What is Medicaid and How does it Impact Communities of Color? Mara Youdelman National Health Law Program 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 Govt reimburses states for a substantial portion of their costs Services: FMAP avg. 57% (varies from 50% to 83% depending upon a states 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 Medicaids focus on providing health insurance for low-income individuals.* Source: Kaiser Family Foundation, Key Facts: Race, Ethnicity and Health Care, Figure 12. * State data collection of race and ethnicity varies.

Mandatory v. Optional Eligibility and Services Eligibility Groups – mandatory and optional Services – mandatory and optional Groups Services Mandatory Eligibility Optional Eligibility Mandatory Services YES Optional Services Depends on State

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

Expenditures by Racial/Ethnic Group

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

Services Mandatory 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 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 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 didnt 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 didnt require a waiver to implement Administrations new policies (HIFA): SCHIP fund transfers Cuts in existing coverage and/or benefits Increased cost-sharing for beneficiaries

Administrations 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

Administrations 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

Administrations New Crop of Waivers (contd.) Effects of Increased Cost Sharing Will the very poor be able to afford the payments? If providers arent 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?

Administrations 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. cant 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 AAs 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