May 11, Overview of Medicare, Medicaid and State Children’s Health Insurance Program for Citizens’ Health Care Working Group William J. Scanlon Health Policy R&D National Health Policy Forum

May 11, Overview of Medicare, Medicaid and SCHIP Eligibility Services Covered Financing

May 11, Eligibility CategoriesIncome Medicare -Aged -Disabled -ESRD Patients All Medicaid -Children -Parents -Aged -Disabled Low Income--varies by state subject to federal limits SCHIP-Children Low Income--varies by state subject to federal limits

May 11, Services Acute CareChronic CareLong-term Care Medical, nursing and pharmaceutical services for an immediate need Medical, nursing and pharmaceutical services for an ongoing need Supportive services to compensate for a disability

May 11, Services Acute CareChronic CareLong-term Care MedicareXX MedicaidXXX SCHIPXX

May 11, Financing Medicare –Open Ended Entitlement –Federal Payroll Taxes General Revenues –Beneficiary Premiums Medicaid –Open Ended Entitlement –Federal and State General Revenues SCHIP –Fixed Federal Appropriation –Federal and State General Revenues –Beneficiary Premiums

May 11, Medicare 41 million beneficiaries $301 billion in 2004 –11.7% of Federal Budget –2.6% of GDP (2003)

May 11, Medicare Program Structure “Original” or “Traditional” Medicare (also known as “Fee-for-Service” Medicare) Medicare Advantage— Private plan options Drug Benefit Parts A and B Part C Part D

May 11, Medicare Benefits Medicare Covers Acute and Chronic Care Part A –Inpatient hospital –Post-hospital skilled nursing facility (SNF) services –Home health –Hospice-care Part B –Physician and laboratory services –Outpatient hospital –Therapy –Durable medical equipment and supplies –Home health (not-covered under Part A) Part D –Drugs

May 11, Medicare Cost-Sharing Hospital Care –Days 1-60—Deductible ($912 in 2005) –Days 61-90—Per day coinsurance ($228 in 2005) –Days —Per day coinsurance ($456 in 2005) for 60 lifetime reserve days SNF –Days —Per day coinsurance ($114 in 2005 )

May 11, Medicare Cost Sharing Continued Part B Deductible: $110 in 2005 Coinsurance: 20% of Medicare approved amount Exceptions –Mental health: 50% co-insurance –Hospital outpatient—Fixed amounts –Home health—none Over-billing limit: 15 % above Medicare approved amount on unassigned claims

May 11, Medicare Cost Sharing Continued Beneficiary cost sharing on Medicare covered services can be substantial Beneficiaries in 1998 paying more than: Number of BeneficiariesPercent $2, million11.5 % $5, thousand2.5 % $10, thousand0.6 %

May 11, Medicare Supplementary Coverage Vast majority of beneficiaries in traditional Medicare have supplementary coverage Supplementary Coverage in 2000

May 11, Medicare Advantage—Part C Offers choice to join private plan Plan types include HMOs, PPOs, FFS, MSAs Plans paid monthly per enrollee fee regardless of services used Plan “savings” returned in extra benefits

May 11, Medicare Advantage—Part C Plan and beneficiary participation have varied over time Plans Enrollees (millions)

May 11, Medicare Advantage—Part C Medicare Modernization Act changed Part C –Increased payments to plans –Provided for financial competition among plans and share of savings to Medicare –Created regional PPOs to expand areas served

May 11, Medicare Advantage—Part C PPO Regions for 2006

May 11, Medicare Drug Benefit--Part D Begins January 1, 2006 Separate enrollment and premium Monthly premium expected to average $37 nationally Benefit provided by competing private stand-alone drug plans or Medicare Advantage plans Benefit –$250 deductible –Coinsurance 25% from $250 to $2, % from $2,250 to $5,100 5% on spending over $5,100 Subsidies for premium and cost sharing for low income persons

May 11, Medicaid and SCHIP Medicaid over 52 million beneficiaries $ 309 billion in 2004 Federal share –$176 billion or.8% of federal budget State share –$133 billion or 22%* of state budgets *2003 SCHIP ~ 6 million beneficiaries $6.1 billion in 2004 ≈ 75 % Federal ≈ 25 % State

May 11, Medicaid Program Roles Primary health insurance—mostly families Medicare supplement—dual eligible aged and disabled beneficiaries Long-term care financer — beneficiaries with disabilities

May 11, Medicaid

May 11, Medicaid Programs are state designed and administered subject to federal requirements Result is 56 distinct Medicaid programs

May 11, Medicaid Mandatory and Optional Eligibility Selected Categories Mandatory Children –6-18 years up to 100% FPL –0-5 years up to 133% FPL –Foster care Pregnant women –Up to 133% FPL SSI cash recipients Optional Children and Pregnant women –Up to 185% FPL Elderly and Disabled –Up to 100%FPL Medically Needy

May 11, Medicaid Mandatory Medicare Supplementary Insurance Qualified Medicare Beneficiaries (QMBs) –Up to 100% FPL—Part B Premium and cost sharing Specified Low-Income Medicare Beneficiaries (SLMBs) – % FPL---Part B Premium Qualifying Individuals (QIs) – % FPL—Portion of Part B Premium Qualified Disabled Working Individuals (QDWIs) –Up to 200% FPL---Part A Premium

May 11, Medicaid Mandatory and Optional Services Selected Types Mandatory Physician Hospital inpatient and outpatient Nursing Facility for persons 21 and over Lab and X-ray EPSDT for persons less than 21 Optional Prescription Drugs Dental services ICF/MRs Home and community-based services

May 11, Medicaid Waivers Program Waivers –Mandatory managed care enrollment (1915(b)) Section 1115 Demonstrations –Statewide experimentation with financing mechanisms, managed care, coverage expansions –HIFA—Health Insurance Flexibility and Accountability—tradeoff of more limited benefit packages and cost sharing for expanded coverage

May 11, SCHIP Federal-State Partnership very different Capped appropriation—not an entitlement $39 billion for 10 years (reauthorization 2007) State Flexibility –States can cap/close enrollment 7 states froze enrollment at least temporarily between 2001 and had freezes in effect at end of 2004

May 11, SCHIP State Flexibility (Continued) Benefits –Medicaid Expansion –Distinct program with benefits similar to BC/BS plan; state employees plan; largest Medicaid HMO; or actuarially equivalent –Combination Cost sharing –Very limited for children in families ≤ 150%FPL –For others, premiums and co-payments allowed if ≤ 5% of income

May 11, Changes in Health Insurance Coverage for Low-Income Children and Adults, Percentage Point Changes ChildrenAdults 5.7 Million2.0 Million Change in Population 3.9 Million-0.1 Million Change in Uninsured Note: Low-income is defined as less than <200% of poverty ($29,360 for a family of three) SOURCE: Urban Institute for the Kaiser Commission on Medicaid and the Uninsured, 2004

May 11, Medicaid as LTC Financer Pays close to half of all LTC expenditures Nursing homes ≈46 percent of revenues ≈1 million or 2/3 of residents partially or fully financed Home and community services ≈48 percent of expenditures ≈850 thousand recipients

May 11, Medicare and Medicaid as a Share of GDP

May 11, For more information Understanding Medicare and Medicaid: Fundamentals and Issues for the New Congress Briefing Book — January 26, Understanding Medicare and Medicaid: Fundamentals and Issues for the New Congress