1. What Does a Debate on National Health Care Reform Mean for Medicaid in New York? James R. Tallon, Jr. President United Hospital Fund July 10, 2008
Funded by the New York State Department of Health

2. Outline Medicaid’s key roles The national health care reform debate
Medicaid in the coverage debate

3. Medicare and Medicaid: one-fifth of the federal budget
$2,655 billion in gross federal outlays, 2006

4. Medicaid’s key roles Health insurance for low-income families
Health and long term care for people with physical and mental disabilities
Supplement to Medicare for duals
Major source of long term care financing
Support for safety net providers

5. Health insurance for low-income families
About one in four New Yorkers (24 percent) are enrolled in Medicaid (and SCHIP).
2.0 million children
45% of all children in New York State
1.5 million (non-elderly, non-disabled) adults
Only 600,000 were enrolled in 2001
In addition, over 1 million elderly and disabled enrollees

6. Annual Medicaid costs per person Medicaid beneficiaries (in millions)
Medicaid spending is heavily concentrated on a small minority of beneficiaries; the vast majority of enrollees are low-cost.
Persons using long term care: $59,000
Persons with high costs (no long term care): $20,000
$23 b
Annual Medicaid costs per person
Persons with low costs
(no long term care): $1,700
$9 b
400 K
450 K
4 million beneficiaries, $7 billion
Medicaid beneficiaries (in millions)

7. Health and long term care for people with physical and mental disabilities
Prevalence of chronic conditions
Multiple chronic conditions
Mental illness
Absence of private resources
Very low incomes and very few assets
Medicaid has different rules
No waiting periods
No exclusions for pre-existing conditions
Few benefit limits for medically necessary services

8. Supplement to Medicare for duals
For duals, Medicaid is responsible for the services and costs not covered by Medicare.
Medicare covers almost no long term care.
Medicare has a more limited acute care benefit.
Medicare requires significant cost-sharing.
Medicare acute coverage
No dental, vision, or hearing services. No annual or regular physicals. No foot care or orthotic shoes. Very limited coverage of screening tests. Limited coverage for physical, occupational, and speech therapy.
Medicare cost-sharing
Over $1,000 deductible per spell of illness for inpatient care.
20% coinsurance on outpatient services (includes DME).
50% coinsurance for outpatient mental health care.

9. Supplementing Medicare coverage for duals accounts for more than 40 percent of Medicaid spending in New York.
35%
FFY 2004 spending:
$12.4 billion LTC
$ 5.3 billion Acute
$17.7 billion Total

10. Major source of long term care financing
Medicaid payments account for the majority of nursing home revenue in New York.
$6.9 billion in annual payments
78% of patient days statewide
Apart from family resources, Medicaid is the only major source of financing for intermediate care facilities and home-based services for individuals with mental retardation.

11. Support for safety net providers
$13.9 billion in total annual payments to hospitals
23% of hospitals’ net patient revenue statewide
33% in NYC
$3.1 billion in disproportionate share hospital (DSH) payments—which help offset the cost of caring for the uninsured—account for 23% of Medicaid’s total support for hospitals.
Note:
DSH spending includes:
$2.4 billion in “regular” DSH payments to general hospitals
$0.7 billion in “mental health” DSH payments
$3.1 billion in total DSH payments

12. National health care reform debate
Substantial (and continuing) federal budget deficits
Insurance coverage
Employer or individual
National or state
Emerging cost and quality debate
Medicare reimbursement changes
“Systemness” in health care
The Federal Reserve Board model
Medicaid reform as an afterthought
Future deficits:
CBO projects substantial – yet declining – deficits in the near future. This can be misleading. Things are not, in fact, “projected to get better.”
By statute, CBO is bound to estimate spending and revenues based on current law; therefore, their models must assume, for example, there will be no supplemental military appropriations, and that no changes will be made to the alternative minimum tax provisions. Therefore, projected deficits in the out years are likely understated.

13. Medicaid in the coverage debate
Resolve proposed regulatory changes
Reduce state variation
Broaden eligibility, especially for adults
Improve enrollment and retention
Transitions between public and private coverage
Countercyclical financing challenge

14. Conclusions
National health reform does not focus on Medicaid’s special roles.
New York is at the upper end of state variation in Medicaid spending.
New York is entering a period of growing budget deficits.
New York has begun—but not completed—renewal and reform of its Medicaid program.