop of Waivers

• Provide states with broad discretion to reshape their Medicaid and SCHIP programs Increased cost sharing (co-pays, premiums,

deductibles) not currently permitted Substitution of SCHIP benefit package for optional

Medicaid populations Enrollment caps and waiting lists for Medicaid Expansion populations need not have access to more

than primary care physician services

Administration’s New Crop of Waivers (contd.)

• Encourage – and perhaps require – use of premium assistance programs to subsidize the cost to recipients of employer based insurance No minimum standards for what must be

provided in an employer plan No requirement for wrap around coverage No provisions for insuring that employers do

not absorb all or part of the state subsidy

Administration’s New Crop of Waivers (contd.)

• Effects of Increased Cost Sharing Will the very poor be able to afford the

payments? If providers aren’t permitted to refuse service

to someone unable to meet the copayment, will they refuse to participate?

If providers are permitted to refuse service if the patient cannot meet the copayment, will this increase the use of emergency rooms?

Administration’s New Crop of Waivers (contd.)

• Reduced coverage for Medicaid recipients Will reduced coverage result in poorer overall health

for the elderly, the disabled and children? Is it appropriate to expect a nationwide minimum

benefit package in return for federal dollars? Are enrollment caps, waiting lists and diminished

benefits consistent with a goal of universal health coverage?

Reconciliation• Would dramatically restructure how Medicaid operates and eliminate

many of the protections Medicaid offers to protect our most vulnerable low-income individuals

• States given wide latitude to: Increase co-pays & premiums

No yearly limits on co-pays for those < 100% FPL Higher co-pays for those > 100% (up to 20% of service) Add new Rx co-pays (up to 20% if > 150% FPL), ER co-pays

Allow providers to deny service if ind. can’t pay Terminate for failure to pay premium Eliminate EPSDT for kids

• Increases co-pays by medical inflation which would quickly outstrip wage increases

Reconciliation – Verification Requirement for Citizens

• Require birth certificate/passport to enroll Some minorities – particularly older AA’s

living in rural areas – were never issued birth certificates b/c not allowed in hospitals at birth

Effectively implements application fee for Medicaid – $8-$100 for birth certificate or passport

Katrina/Rita Relief

• $2 billion block grant to states to pay for Medicaid expenses and direct health care Medicaid/SCHIP expenses thru 6/30/06 limited to evacuees or individuals still living

in affected counties/parishes)

• State must have approved 1115 Hurricane-related waiver

Ways to Improve Medicaid for Racial, Ethnic and

Language Groups• Maintain Medicaid as an entitlement with all the

protections currently mandated by law

• Improve data collection so data is available to identify and then address health disparities

• Provide direct reimbursement to providers by using federal matching funds to pay for language services

HI, ID, KS, MA, ME, MN, MT, NH, UT, VT, WA TX and VA to start pilot programs