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Medicaid - Data Summary and Trends

Medicaid was initially formulated as a medical care extension of Federally-funded programs proving cash income assistance for the poor, with an emphasis on dependent children and their mothers, the disabled, and the elderly. Over the years, however, Medicaid eligibility has been incrementally expanded beyond its original ties with eligibility for cash programs. Legislation in the late 1980s assured Medicaid coverage to an expanded number of low-income pregnant women, poor children and to some Medicare beneficiaries who are not eligible for any cash assistance program. Legislative changes also focused on increased access, better quality of care, specific benefits, enhanced outreach programs, and fewer limits on services.

In most years since its inception, Medicaid has had very rapid growth in expenditures. This rapid growth has been due primarily to the following factors:

·   The increase in size of the Medicaid-covered populations as a result of Federal mandates, population growth, and economic recessions.

·   The expanded coverage and utilization of services.

·   The disproportionate share hospital (DSH) payment program, coupled with its inappropriate use to increase Federal payments to States.

·   The increase in the numbers of very old and disabled persons requiring extensive acute and/or long term health care and various related services.

·   The results of technological advances to keep more very low birth-weight babies and other critically ill or severely injured persons alive and in need of continued extensive and very expensive care.

·   The increase in drug costs and the availability of new expensive drugs.

·   The increase in payment rates to providers of health care services, when compared to general inflation.

As with all health insurance programs, most Medicaid recipients require relatively small average expenditures per person each year, and a relatively small proportion incurs very large costs. Moreover, the average cost varies substantially by type of beneficiary. The national data for 2001, for example, indicate that Medicaid payments for services for 23.3 million children, who constitute 50 percent of all Medicaid recipients, averaged about $1,305 per child (a relatively small average expenditure per person). Similarly, for 11.6 million adults, who comprise 25 percent of recipients, payments averaged about $1,725 per person. However, certain other specific groups have much larger per-person expenditures. Medicaid payments for services for 4.4 million aged, constituting 9 percent of all Medicaid recipients, averaged about $10,965 per person; for 7.7 million disabled, who comprise 16 percent of recipients, payments averaged about $10,455 per person. When expenditures for these high- and lower-cost recipients are combined, the 2001 payments to health care vendors for 47 million Medicaid recipients averaged $3,965 per person.

Long-term care is an important provision of Medicaid that will be increasingly utilized as our nation's population ages. The Medicaid program paid over 41 percent of the total cost of care for persons using nursing facility or home health services in 2001. National data for 2001 show that Medicaid payments for nursing facility services (excluding ICFs/MR) totaled $37.2 billion for more than 1.7 million beneficiaries of these services--an average expenditure of $21,890 per nursing home beneficiary. The national data also show that Medicaid payments for home health services totaled $3.5 billion for more than 1 million beneficiaries--an average expenditure of $3,475 per home health care beneficiary. With the percentage of our population who are elderly or disabled increasing faster than that of the younger groups, the need for long-term care is expected to increase.

Another significant development in Medicaid is the growth in managed care as an alternative service delivery concept different from the traditional fee-for-service system. Under managed care systems, health maintenance organizations (HMOs), prepaid health plans (PHPs) or comparable entities agree to provide a specific set of services to Medicaid enrollees, usually in return for predetermined periodic payments per enrollee. Managed care programs seek to enhance access to quality care in a cost-effective manner. Waivers may provide the States with greater flexibility in the design and implementation of their Medicaid programs. Three major waivers (known as "1915(b)", "1915(c)", and "1115") are an important part of the Medicaid program. Section 1915(b) of the law (also known as Freedom of Choice Waivers) allows States to develop innovative health care delivery or reimbursement systems. Section 1915(c) of the law (also referred to as Home and Community-Based Services [HCBS] waivers), affords States the flexibility to develop and implement creative alternatives to placing Medicaid-eligible individuals in hospitals, nursing facilities or intermediate care facilities for persons with mental retardation. Section 1115 (Research and Demonstrations Projects waivers) of the law allows statewide health care reform demonstrations for testing various methods of covering uninsured populations, and testing new delivery systems, without increasing costs. Finally, the Balanced Budget Act of 1997 provided States a new option to use managed care. Medicaid managed care programs are growing rapidly. The number of Medicaid beneficiaries who are now enrolled in some managed care program continues is growing rapidly, from 14 percent of enrollees in 1993 to 59 percent in 2003.

More than 46 million persons received health care services through the Medicaid program in FY 2001 (the last year for which beneficiary data are available). In FY 20032, total outlays for the Medicaid program (Federal and State) were $278.3 billion, including direct payment to providers of $197.3 billion, payments for various premiums (for HMOs, Medicare, etc.) of $52.1 billion, payments to disproportionate share hospitals of $12.9 billion, and administrative costs of $16 billion. Outlays under the SCHIP program in FY 2003 were $6.1 billion. With no changes to either program, expenditures under Medicaid and SCHIP are projected to reach $445 billion and $7.5 billion, respectively, by FY 2009.

See these topics for additional information:

·   Medicaid - Overview

·   Medicaid - Eligibility

·   Medicaid - Scope of Services

·   Medicaid - Amount and Duration of Services

·   Medicaid - Payment for Services

·   Relationship of Medicaid and Medicare

Source

http://www.cms.hhs.gov/MedicareProgramRatesStats/02_SummaryMedicareMedicaid.asp

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