Medicaid Lecture 15A

Medicaid Established in 1965 along with Medicare Medicaid is a federal and state program that helps low income and disabled individuals pay for health care expenses Medicaid rules vary from state to state (though there are federal standards that often set minimums and maximums) Low income elderly can qualify for both Medicaid and Medicare – if so, nearly all expenses are covered

Medicaid Eligibility Federal statutes identify over 25 different eligibility categories for which federal funds are available. These fall roughly into 5 groups: Pregnant women Children / teenagers Aged Blind Disabled Means-tested

Means Testing Income and Asset Tests Income test is usually a multiple of the Federal Poverty Level (FPL) In 2009, FPL = $22,050 for family of 4 ($27,570/Alaska) Asset tests also very stringent Eligibility differs depending on group Pregnant women and children under 6 with incomes below 133% of poverty line ($29,327 in 2009) Children 6 – 18 in families with incomes < 125% of FPL qualify. 36 states have extended coverage to include pregnant women/infants<1 up to 185% of FPL “Medically Needy”

Enrollment In 2007, there were approximately 53 million people enrolled in Medicaid 51% were <19 years (Nation’s largest provider of children’s health insurance) 37% were % were 65+ (Numbers do not add to 100% due to rounding)

Illinois Medicaid Illinois and Federal Gov’t share financial burden about 50/50 In any given month during Fiscal Year 2007, there were approx 1.2 million residents (1 out of every 9) in Illinois were covered by Medicaid 600,000+ of these were children under 19 60,000+ were residents of long-term care facilities

Long-Term Care Now that Medicare covers Rx drugs, the one major omission is coverage of long-term care (nursing homes) U.S. spends over $135 billion per year on LTC. Average annual cost of a nursing home is over $60,000 per year Costs growing much faster than inflation Fewer than 10% of 65+ population have private insurance

Medicaid and LTC Most nursing home stays are either paid out of pocket or by Medicaid Medicaid imposes strict income and asset tests – it is like having a deductible equal to nearly all of your assets Current state level experiments to boost private insurance

Why Not Private Insurance? Research shows that Medicaid’s rules effectively impose a very large implicit tax on purchase of private insurance Why? Makes you less likely to qualify for government assistance If you still qualify, private policy pays first Large share of benefits paid by private insurance are duplicative of what Medicaid would have otherwise provided