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Medicaid

Medicaid is a critical building block for health care reform efforts over the long term. Medicaid pays for medical assistance for individuals and families with low incomes and resources and covers 60 million low-income people, including 29.5 million children.  It is administered by the states and funded by both the federal and state governments. Medicaid is larger than any single private health insurer.

RESULTS champions Medicaid expansion and improvements because it covers millions of low-income people, including children, the disabled, and seniors. Expansion is costly however, and is requiring increasing federal support to reach more people at or near the federal poverty line, and to insure that access to care is feasible for them. Some health care providers will not see Medicaid patients unless the provider receives what is deemed a reasonable reimbursement from Medicaid and this also increases the costs of Medicaid expansion.

Pending Legislation

Health Care Reform and Medicaid Expansion

As health care reform reaches critical votes in the House and Senate in March, the President and Congress are in agreement to expand Medicaid coverage to 133% of the Federal Poverty Line (FPL). The Congressional Budget Office estimates that this expansion alone will cover 15 million people who currently have no health insurance. While RESULTS and its coalition partners advocated for even greater coverage, the President’s proposal needs to pass. We join with our allies at Families USA, Georgetown University Health Policy Institute’s Center for Children and Families and the Center on Budget and Policy Priorities to urge Congress to address the growing health care needs of low-income individuals and families by growing Medicaid coverage. Every state already has a Medicaid program that can be build upon, and it carries 20 percent fewer overhead and administrative costs than private insurance, creating a more efficient and cost-effective program. RESULTS has worked to support incenting more health care providers to accept Medicaid-covered patients. This requires increasing the provider reimbursement rates. The reconciliation bill on comprehensive health care reform includes a proposal to increase Medicaid reimbursement rates to those of Medicare. 

To learn more about RESULTS’ positions, and those of the President and Congress, visit our Recent Developments in Health Care Legislation page. Take action to ask your members of Congress to pass health care reform.

Increased Federal Funding to States for Medicaid During the Recession

 

The economic recovery package passed by Congress in February, 2009, increased federal funds for Medicaid by $87 billion - a key priority for the RESULTS network at that time - to help states maintain health coverage during the recession. But that increased federal assistance (FMAP) runs out this year, and most states right now are already budgeting into 2011. They need assurance now that increased federal assistance for Medicaid will last until July 2011.

The American Workers, State, and Business Relief Act of 2010 (HR 4213) as passed by the Senate in early March, provides for the FMAP extension for six months. The bill is headed for a conference committee. It also includes provisions extending unemployment insurance benefits through the end of 2010. Families USA has developed a series of talking points on FMAP. These include state-by-state numbers on how an expansion will help the state in terms of dollars, jobs and wages.

For more information on Medicaid services in specific states, see the Kaiser Foundation's 50-State Database on Medicaid Benefits.

General Background Information and Resources

Medicaid is a program that pays for medical assistance for individuals and families with low incomes and resources. Medicaid is a logical building block for health care reform. Medicaid is larger than any single private health insurer.

Coverage

To qualify for Medicaid, an individual must meet financial criteria and also be part of a group that is “categorically eligible” for the program, such as low-income children, pregnant women, the elderly, people with disabilities, and parents. The income levels at which these groups qualify vary from state to state and group to group, generally with coverage of children and pregnant women being available at higher income levels, followed by the disabled and elderly, then parents of dependent children. Childless adults who are not disabled or elderly rarely qualify for Medicaid, even at the very lowest income levels.

Services covered by Medicaid include physician and hospital visits, well-child care, health screenings, vision care, and dental services and all services that a doctor or other health care professional identifies as “medically necessary.”A few key statistics on Medicaid from the Kaiser Commission on Medicaid and the Uninsured(prior to any enactment of health care reform):

  • Medicaid covers 60 million low-income people, including 29.5 million children, 15.2 million adults, 8.2 million people with disabilities, and 6.1 million seniors.
  • More people than any other single health care program in the U.S., including Medicare.
  • Medicaid is the largest children’s health program in the country.
  • Medicaid is the nation’s primary long-term care program, accounting for 43 percent of total long-term care spending and paying for nearly 60 percent of nursing home residents.
  • Medicaid covers over 40 percent of the poor.
  • Medicaid covers one in five people with severe disabilities.

As economic conditions deteriorated and unemployment rose to double digits with the Great Recession, national Medicaid enrollment grew at a level not seen since the early days of the program in the late 1960’s. According to the Kaiser Commission,

With the country mired in a deep recession, nearly 3.3 million more people were enrolled in state Medicaid programs in June 2009 compared to the previous June. It was the biggest ever one-year increase in terms of absolute numbers, and boosted the June monthly Medicaid enrollment by 7.5 percent to 46.9 million people nationally. It was the first time in decades that every state experienced an increase in Medicaid enrollment, and in 32 states enrollment grew at least twice as fast as the year before, according to the analysis, which includes data breakouts by state.

Medicaid’s funding comes from both the federal and state governments. Medicaid is the largest source of funding for medical and health-related services for people with limited income. The child health component of Medicaid is the Early Periodic Screening, Diagnosis, and Treatment (EPSDT) Program. EPSDT is required in every state. It is intended to fund necessary and appropriate screening and treatment for all eligible children.

Because states set their own eligibility levels, only 16 states and Washington, DC currently cover parents up to the federal poverty level ($22,050 for a family of four in 2009). The national median income threshold for eligibility is only 67 percent of the poverty line. For parents, income must be below 41 percent of poverty or $7,216 per year. And for almost all adults who do not meet the current categorical standards, Medicaid is not an option no matter their income level.

Thirty-five percent of uninsured Americans have income levels below $10,830 a year. This includes 45 percent of non-elderly Americans below the poverty line, with parents and adults without dependent children making up over half of non-seniors without insurance. In addition, none of the poverty line figures take into account the cost of living for individuals in the various regions of the country. As our economy worsens, this number will only increase, and it is imperative that we begin to find solutions in our existing programs to help cover every American, particularly those most in need.

Benefits

Medicaid was designed to address the needs of low-income individuals; therefore, it is the best designed program to cover a growing population in need of public support for their health care needs. Medicaid participants can appeal coverage denials without risk of losing their coverage, unlike many private plans, and Medicaid covers many services not typically covered by private health insurance such as:

  • Transportation to and from doctor’s appointments
  • Disability assistance services
  • Services provided at rural or community health centers

Medicaid currently protects low-income individuals against unaffordable out-of-pocket costs. The Federal government limits how much a person on Medicaid can be charged for service, and adults enrolled in private insurance plans pay more than six times as much in out-of-pocket expenses. Medicaid also provides comprehensive coverage, ensuring care without limitation on total cost of long-term care due to serious illness. Those in Medicaid are less likely than those without insurance, and those in private insurance, to lack a usual source of coverage or to have unmet health care needs.

Federal Funding of State-run Medicaid Programs

The need for Medicaid is countercyclical. This means that as the economy worsens and more people lose their jobs and health benefits, many people turn to government safety-net programs such as Medicaid, thus requiring an increase in funding for the program. Unfortunately, because Medicaid is a federal-state partnership and therefore funding for Medicaid is dependant on state budgets, states often cut Medicaid during economic downturns in order to balance their budgets.

During this deepening economic crisis, we must make sure that these safety-nets are protected, and expanded, to meet their growing demand. RESULTS supports efforts to strengthen Medicaid by improving the financing structure. Financing should be such that states do not face the prospects of cutting millions off of Medicaid just as the need grows. The best way to do this is to build in automatic increases in the federal share of costs as state revenues fall.

The Federal Medical Assistance Percentage (FMAP) is the federal government’s shared fiscal responsibility of each state’s expenditures for Medicaid. This percentage is determined annually and designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita income relative to the national average. Under law, the FMAP funding cannot be lower than 50 percent or higher than 83 percent. For example, in FY 2008, Mississippi, Arkansas and Louisiana received over 70 percent federal funding while 12 higher per capita states received the minimal 50 percent.

Every 1 percent increase in the unemployment rate is expected to produce an additional 1 million people enrolling in Medicaid and CHIP, even as states revenues are expected to continue to fall at a rate of 3 to 4 percent. The economic recovery package signed into law on February 17, 2009, the American Recovery and Reinvestment Act (ARRA), was an effort by Congress and President Obama to inject some much needed spending into the ailing economy in hopes that these funds would initiate the creation of jobs and economic growth. Of the total expected cost of $787 billion, the Act includes an $87 billion increase in FMAP (see the breakdown of funding increases for specific states) to meet the expected increased demand for Medicaid. The increase in federal funding is to ensure that those currently receiving benefits, and those soon to qualify, do not see a subsequent drop in the quality of their health care in this extremely difficult economic environment.

ARRA funding and the increased FMAP expire at the end of 2010. However, many state budgets are for fiscal years beginning July 1, 2010 and ending June 30, 2011. States are pressing Congress now to extend the increased FMAP support through June 30, 2011, to forestall state cuts to Medicaid that would begin this year.

Temporarily increasing the FMAP is also a proven strategy for stimulating the economy and providing immediate relief to state and local economies. For that reason, we anticipate opportunities to advocate for the extension as further emergency relief and stimulus bills make their way through Congress in 2010. 

Health Care Provider Reimbursement Rates

One of the key challenges in Medicaid is finding doctors to pay Medicaid patients. Medicaid is very much like a single-payer program; doctors treat patients and then are reimbursed for their services by state and federal governments. Unfortunately, the reimbursement rate for doctors who treat Medicaid patients is very low. Medicaid doctors are only paid 66 percent of what Medicare doctors are paid for primary care. As a result, because doctors are not required to take Medicaid patients, many refuse to do so. In 2008 only 40 percent of physicians accepted all of the new Medicaid patients that came through their doors. This means that Medicaid patients have fewer outlets to seek medical care than do Medicare and private insurance patients.

The Center for Budget & Policy Priorities has taken the position that, 'In a reformed system where Medicaid serves as a foundation for universal coverage, it is essential that payment rates be brought up to levels sufficient to encourage more providers to participate in the program." It is the position of the American Academy of Pediatrics that health care reform should recognize that health care providers must receive adequate payment if they are to provide comprehensive quality health services for all children and ensure physician payment is comparable in all commercial and government-subsidized health insurance programs for children.

The Kaiser Family Foundation's State Health Facts site posted a 2008 Medicare-to-Medicaid Fee Index that shows that nationwide Medicaid reimbursement rates for primary care are 66 percent of Medicare rates; and a Medicaid Physician Fee Index by State showing the low rates paid by California and New York, two of our most populous states. The Center for Studying Health System Change notes, in findings of a 2008 physician survey, that 28.2 percent of all physicians accept no new Medicaid patients, while only 13.7 percent accept no new Medicare patients.

For more background on how to expand and strengthen Medicaid this year, see recent papers from our allies at: