Week 1 - Medicaid

Medicaid
A Primer 2010
The Kaiser Commission on Medicaid and the Uninsured provides information and analysis on health care coverage and access for the low-income population, with a special focus on Medicaids role and coverage of the uninsured. Begun in 1991 and based in the Kaiser Family Foundations Washington, DC office, the Commission is the largest operating program of the Foundation. The Commissions work is conducted by Foundation staff under the guidance of a bipartisan group of national leaders and experts in health care and public policy.
MEDICAID
A Primer
Key Information on Our Nations Health Coverage Program for Low-Income People
June 2010
TABLE OF CONTENTS
Introduction.......................................................................................1
Over its nearly 45-year history, the Medicaid program has grown increasingly integral to our health care system. Today, it is a primary source of coverage, access, health care nancing, and innovation in health care delivery. During the recession, the program has provided a coverage safety-net for millions of Americans, especially children, who would otherwise have joined the uninsured. Under health reform, Medicaid assumes even greater importance as it becomes the national coverage mechanism for low-income people in the new plan for near-universal coverage. With this expanded role for Medicaid on the horizon, basic information about the program is a key resource.
What is Medicaid?...................................................................................3
Medicaid is the nations publicly funded health coverage program for low-income Americans. Medicaid covers health and long-term care services for specied categories of low-income people currently, but it will be expanded in 2014 to reach nearly everyone under age 65 with income up to 133% of the poverty level. Medicaid lls large gaps in our health insurance system, nances the lions share of long-term care, and provides core support for the health centers and safety-net hospitals that serve the nations uninsured and millions of others. Within broad federal guidelines, states design their own Medicaid programs.
Who is Covered by Medicaid?.................................................................7

Medicaid covers nearly 60 million low-income Americans, including children and parents, people with severe disabilities, and low-income, elderly and disabled Medicare beneciaries known as dual eligibles. Medicaid is expected to reach another 16 million people over the rst ve years of health reform, when a national expansion of the program takes place. Most Medicaid beneciaries have no access to or cannot aord employer-based or individual insurance in the private market. For dual eligibles, Medicaid supplements Medicare, covering services that Medicare excludes or limits especially, long-term care and paying Medicares premiums and cost-sharing.
What Services Does Medicaid Cover?....................................................14

Medicaid covers a broad range of health and long-term care services, but program benets vary by state. Medicaid covers comprehensive services for children. It also covers services that most private insurers and Medicare exclude or limit, including long-term care, mental health care, and services and supports needed by people with disabilities. Transportation, translation, and other services help lower access barriers that many in the low-income population face. Medicaid enrollees obtain most services from providers and managed care plans in the private sector.
How Much Does Medicaid Cost?............................................................22

Medicaid spending on services totaled about $339 billion in 2008. Two-thirds of Medicaid benet spending is attributable to seniors and people with disabilities. Although beneciaries in these two groups make up just a quarter of all Medicaid enrollees, their extensive needs for health and long-term care translate into high costs to the program. While aggregate Medicaid costs are high, Medicaids administrative costs are low and Medicaid acute care spending per capita has been rising more slowly than private insurance premiums.
How is Medicaid Financed?....................................................................27

Medicaid nancing is a federal-state partnership in which the federal government matches state Medicaid spending. Under normal rules, the federal match rate is at least 50% in every state but higher in poorer states, reaching 76% in the poorest state, and the federal share of Medicaid spending overall is 57%. In 2008, states on average spent about 16% of their general funds on Medicaid, and Medicaid accounted for about 7% of total federal outlays. In 2009, Congress enacted a temporary increase in federal Medicaid funding to ease recessionary pressures on states and preserve coverage, and currently the federal government funds about 66% of Medicaid spending. Under health reform, the federal-state nancing partnership that supports Medicaid will continue. However, the federal government will nance the lions share an estimated 96% -- of the cost of the new Medicaid coverage stemming from health reform over the rst decade.
How Does Health Reform Reshape Medicaid for the Future?..................30

A major expansion of the Medicaid program is integral to the national coverage framework established by the health reform law. In the new system, Medicaid will provide the foundation for coverage of the low-income population. Current restrictions on eligibility for non-elderly adults will be removed so that nearly everyone under age 65 with income below a national oor will be eligible. Millions of the uninsured will gain Medicaid coverage as a result, and the federal government will nance the vast majority of increased coverage over the next decade. To prepare Medicaid for its broader, national role, the reform law strengthens the program through provisions and investments to simplify Medicaid enrollment, improve Medicaid access and quality of care, ensure coordination with the new insurance exchanges, and achieve other goals of reform.
Tables..35
INTRODUCTION
No major health program or issue can be considered today outside the context of the nations new health care reform law, known as the Aordable Care Act.* The health reform law, the most signicant social legislation in the U.S. since 1965, seeks to eliminate large and growing gaps in health insurance by increasing access to aordable coverage and instituting a new legal obligation on the part of individuals to obtain it. To accomplish this reform, the law creates a national framework for near-universal coverage and also outlines a comprehensive set of strategies to improve care and contain costs. Integral to the coverage framework laid out in the reform law is a dramatic expansion of the Medicaid program; half the expected gains in coverage due to health reform will be achieved through this expansion.
Figure 1
Medicaid in the Health System, 2008

Medicaid as a share of national health care spending:
41%
16%
17% 13% 8%
Total National Spending (billions)
Total Health Services and Supplies
Hospital Care
Professional Services
Nursing Home Care
Prescription Drugs
$2,181
$718
$731
$138
$234
Note: Does not include spending on CHIP. SOURCE: Centers for Medicare and Medicaid Services, Oce of the Actuary, National Health Statistics Group, National Health Expenditure Accounts, January 2010.
The reliance on Medicaid as a platform for wider coverage of the low-income uninsured has a long history. Established in 1965 as part of President Johnsons Great Society, Medicaid was originally conceived as a health coverage supplement only for those receiving cash welfare assistance. Overtime, Congress has expanded Medicaid substantially to ll growing coverage gaps left by the private insurance system. Many states have expanded eligibility for the program further and Medicaid has been the cornerstone of all state-level initiatives to broaden coverage of the uninsured. In 2007, Medicaid covered health and long-term care services for nearly 60 million people, including more than 1 in 4 children and many of the sickest and poorest in our nation. During the economic recession, Medicaid has provided a safety-net of coverage for millions more Americans aected by loss of work or declining income. Medicaid now provides bene ts to more people than any other public or private insurance program, including Medicare.
Health reform was enacted in two separate pieces of legislation. President Obama signed the Patient Protection and Aordable Care Act (P.L. 111-148) into law on March 23, 2010. The Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), signed on March 30, 2010, includes changes to new law.
MEDICAID: A PRIMER
AsamainstayofcoverageintheU.S.,Medicaidisalsoacoresourceofhealthcarefinancingit fundsalmostasixthoftotalnationalspendingonpersonalhealthcare(Figure1).Medicaidisthe mainpayerofnursinghomecareandlongtermcareservicesoverall;itisalsothelargestsourceof publicfundingformentalhealthcare.Healthcentersandsafetynethospitalsthatservelow incomeanduninsuredpeoplerelyheavilyonMedicaidrevenues.Medicaidisanengineinstate andlocaleconomies,too,supportingmillionsofjobs. LookingaheadtotheevenlargerroleMedicaidwillsoonplayunderhealthcarereform, understandingtheprogramandhowitfitsintoourhealthcaresystemtakesonadditional importance.Thepurposeofthisprimeristoprovidethatfoundationbyexplainingthebasicsof Medicaidandprovidingkeyinformationabouttheprogramtoday.
THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED
WHAT IS MEDICAID?
Medicaid is a public health insurance program that lls important gaps in our system today gaps in coverage, long-term care, and nancing for the safety-net delivery system. Under health reform, Medicaids role in health coverage and nancing will increase substantially. A signicant expansion of Medicaid, which will extend health coverage to millions more low-income people, is the foundation of the national coverage system established by the new law. The federal government will nance the lions share of the cost of the new coverage. States will continue to shape their own programs, but Medicaid eligibility will be simplied to support coordination between Medicaid and subsidized coverage oered in the new insurance exchanges.
What is Medicaid?
Medicaid is the nations publicly nanced health and long-term care coverage program for low-income people. Enacted in 1965 under Title XIX of the Social Security Act, Medicaid is an entitlement program that was initially established to provide medical assistance to individuals and families receiving cash assistance, or welfare. Over the years, Congress has incrementally expanded Medicaid eligibility to reach more Americans living below or near poverty, regardless of their welfare eligibility. Today, Medicaid covers a broad low-income population, including parents and children in both working and jobless families, individuals with diverse physical and mental conditions and disabilities, and seniors. Medicaids beneciaries include many of the poorest and sickest people in the nation.
What is Medicaids role in the U.S. health care system?

Medicaid lls large gaps in our health insurance system. Medicaid provides health coverage for millions of low-income children and families who lack access to the private health insurance system that covers most Americans. The program also provides coverage for millions of people with chronic illnesses or disabilities who are excluded from private insurance or for whom such insurance, which is designed for a generally healthy population, is inadequate. Finally, Medicaid provides extra help for millions of low-income Medicare enrollees known as dual eligibles, assisting them with Medicare premiums and cost-sharing and covering key services, especially long-term care, that Medicare limits or excludes. Medicaid is the nations largest source of coverage for long-term care, covering more than two-thirds of all nursing home residents. (Figure 2)
Figure 2
Medicaids Role for Selected Populations

Percent with Medicaid Coverage:
Poor Near Poor 24% 42%
Families
All Children Lo Income Children Low-Income Low-Income Adults Births (Pregnant Women) 21% 41% 30% 56%
Aged & Disabled

Medicare Beneficiaries P People l with ith Severe S Di Disabilities biliti People Living with HIV/AIDS Nursing Home Residents 17% 20% 44% 70%
SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute analysis of 2009 ASEC Supplement to the CPS; Birth data from Maternal and Child Health Update: States Increase Eligibility for Children's Health in 2007, National Governors Association, 2008; Medicare data from USDHHS.
MEDICAID: A PRIMER
Bydesign,Medicaidexpandstocovermorepeopleduringeconomicdownturns.Because eligibilityforMedicaidistiedtohavinglowincome,andenrollmentcannotbelimitedor waitinglistskept,theprogramoperatesasasafetynet.Duringeconomicrecessionslikethe currentone,whenjoblosscausesworkersandtheirfamiliestolosehealthcoverageand income,morepeoplebecomeeligibleforMedicaidandtheprogramexpandstocovermany ofthem,offsettinglossesofprivatehealthinsuranceandmitigatingincreasesinthenumber ofuninsured. Itisestimatedthatforeveryonepercentagepointincreaseintheunemploymentrate, Medicaidenrollmentgrowsby1million.1Medicaidenrollmentgrowthhasbeenaccelerating ineachsixmonthperiodsincetherecessionbeganinDecember2007.Thelargestsixmonth MedicaidenrollmentincreaseonrecordoccurredfromDecember2008toJune2009,when 2.1millionadditionalindividualsobtainedMedicaidcoverage.BetweenJune2008andJune 2009,enrollmentrosebynearly3.3million,or7.5%. MedicaidisthemainsourceoflongtermcarecoverageandfinancingintheU.S.Over10 millionAmericans,includingabout6millionelderlyand4millionchildrenandworkingage adults,needlongtermservicesandsupports.2Medicaidcoversabout7ofevery10nursing homeresidentsandfinancesover40%ofnursinghomespendingandlongtermcarespending overall.3MorethanhalfofallMedicaidlongtermcarespendingisforinstitutionalcare,buta growingshare41%in2006,upfrom30%in2000and13%in1990isattributabletohome andcommunitybasedservices.4 Medicaidfundingsupportsthesafetynetinstitutionsthatprovidehealthcaretolowincomeand uninsuredpeople(Figure3).Medicaidprovides33%ofpublichospitalsnetrevenues.Medicaid paymentsprovideanevenlargershareofhealthcenterstotaloperatingrevenues(37%)andis theirlargestsourceofthirdpartypayment.5
Figure 3
Medicaid Financing of Safety-Net Providers

Public Hospital Net Revenues by Payer, 2008
Self-Pay Other 4% 3%
Health Center Revenues by Payer, 2008

Self-Pay Private 7% 7% Medicare 6%
Other Public 3%
Medicare 21% Medicaid 33% Commercial 26%

State/Local
Medicaid 37% Federal Grants 20%
Subsidies 13%
State/Local/ Other 20%
Total = $40 billion
Total = $10 $10.1 1 billion
SOURCE : Data for public hospitals from Americas Public Hospitals and Health Systems, 2008, National Association of Public Hospitals and Health Systems, February 2010. Health center data from 2008 Uniform Data System (UDS), Health Resources and Services Administration.
How is Medicaid structured?

Medicaid is nanced jointly by the federal government and the states. The federal government matches state spending on Medicaid. States are entitled to these federal matching dollars and there is no cap on funding. This nancing model supports the federal entitlement to coverage and allows federal funds to ow to states based on actual need. Through the matching arrangement, the federal government and the states share the cost of the program. The states administer Medicaid within broad federal guidelines and state programs vary widely. State agencies administer Medicaid subject to oversight by the Centers for Medicare and Medicaid Services (CMS) in the U.S. Department of Health and Human Services (HHS). State participation in Medicaid is voluntary but all states participate. Federal law outlines basic minimum requirements that all state Medicaid programs must meet. However, states have broad authority to dene eligibility, benets, provider payment, delivery systems, and other aspects of their programs. As a result, Medicaid operates as more than 50 distinct programs one in each state, the District of Columbia, and each of the Territories. Due to wide programmatic variation and demographic dierences across the country, the proportion of the population covered by Medicaid varies from state to state, ranging from 8% in New Hampshire and Nevada to 22% in the District of Columbia (Figure 4).
Figure 4
Percent of Residents Covered by Medicaid, by State, 2007-2008

NH WA MT OR ID WY NE NV UT CA CO KS OK AZ NM MO IA IL IN OH WV KY TN AR MS TX AK HI LA FL AL GA DE VA NC SC MD DC SD ND MN MN WI NY MI PA CT NJ MA RI VT ME
US Average = 14%
>15% (12 states including DC) 13-15% (12 states) 10 12% (20 states) 10-12% < 10% (7 states)
SOURCE: Urban Institute and Kaiser Commission on Medicaid and the Uninsured analysis of the March 2008 and 2009 ASEC Supplements to the CPS. Two-year pooled estimates for states and the US (2007-2008).
MEDICAID: A PRIMER
StatescanseekfederalwaiverstooperatetheirMedicaidprogramsoutsideoffederal guidelines.Section1115oftheSocialSecurityActgivestheHHSSecretaryauthoritytowaive statutoryandregulatoryprovisionsofhealthandwelfareprograms,includingMedicaid,for demonstrationpurposes.StatescanapplyforSection1115waiverstooperatetheirMedicaid programsoutsideregularfederalrules.SomestateshaveusedwaiverstoexpandMedicaid eligibilityandtoadoptnewmodelsofcoverageandhealthcaredeliveryforthelowincome population. Medicaidsstructureenablestheprogramtoadaptandevolve.Thecombinationofthe federalentitlementtoMedicaidforallindividualswhoqualify,broadstateflexibilityin programdesign,andguaranteedfederalmatchingfundshasenabledMedicaidtorespondto economicanddemographicchanges,andtoaddressemergentneedsforexample,by expandingduringeconomicdownturnsandprovidingacoveragesafetynetformanyaffected bytheHIV/AIDSpandemic.Inaddition,asamajorsourceofhealthcarefinancing,Medicaid hasleveragedimprovementsinhealthcare,includingnewapproachestocarecoordination andmanagement,aswellaswideradoptionofcommunitybasedalternativestoinstitutional longtermcare.
WHO IS COVERED BY MEDICAID?

By design, Medicaid covers low-income and high-need populations. Medicaid plays an especially large role in covering children and pregnant women. It also covers millions of low-income Medicare beneciaries and individuals with disabilities and chronic conditions. Currently, nearly all low-income children can qualify for Medicaid or the Childrens Health Insurance Program. But Medicaid eligibility for low-income parents is far more limited and varies widely by state, and federal law categorically excludes adults without dependent children. Under health reform, who is covered will change dramatically. The new law simplies and broadens Medicaid eligibility for the under-65 population by eliminating categorical criteria and establishing a national income eligibility oor at 133% of the poverty level. These reforms of Medicaid eligibility t Medicaid into the national health coverage framework structured by the new law, establishing the program as the coverage pathway for low-income people.
What is Medicaids coverage role?

Medicaid covers 45% of all poor Americans those with income below the federal poverty level (FPL), which was $22,025 for a family of four in 2008* (Figure 5). Medicaid also covers more than one-quarter of near-poor Americans, those between 100% and 200% FPL. Most of the low-income individuals Medicaid covers are in working families but lack access to jobbased health insurance or cannot aord the premiums. Most cannot obtain individual (nongroup) health insurance either, because they cannot aord it or because they are excluded based on their health status or conditions. Overall, Medicaid beneciaries are much poorer and in markedly worse health than low-income people with private insurance.
Figure 5
Health Insurance Coverage by Poverty Level Level, 2008

Employer/Other Private 100% 35% 29% 29% 45% 42% 0% 20%
<100% FPL 100-199% FPL 200-299% FPL 300-399% FPL 400%+ FPL
Medicaid/Other Public
Uninsured
5%
18% 12%
10%
7%
4%
71%
83%
92%
Note: The federal poverty level (FPL) was $22,025 for a family of four in 2008. Data may not total 100% due to rounding. SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute analysis of 2009 ASEC Supplement to the CPS.
* $22,025 for a family of four is the 2008 poverty threshold published by the U.S. Census Bureau. Depending on the context, this Primer also sometimes uses the poverty guidelines issued by the U.S. Department of Health and Human Services.
MEDICAID: A PRIMER
WhocanqualifyforMedicaid?
Undercurrentlaw,toqualifyforMedicaid,apersonmustmeetfinancialcriteriaandalso belongtooneofthegroupsthatarecategoricallyeligiblefortheprogram.Federallaw requiresstatestocovercertainmandatorygroupsinordertoreceiveanyfederalmatching funds.Themandatorygroupsarepregnantwomenandchildrenunderage6withfamily incomebelow133%FPL;childrenage6to18below100%FPL;parentsbelowstatesJuly1996 welfareeligibilitylevels(oftenbelow50%FPL);andmostelderlyandpersonswithdisabilities whoreceiveSupplementalSecurityIncome(SSI),aprogramforwhichincomeeligibility equatesto75%FPLforanindividual.Stateshavebroadflexibilitytodeterminetheirown methodsforcountingincomeandtheymayalsoimposeanassettest.Nearlyallstate Medicaidprogramshaveeliminatedtheassettestforchildren,butabouthalfrequireanasset testforparents;almosteverystateappliesanassettestindeterminingMedicaideligibilityfor theelderlyandpeoplewithdisabilities. Underthenewhealthreformlaw,nearlyeveryoneunderage65regardlessofcategory withincomebelowanationalfloorwillbeeligibleforMedicaid,makingMedicaidthe coveragepathwayformanymorelowincomeAmericans.Historically,nonelderlyadults withoutdependentchildren,nomatterhowpoortheyare,havebeencategoricallyexcluded fromMedicaidbyfederallawunlesstheyaredisabledorpregnant.Stateshavebeenableto receivefederalMedicaidfundstocovertheseadultsonlyiftheyobtainedafederalwaiver; alternatively,statescouldusestateonlydollars.Thenewhealthreformlawendsthe categoricalexclusionoftheseadultsasof2014,expandingMedicaideligibilitynationallyto reachadultsunderage65(bothparentsandthosewithoutdependentchildren)upto133% FPL;anenhancedfederalmatchrateappliesforadultsnewlyeligibleforMedicaidasaresult. HealthreformdidnotchangeMedicaideligibilityfortheelderlyandpeoplewithdisabilities. Stateshavetheoptiontocoverorphaseincoverageoftheneweligibilitygroupbeginning April1,2010,ratherthanwaitinguntil2014.States(includingthosethathavebeencovering childlessadultsinMedicaidwithstateonlydollars)canreceivefederalMedicaidmatching fundsforpeopleintheneweligibilitygroup.Statesregularfederalmatchrateappliesforthis groupuntil2014,whentheenhancedfederalmatchratetakeseffect.
MedicaideligibilityislimitedtoAmericancitizensandcertainlawfullyresidingimmigrants. OnlyAmericancitizensandspecificcategoriesoflawfullyresidingimmigrantscanqualifyfor Medicaid.ThePersonalResponsibilityandWorkOpportunityReconciliationAct,enactedin 1996,barredmostlawfullyresidingimmigrantsfromMedicaidduringtheirfirstfiveyearsin theU.S.,exceptforemergencytreatment.6Somestateshaveusedstateonlyfundstocover theselegalimmigrantsduringthefiveyearban.Recently,Congressgavestatestheoptionto receivefederalMedicaidmatchingfundsforlawfullyresidingimmigrantchildrenandpregnant womenduringtheirfirstfiveyearsintheU.S.7Atthiswriting,18statesincludingtheDistrict ofColumbiahadadoptedtheoptiontocoverimmigrantchildren,pregnantwomen,orboth, withoutthefiveyearwait.Thehealthreformlawdoesnotchangeanyoftherulesregarding immigrantseligibilityforMedicaid.
Documentationofcitizenshipandidentityisrequired.SinceJuly1,2006,mostU.S.citizens applyingforMedicaidcoverageforthefirsttimemust,underfederallaw,documenttheir citizenshipandidentitybysubmittingapassportoracombinationofabirthcertificateandan identitydocument.8(Previously,manystatesacceptedapplicantsselfdeclarationof citizenshipunderpenaltyofperjury.)Nearlyallelderlyindividualsandpeoplewithdisabilities areexemptfromthecitizenshipdocumentationrequirement,asarenewbornswhose deliverieswerepaidforbyMedicaid.AsofJanuary1,2010,stateshavetheoptiontosatisfy thedocumentationrequirementbyconductingadatamatchwiththeSocialSecurity Administrationsdatabase,usingsocialsecuritynumbers,toverifyU.S.citizenship.Almosthalf thestatesarenowusingortestingthisdatamatchoption. StateshavebroaddiscretiontoexpandMedicaideligibilitybeyondfederalminimum standardstocoveradditionaloptionalgroups.Optionaleligibilitygroupsinclude,among others:pregnantwomen,children,andparentswithincomeexceedingthemandatory thresholds;elderlyanddisabledindividualsupto100%FPL;workingdisabledindividualsupto 250%FPL;personsresidinginnursingfacilitieswithincomebelow300%oftheSSIstandard; individualswhowouldbeeligibleifinstitutionalized,butwhoarereceivingcareunderhome andcommunitybasedserviceswaivers;andthemedicallyneedy,individualswhocannot meetthefinancialcriteriabuthavehighhealthexpensesrelativetotheirincome,andwho belongtooneofthecategoricallyeligiblegroups.BetweenMedicaidexpansionsforchildren andcoverageundertheChildrensHealthInsuranceProgram(CHIP),moststatescoverall childrenbelow200%FPL.StateshavealsoexpandedMedicaidtoadultoptionalgroups,but muchlessextensively,andMedicaidadulteligibilityabovefederalminimumlevelsvaries widelyfromstatetostate.(Figure6)
Figure 6
Median Medicaid/CHIP Income Eligibility Thresholds, 2009

235% 185%
Minimum Medicaid Eligibility under Health Reform = 133%FPL
64%
75% 38% 0%
Children
Pregnant Women
Working Parents
Non-Working Childless Adults Parents
Elderly and Individuals with Disabilities
Note: Medicaid income eligibility for most elderly and individuals with disabilities is based on the income threshold of Supplemental Security Income (SSI). SOURCE: Based on a national survey conducted by the Center on Budget and Policy Priorities for Kaiser Commission on Medicaid and the Uninsured, 2009.
MEDICAID: A PRIMER
IndividualswhoqualifyforMedicaidhaveafederalentitlementtocoverage.Medicaidisan entitlementprogram.ThatmeansthatanypersonwhomeetshisorherstatesMedicaid eligibilitycriteriahasafederalrighttoMedicaidcoverageinthatstate;thestatecannotlimit enrollmentintheprogramorestablishawaitinglist.Theguaranteeofcoverageandthe obligationofstatesandthefederalgovernmenttofinanceitdistinguishMedicaidfromthe ChildrensHealthInsuranceProgram(CHIP)andotherblockgrantprograms,whichcanlimit enrollment.
Whoiscoveredcurrently?
Over46millionlowincomechildrenandparents,themajorityoftheminworkingfamilies,rely onMedicaid.MedicaidisthelargestsourceofhealthinsuranceforAmericanchildren.In2007, about29millionchildrenoveronequarterofallchildrenandmorethanhalfoflowincome childrenwereenrolledintheprogramatsomepointduringtheyear.9CHIPbuildsonMedicaid, coveringmorethan7millionchildreninfamilieswhoseincomesaretoohightoqualifyfor Medicaid.10Medicaidcoverscloseto15millionlowincome,nonelderlyadults,primarilyparents inworkingfamilies.MostchildrenandfamiliescoveredbyMedicaidwouldbeuninsuredwithout itastheylackaccesstoprivateinsurance. Medicaidcovers8.8millionnonelderlypeoplewithdisabilities,including4millionchildren. Medicaidprovideshealthandlongtermcarecoverageforpeoplewithdiversephysicaland mentaldisabilitiesandchronicillnesses.Often,theseindividualscannotobtaincoverageinthe privatemarketorthecoverageavailabletothemfallsshortoftheirhealthcareneeds.Medicaid enablespeoplewithdisabilitiestogainaccesstoafullerrangeoftheservicestheyneed,helping tomaximizetheirindependenceand,inthecaseofsomedisabledadults,supportingtheir participationintheworkforce.Medicaidcoversalargemajorityofallpoorchildrenwith disabilities.
Medicaidisakeysourceofcoverageforpregnantwomen.Moststateshaveexpandedcoverage ofpregnantwomenbeyondthefederalminimumincomeeligibilitylevelof133%FPL.Sixteen statescoverpregnantwomenupto185%FPLandanother24statesprovideeligibilityathigher incomelevels.Medicaidimprovesaccesstoprenatalcareandneonatalintensivecareforlow incomepregnantwomenandtheirbabies,helpingtoimprovematernalhealthandreduceinfant mortality,lowweightbirths,andavoidablebirthdefects.Medicaidfundsapproximatelyfourof everytenbirthsintheU.S.andisthelargestsourceofpublicfundingforfamilyplanning.11 Medicaidprovidesassistanceformorethan8millionlowincomeMedicarebeneficiaries.The federalMedicareprogramprovideshealthinsurance47millionAmericans,including39million seniorsand8millionnonelderlyindividualswithpermanentdisabilities.About1in6Medicare beneficiaries,basedontheirlowincome,arealsocoveredbyMedicaidandareknownasdual eligibles.DualeligiblesaremuchpoorerandinworsehealthcomparedwithotherMedicare enrollees.MedicaidassistsdualeligibleswithMedicarepremiumsandcostsharingandcovers importantservicesthatMedicarelimitsordoesnotcover,especiallylongtermcare.In2005,dual eligiblesaccountedfor18%ofMedicaidenrolleesbut46%ofallMedicaidspendingforservices. UntilaprescriptiondrugbenefitwasaddedtoMedicarein2006,Medicaidcoveredprescription drugsfordualeligiblesandpaidnearly40%oftheirtotalhealthcarecosts.
10
WhoisleftoutofMedicaid?
Medicaidisviewedfavorablybothbythegeneralpublicandbythosewithexperienceinthe program.AlargemajorityofAmericansviewMedicaidasaveryimportantprogramand wouldbewillingtoenrollintheprogramiftheyneededhealthcareandqualified.Overhalfof adultshavereceivedMedicaidbenefitsthemselvesorhaveafriendorfamilymemberwho hasbenefitedfromMedicaid.12Findingsfromsurveysandfocusgroupstudiesshowahigh degreeofsatisfactionwithMedicaidamongfamilieswithprogramexperience.13Theyvalue boththebreadthofMedicaidsbenefitsandtheaffordabilityofthecoverage.
NotalllowincomeAmericanscancurrentlyqualifyforMedicaid.AlthoughMedicaidcovers millionsofpoorandnearpoorAmericans,incomeandcategoricalrestrictionscurrently excludemillionsoflowincomepeoplemostlyadults.Duetotheserestrictions,whichthe newhealthreformlawredresses,lowincomeadultstodayaremuchmorelikelythanlow incomechildrentobeuninsured,asoutlinedmorefullybelow. Parents.WhileallpoorchildrenareeligibleforMedicaid,manyoftheirparentsarenot becausemoststateshavemuchstricterincomeeligibilityforparentsthanforchildren.Asof December2009,34statessetincomeeligibilityforworkingparentsatalevelbelow100%FPL, andhalfofthosestatessettheirlevelsbelow50%FPL.In29states,aparentinafamilyof threeworkingfulltimeatthestatesminimumwagecouldnotqualifyforMedicaid.14Because theireligibilityforMedicaidissomuchmorelimitedthanchildrens,parentswhoarebelowor nearthepovertylevelaremorethantwiceaslikelytobeuninsuredaschildreninthesame incomestratum(Figure7).HealthreformextendsMedicaideligibility,nationally,tonearly everyoneunderage65withincomeupto133%FPL,closingthecoveragegapthatmanylow incomeparentscurrentlyface.
Figure 7
Health Insurance Coverage of Low-Income Children and Adults, 2008

Employer/Other Private
(<100% Poverty)
Medicaid/Other Public
Uninsured
Poor
16% 38%
66% 47%
18% 15%
Children
(100-199% Poverty)
Near-Poor
Poor
17% 48%
41% 18%
42% 33%
Parents
Near-Poor
Adults without Children
Poor Near-Poor
24% 42%
29% 20%
47% 38%
Note: Data may not total 100% due to rounding. SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute analysis of 2009 ASEC Supplement to the CPS.
MEDICAID: A PRIMER
11
Adultswithoutdependentchildren.Untilhealthreformwasenacted,federallawcategorically excludedmostadultswithoutdependentchildrenfromMedicaid.Stateswereprecludedfrom receivingfederalMedicaidmatchingfundsforsuchadultsnomatterhowpoorunlessthey werepregnantorseverelydisabled.Abouthalfthestateshavefederalwaiversand/orusestate onlyfundstoprovidesomekindofcoveragetochildlessadults.Onlyfiveofthesestatesprovide MedicaidorMedicaidlikebenefits;mostprovidemorelimitedbenefitsorcoverchildlessadults throughworkplacecoverageundercertainconditions.15In2008,over40%oflowincomeadults withoutchildrenwereuninsured,andtheseadultsaccountedformorethanonethirdofthe46 millionnonelderlyAmericanswholackedinsurance.16ThenationalMedicaidexpansionunder healthreformdoesawaywiththeexclusionofchildlessadultsandcoversthosewithincomeupto 133%FPL.Asmentionedpreviously,stateshavetheoptiontoimplementthisexpansion immediately,ratherthanwaitinguntil2014whentheexpansionisrequired. Immigrants.Inmoststates,lawfullyresidingimmigrantsareineligibleforMedicaidfortheirfirst fiveyearsintheU.S.Whilestatescanopttocoverlegalimmigrantpregnantwomenand childrenwithoutawait,mosthavenot,andotherlegalimmigrantsremainbarredfrom Medicaidfortheirfirstfiveyearshere.Federallawprohibitsundocumentedimmigrantsfrom enrollinginMedicaid.Medicaidpaymentsmaybemadeforundocumentedimmigrantsonlyfor emergencyservicesandonlyiftheywouldotherwisequalifyforMedicaid.Theserulesdonot changeunderhealthreform. Statetostatevariationineligibilityleadstomarkedinequitiesinlowincomeadultsaccessto Medicaidcoverage.BecauseofstatevariationinMedicaidincomeeligibilitylevelsandother statepolicychoices,adultsatagivenincomelevelevenbelowthepovertylevelmaybe eligibleforMedicaidinonestatebutineligibleinanother.In2009,eligibilitythresholdsfor workingparentsrangedfrom17%FPLinArkansasto215%FPLinMinnesota(Figure8).Twenty fivestatesincludingtheDistrictofColumbiahadfederalwaiversorusedstateonlyfundsto provideMedicaidcoveragetochildlessadults.17Duetofederalminimumstandards,Medicaid incomeeligibilitylevelsforpregnantwomenandchildrenaresomewhatuniform,butotherlow incomeadultsaccesstoMedicaidcoveragevarieswidelyacrossthestates.
Figure 8
Medicaid Eligibility for Working Parents by Income Income, December 2009

NH WA MT OR ID WY IA NV UT CA CO NE IL IL KS OK AZ NM TX AK MO IN KY NC TN AR MS LA FL HI AL GA SC OH WV VA SD ND MN WI MI PA DE MD DC NY CT NJ MA RI VT ME
< 50% FPL (17 states) 50% - 99% FPL (17 states) 100% FPL or Greater ( (17 states, including g DC) ) Note: The federal poverty line (FPL) for a family of three in 2009 was $18,310 per year. SOURCE: Based on a national survey conducted by Kaiser Commission on Medicaid and the Uninsured with the Center on Budget and Policy Priorities, 2009.
12
ManypeoplewhoareeligibleforMedicaidarenotenrolled.ParticipationinMedicaidis highcomparedwithothervoluntaryprograms.Yetmanywho couldgaincoverageunder theprogramarenotenrolled.Over70%ofuninsuredchildrenarepotentiallyeligiblefor MedicaidorCHIPbutnotenrolled.Somelowincomefamilies arenotawareofthe programsordonotbelievetheirchildrenqualify.Inaddition,althoughimportant improvementshavebeenmadeoverthelastdecade,mostlyforchildren,burdensome enrollmentandrenewalrequirements stillposemajorobstaclesto participation. Responding toevidencethatcitizenshipdocumentationrequirements haveimposeda further burdenonU.S.citizenswho areeligibleforMedicaidandimpededtheir participation,Congressenactedchangestoeasetheimpact. 18 StatesthatmeetperformancegoalsrelatedtoenrollingMedicaideligiblechildrencan qualifyforfederalbonuspayments.TheChildrensHealthInsuranceProgramReauthorization Act(CHIPRA),enactedinFebruary2009,providedforfederalperformancebonusestobepaid tostatesthatbothimplementanarrayofpoliciestoencourageenrollmentandretentionof childreninMedicaidandCHIPandachievechildenrollmentinMedicaidthatexceedstargets specifiedinthelaw.Themorechildrenastateenrollsabovethetarget,thelargerthefederal bonuspaymenttothestate.Theintentofthebonusesistopromoteandrewardincreased enrollmentofchildrenwhoareeligibleforMedicaidbutuninsured.InDecember2009,HHS awardedninestates$72.6millioninperformancebonuses. ChurninginMedicaidinterruptscoverageandcareandcontributestothenumberof Americanswithoutinsurance.Documentationandotheradministrativerequirementscause manyeligiblechildrenandfamiliestolosetheirMedicaidcoverageatrenewaltime.This churningpeoplecyclingonandofftheprogramdisruptscoverageandcareandleadsto uninsuredspells.Manystates,whenfiscallystrong,havesteppeduptheirMedicaidoutreach, simplifiedenrollmentandrenewal,andtakenotheractionstopromoteparticipation. However,whenfacedwithdifficultbudgetpressures,stateshaveoftenreducedtheirefforts orevenreinstatedbarriersthatdampenparticipationinanattempttocontrolcosts. Forhealthreformtoachieveitscoveragegoals,effectiveMedicaidoutreachandeasy enrollmentandrenewalprocedureswillbeneeded.Thepotentialofhealthreformtocover millionsoflowincome,uninsuredindividualsandfamiliesiscontingentonimproving participationinMedicaid.Particulareffortswillbeneededtoreachchildlessadults,whoare newtoMedicaid,tointroducetheprogramtothemandmotivatethemtoparticipate. ResearchshowsthateasyproceduresforenrollinginandrenewingMedicaidcoverageare alsonecessarytoconverteligibilitytoparticipation.
CanMedicaidcovermoreoftheuninsured?
MEDICAID: A PRIMER
13
WHAT SERVICES DOES MEDICAID COVER?

Medicaid covers a broad array of health and long-term care services, including many services not typically covered by private insurance. Cost-sharing is tightly restricted to minimize nancial barriers to access for the low-income people Medicaid serves. The benet package for children is comprehensive. Federal law gives states more latitude in dening the benet package for adults. Under health reform, individuals newly eligible for Medicaid generally will receive benchmark or benchmark-equivalent benets, which must include at least the essential health benets required of coverage in the new exchanges. The health reform law oers nancial incentives to states to increase access to preventive care in Medicaid and to provide health home services to better coordinate care for people with chronic conditions. The law also increases states opportunities to expand access to home and community-based long-term services and gives states nancial incentives to further shift their Medicaid long-term services to non-institutional settings. A new Medicaid and CHIP Payment and Access Commission (MACPAC) is charged with assessing a broad set of access issues.
What does the Medicaid benet package include?

Because Medicaid enrollees have diverse and often extensive needs, Medicaid benets include a broad range of health and long-term care services. Medicaid covers parents and children, pregnant women, people with physical and mental disabilities and chronic diseases of all kinds, and seniors. To address the wide-ranging health needs of its diverse enrollees and their limited ability to aord care out-of-pocket, Medicaid benets include the health services typically covered by private insurance, but also many additional services, such as dental and vision care, transportation and translation services, and long-term care services and supports. Some covered benets, such as services provided by federally qualied health centers, reect the special role that certain institutions and other providers play in furnishing care to the low-income population. States use numerous tools to manage utilization, such as prior authorization and case management. State Medicaid programs must cover mandatory services specied in federal law in order to receive any federal matching funds. Most Medicaid beneciaries are entitled to receive the mandatory services listed below. Medicaid services are covered subject to medical necessity, as determined by the state Medicaid program or a managed care plan that is under contract to the state. Physicians services Hospital services (inpatient and outpatient) Laboratory and x-ray services Early and periodic screening, diagnostic, and treatment (EPSDT) services for individuals under 21 Federally-qualied health center and rural health clinic services Family planning services and supplies Pediatric and family nurse practitioner services Nurse midwife services Nursing facility services for individuals 21 and older Home health care for persons eligible for nursing facility services Transportation services
14
Statesarealsopermittedtocovermanyimportantservicesthatfederallawdesignatesas optional.Manyoftheseoptionalservicesareparticularlyvitalforpersonswithchronic conditionsordisabilitiesandtheelderly.Prescriptiondrugs(whichallstatescover),personal careservices,andrehabilitationservicesarejustthreeexamples.Theinclusionofmanyof theseservicesinstateMedicaidprogramsdespitetheiroptionaldesignationinfederal statuteisevidencethat,asapracticalmatter,theyareoftenconsideredessential. Nonetheless,whenstatesareunderseverebudgetstrains,suchasinthecurrenteconomic recession,optionalbenefitslikedentalservicesforadultsareparticularlyvulnerabletocuts. ClosetoonethirdofMedicaidspendingisestimatedtobeattributabletooptionalservices.19 Commonlyofferedoptionalservicesinclude: Prescriptiondrugs Clinicservices Carefurnishedbyotherlicensed practitioners Dentalservicesanddentures Prostheticdevices,eyeglasses,and durablemedicalequipment Rehabilitationandothertherapies Casemanagement Nursingfacilityservicesfor individualsunderage21 Intermediatecarefacilityforindividuals withmentalretardation(ICF/MR) services Homeandcommunitybasedservices (bywaiver) Inpatientpsychiatricservicesfor individualsunderage21 Respiratorycareservicesforventilator dependentindividuals Personalcareservices Hospiceservices
HowareMedicaidbenefitsdifferentfromtypicalprivatehealthbenefits?
ThepediatricMedicaidbenefit,knownasEarlyandPeriodicScreening,Diagnostic,and Treatment(EPSDT),encompassesacomprehensivearrayofhealthservicesforchildren. EPSDTisamandatorybenefitthatentitlesMedicaidenrolleesunderage21toallservices authorizedbyfederalMedicaidlaw,includingservicesconsideredoptionalforother populationsandoftennotcoveredbyprivateinsurance.Inadditiontoscreening,preventive, andearlyinterventionservices,EPSDTcoversdiagnosticservicesandtreatmentnecessaryto correctoramelioratechildrensacuteandchronicphysicalandmentalhealthconditions. Servicesthatareparticularlyimportantforchildrenwithdisabilities,suchasphysicaltherapy, personalcareservices,anddurablemedicalequipment,whichareoftenlimitedorexcluded underprivateinsurance,arecoveredasneededunderEPSDT. TheconceptofmedicalnecessityinEPSDTisexpansive,consistentwithanemphasisin Medicaidonpromotingchildrenshealthydevelopmentandmaximizingtheirhealthand function.Further,thelimitsthatstatesmayimposeonservicesforadultscannotbeappliedto children.Inprincipleatleast,EPSDTrepresentsauniformandcomprehensivefederalbenefit packageforlowincomechildren.
MEDICAID: A PRIMER
15
Healthcarereformcreatesnewopportunitiesandincentivesforstatestobalancetheir Medicaidlongtermcaredeliverysystemsbyexpandingaccesstohomeandcommunitybased services.ThenewlawexpandsstatescurrentMedicaidoptionstoprovidehomeand communitybasedbenefits,bothenlargingthescopeofservicescoveredandbroadening financialandfunctionaleligibilitycriteriatoexpandaccesstothesebenefits.Thelawalso providesincreasedfinancialincentivesforstatesthatfurthershifttheirMedicaidlongterm servicestononinstitutionalsettings. SeparatefromMedicaid,thehealthreformlawestablishesanational,voluntaryinsurance programforpurchasingcommunitylivingassistanceservicesandsupports(CLASS).The programwillbefinancedthroughpayrolldeductions;allworkingageadultswillbeenrolled automaticallyunlesstheyoptout.Subjecttoafiveyearvestingperiod,CLASSwillprovide cashbenefitstoindividualswithfunctionallimitationsfornonmedicalservicesandsupports necessarytomaintaincommunityresidence. ThebroadarrayofservicesMedicaidcoversisparticularlyimportantforthecareoflow incomepeoplewithchronicillnessesanddisabilities,whoincludepretermbabies, individualswithmentalillness,peoplelivingwithHIV/AIDS,andmanywithAlzheimers disease.AnotherdistinctivepurposeofMedicaidsistoprovideaccesstocareforpeoplewith disabilitiesandcomplexconditions,whooftenhaveextensiveneedsforbothacutecareand longtermservices.Medicaidscoverageofservicesneededespeciallybysuchindividuals, suchascasemanagement,dentalcare,mentalandbehavioralhealthservices,rehabilitation services,personalcare,andnursingfacilityandhomehealthcare,isadefiningaspectofthe program.MillionsofAmericanswithdiversedisabilitiesandneedsdependonMedicaid. Medicaidisthesinglelargestpublicpayerofmentalhealthcareinoursystem.20Itisalsothe nationslargestsourceofcoverageforpeoplewithHIV,coveringabout40%ofthose estimatedtobereceivingcarefordisease.21
Inadditiontoacutehealthservices,Medicaidcoversawiderangeoflongtermservicesand supportsthatMedicareandmostprivateinsuranceexcludeornarrowlylimit.Medicaidlong termcareservicesincludecomprehensiveservicesprovidedinnursinghomesand intermediatecarefacilitiesforthementallyretarded(ICFMR),aswellasawiderangeof servicesandsupportsneededbypeople,youngandold,toliveindependentlyinthe communityhomehealthcare,personalcare,medicalequipment,rehabilitativetherapy, adultdaycare,casemanagement,respiteforcaregivers,andotherservices.Because Medicareandprivateinsurersprovidelittlecoverageoflongtermcare,Medicaidisbyfarthe largestsourceofassistanceforthesecostlyservices.DrivenpartlybytheSupremeCourts Olmsteaddecisionconcerningthecivilrightsofpeoplewithdisabilitiesinpublicprograms, bothfederalandstateMedicaidpolicyhaveincreasinglysupportedhomeandcommunity basedalternativestoinstitutionallongtermcare.
16
HowdostatesdefinetheirMedicaidbenefitpackages?
Ingeneral,statesmustprovidethesameMedicaidbenefitpackagetoallcategorically eligibleindividualsintheirstate.Generally,federalMedicaidlawrequiresstatestocoverthe samebenefitsforallcategoricallyeligibleindividuals(whethermandatoryoroptional) statewide,andtheservicesmustbecomparable,regardlessofindividualsdiagnosesor conditions.Stateshaveflexibilitytodefinetheamount,duration,andscopeoftheMedicaid servicestheycover,butfederallawrequiresthatcoverageofeachmandatoryandoptional servicebesufficientinamount,duration,andscopetoreasonablyachieveitspurpose. Statescanoffermorelimitedbenchmarkbenefitstosomegroups.IntheDeficitReduction Actof2005,Congresschangedthelawtopermitstatestoprovidesomegroupswithmore limitedbenefitsmodeledonspecifiedbenchmarkplans,andtoofferdifferentbenefitsto differentenrollees.22Statesprovidingbenchmarkorbenchmarkequivalentcoveragemust provideEPSDTwraparoundcoverageforchildren.Mostgroupsareexemptfrombenchmark coverage,includingmandatorypregnantwomenandparents,individualswithsevere disabilities,individualswhoaremedicallyfrailorhavespecialneeds,dualeligibles,peoplewith longtermcareneeds,andspecifiedothergroups.Fewstateshaveusedthenewauthority.Four stateshaveprovideddifferenttiersofbenefitpackagesfordifferentgroups,twoofthem limitingorgrantingaccesstocertainbenefitsbasedonenrolleeshealthbehaviors.*Fourother stateshaveusedtheauthoritytoenhanceMedicaidcoverageforspecifiedpopulations. Medicaidbenefitsvaryconsiderablyacrossthestates.Medicaidbenefitpackagesvarywidely fromstatetostate.Statescoverdifferentoptionalservices.Theyalsodefineamount, duration,andscopedifferently.Exceptwithregardtochildren,statescanplacelimitson coveredservicesforexample,bycappingthenumberofphysicianvisitsorprescription drugsthatareallowed.Finally,whilefederallawincludesamedicallynecessarystandardto ensureappropriateuseofMedicaidservices,statesdefineandapplythemedicalnecessity standardsomewhatdifferently. StatescanimposepremiumsandcostsharinginMedicaidsubjecttosomefederal limitations.In2005,Congressloosenedlongstandingrulesthatsharplyrestrictedstatesuse ofpremiumsandcostsharinginMedicaid.Premiumsremainprohibitedformostchildrenand adultsbelow150%FPL.However,formostchildrenandadultswithincomeabove150%FPL, premiumsaswellascostsharingupto20%ofthecostoftheservicearenowpermitted. Formostservices,costsharingislargelyprohibitedformandatorychildrenanditislimitedto nominallevelsforadultsbelow100%FPL.Forotherchildrenandadultsupto150%FPL,cost sharingislimitedto10%ofthecostoftheservice.Totalcostsharingandpremiumscannot exceed5%offamilyincomeforanyfamily,andcostsharingforpreventivecareisprohibited forchildrenatallincomelevels.Finally,the2005rulesalsogivestatestheoptiontoterminate Medicaidcoverageifpremiumsarenotpaidand,exceptformandatorychildrenandadults under100%FPL,togranthealthcareproviderstherighttodenycareifMedicaidpatientsdo notpaytheircostsharingcharges.23
Recentfederalregulationsfurtherdelineatethescopeofstateflexibilityregardingbenchmarkpackages.Tocomply withtheserules,oneofthestatesthatrestrictedbenefits(WV)hasdiscontinueddoingso;otherstatesmayalsohave toreexaminetheirbenchmarkpoliciesinlightofthenewrules.
MEDICAID: A PRIMER
17
HowdoMedicaidenrolleesreceiveservices?
Underhealthreform,adultsnewlyeligibleforMedicaidwillreceiveabenchmarkbenefitpackage,orbroader benefitsifastateelects.BeginningJanuary1,2014,newlyeligibleMedicaidadults,unlesstheybelongtooneof theexemptgroupsmentionedabove,willreceivebenchmarkorbenchmarkequivalentcoverage.Thereform lawestablishesanewminimumstandardforbenchmarkbenefits,requiringthattheyincludeatleastthe essentialhealthbenefitsrequiredofhealthplansinthenewinsuranceexchanges.Thesebenchmarkbenefits maybemorelimitedthanstatescurrentMedicaidbenefits,butstatesretaintheflexibilitytoprovidemore comprehensiveorfullMedicaidbenefitstoneweligibles.
AlthoughMedicaidispubliclyfinanced,theprogrampurchaseshealthservicesprimarilyintheprivatesector. Medicaidisapubliclyfinancedhealthcoverageprogram,butitisnotagovernmentruncaredeliverysystem.On thecontrary,theMedicaidprogramgenerallyprocuresservicesforitsbeneficiariesintheprivatehealthcare market.StatespayhealthcareprovidersforservicesfurnishedtotheirMedicaidbeneficiaries.Medicaid programspurchaseservicesonafeeforservicebasis,orbypayingpremiumstomanagedcareplansunder contracts,orbyusingacombinationofbothapproaches. ManagedcareisthemostcommonhealthcaredeliverysysteminMedicaid.In2008,about70%ofMedicaid enrolleesreceivedsomeoralloftheirservicesthroughmanagedcarearrangements(Figure9).Thetwomain modelsofmanagedcareinMedicaidaremanagedcareorganizations(MCO)andprimarycarecase management(PCCM).MCOsarepaidonacapitationbasisandassumethefinancialriskforcomprehensive Medicaidservicesoradefinedsetofservices(e.g.,ambulatorycare,dentalservices).InPCCM,theprimarycare providerreceivesasmallfeeperpersonpermonthtoprovidebasiccareandcoordinatespecialistcareand otherneededservices,whichareusuallypaidfeeforservice. HealthychildrenandfamiliesmakeupthelionsshareofMedicaidmanagedcareenrollees,butmanystatesare nowenrollingmorecomplexpopulations,includingchildrenandadultswithdisabilitiesandchronicillnessesand dualeligibles,inmanagedcarearrangements.Severalstatesareapplyingmanagedcareprinciplestolongterm care;newinitiativesincludeprojectsthatintegrateacuteandlongtermcarewithinMCOdeliverysystems.24
Figure 9
Medicaid Managed Care Penetration Rates y State, , 2008 by

VT WA MT OR ID WY IA NV UT CA CO NE
IL
NH ME
ND MN SD WI MI PA IN KY NC TN OK SC MS TX AL GA OH WV VA NJ DE MD DC NY CT
MA RI
KS
MO
AZ
NM
AR
AK
LA FL
HI
U.S. Average = 70%
0-50% (5 states) 51-70% (20 states including DC) 71-80% (9 states) 81-100% (17 ( states) )
Note: Unduplicated count. Includes managed care enrollees receiving comprehensive and limited benets. SOURCE: Medicaid Managed Care Enrollment as of December 31, 2008. Centers for Medicare and Medicaid Services.
18
Statesareusingavarietyofapproachestobalancetheirlongtermcaredeliverysystemsinfavorof communitysettings.Asthedemandforlongtermservicesinthecommunityisgrowing,effortstomake Medicaidbenefitsmoreflexibleandallowconsumerinvolvementindeterminingandmanagingservicesare expandingacrossthestates.Manystatesallowsomeformofconsumerdirectionofpersonalassistanceservices, givingtheMedicaidbeneficiarymorecontroloverhiring,scheduling,andpayingpersonalcareattendants. Underhealthreform,stateshaveincreasedopportunitiestoexpandaccesstohomeandcommunitybased services,andthelawextendsanexistingdemonstrationprogramthatprovidesstateswithenhancedfederal matchingfundsforeachMedicaidbeneficiarytheytransitionfromaninstitutiontothecommunity. StateshavebuiltdeliverysystemsdesignedtoservetheMedicaidpopulation.Whethertheyusemanaged care,feeforservice,oracombinationofstrategies,manystateshavedevelopedstrongcaredeliverynetworks thatrelyheavilyoncommunityhealthcentersandothersafetynetproviderslocatedinthecommunitieswhere lowincomepeoplereside.Theseprovidersareoftenuniquelypreparedandcompetenttoaddressdiverselow incomepopulationsneedsforservicesandsupports. NewmodelsofcareareemerginginMedicaid.ManystatesarebuildingintotheirPCCMprogramsfeaturesto enhancethecoordinationandmanagementofcareforenrolleeswithchronicillnessesanddisabilities.Some diseaseandcaremanagementprogramsaretargetedtopeoplewithspecificconditions,andotherstarget individualswithmultipleconditions.Anumberofstatesarestructuringpaymentstrategiesandincentivesto supportthepatientcenteredmedicalhomemodelforMedicaidbeneficiaries.Thismodelemphasizes continuousandcomprehensivecare,careteamsdirectedbyapersonalphysician,andcareforallstagesoflife.It alsoseekstoenhanceaccessthroughexpandedhoursandotherimprovements.Informationtechnologyand qualityimprovementactivitiespromotequalityandsafety.
HowisaccesstocareinMedicaid?
Medicaidincreasesaccesstocareandlimitsoutofpocketburdensforlowincomepeople.Childrenandadults enrolledinMedicaidhavemuchbetteraccesstocarethantheuninsured,andpregnantwomencoveredby Medicaidobtainmoretimelyandadequateprenatalcarethantheirlowincome,uninsuredcounterparts.2526 Onkeymeasuresofaccesstopreventiveandprimarycare,Medicaidenrolleesfareaswellaspeoplewith privatehealthinsurance(Figure10).272829Inaddition,Medicaidsstrictlimitsoncostsharinghelptoensure that,forthelowincomeandhighneedpopulationtheprogramserves,costisnotanobstacletoobtaining care.30ResearchshowsthatMedicaidbeneficiariesaresubstantiallylesslikelytofacehighfinancialburdensfor healthcarethanlowincomepeoplewithprivateinsurance.31
Figure 10
Access to Care, b Insurance Ins rance Status Stat s by

Private Percent Reporting:
98% 97% 80% 83% 75% 80% 84% 87% 66% 46% 74% 60% 94% 91%
Medicaid
Uninsured
39%
U Usual lS Source of Care
Check Ch k up in i Past 2 Years
Pap P T Test i in Past 3 Years
U Usual lS Source of Care
Abl Able to S See S Specialist i li if Needed
Low-Income Adults
Low-Income Women
Low-Income Children
Note: Data are not adjusted for health needs and other covariates. SOURCE: Data on low-income adults and women from Kaiser Commission on Medicaid and the Uninsured analysis of 2007 MEPS. Data on low-income children from Kaiser Family Foundation 2007 Survey of Childrens Health Coverage.
MEDICAID: A PRIMER
19
SystemwideproblemswithaccesstocareareamplifiedinMedicaid.Shortagesand inadequaciesinthedistributionofcertainprovidersandspecialistshavecontributedtoaccess problemsintheprivateandpublicsectorsalike,butlowproviderpaymentandparticipation ratescompoundtheseproblemsinMedicaid(Figure11).Gapsinaccesstospecialistand dentalcareinMedicaidareamajorconcern.Inprovidersurveysandotherresearch,low providerpaymentandadministrativeburdenconsistentlyemergeasleadingbarriersto provideracceptanceofMedicaid.32Also,providersoftendonotlocateinlowincome neighborhoods,creatingtime,distance,andcostbarrierstoaccessforpeoplelivinginthese communities.

Figure 11
Medicaid-To-Medicare Provider Fee Ratios for All Services

NH WA MT OR ID WY IA NV UT CA CO NE IL KS OK AZ NM TX AK HI MO IN KY NC TN AR MS LA FL AL GA SC OH WV VA SD ND MN WI MI PA DE MD DC NY CT NJ MA RI VT ME
< 70% (11 states including DC) 70-84% (7 states) 85-99% (21 states) 100%+ (11 states)
U S Average = 72% of Medicare fees U.S.
Note: Tennessee does not have a fee-for-service component in its Medicaid program SOURCE: Zuckerman, Williams, and Stockley, Trends in Medicaid Physician Fees, 2003-2008, Health Aairs, April 28, 2009.
Providerparticipationandsystemsofcareaffectaccess.Anumberofstateshaveachieved gainsinproviderparticipationinMedicaidfollowingincreasesinproviderpaymentand increasedprovideroutreachandsupport.33MCOshavethepotentialtostructureanddelivera networkofproviderstoMedicaidbeneficiarieswho,ontheirowninafeeforservice environment,mighthavedifficultyidentifyingproviderswillingtoservethem.Atthesame time,accessinmanagedcarearrangementsdependsonprovidernetworksthatareadequate tomeettheneedsofMedicaidenrolleesandmechanismsthatconnectenrolleeswithtimely andappropriatecare. TohelpboostaccesstoprimarycareinMedicaid,thehealthreformlawrequiresstatestopay theMedicarepaymentrateforprimarycareservicesfurnishedbyprimarycarephysiciansin 2013and2014andprovidesfullfederalfundingforthisincrease.Thelawalsofundedthe recentlyestablishedMedicaidandCHIPPaymentandAccessCommission(MACPAC),whichis chargedwithmonitoringaccessinthetwoprograms,identifyinggaps,andmaking recommendationsconcerningpaymentandaccessissues.
20
HowdoesMedicaidmonitorandpromotequality?
StatesuseavarietyofdataandpaymentstrategiestoimprovequalityinMedicaid. Increasingly,statesareusingstandardizeddatatobenchmarkandimprovethequalityofcare providedbymanagedcareprogramsandothermedicalproviders.MoststatesrequireMCOs servingMedicaidenrolleestoprovidedataonspecifiedutilizationandperformancemeasures (fromtheHealthcareEffectivenessDataandInformationSet(HEDIS)),andmostalsousethe patientsatisfactionsurveys(ConsumerAssessmentofHealthcareProvidersandSystems (CAHPS))inMCOsasaqualitygauge;asmallernumberofstatesdosoinPCCMandfeefor service.Moreandmorestatesarepubliclyreportingthequalitydatatheycollect,bothtohelp beneficiarieschooseplansbasedonqualityconsiderationsandtodriveimprovementsin providerperformance.AgrowingnumberofstatesrequireorrewardMCOsthatare accreditedbyarecognizedstandardsettingorganization.Finally,payforperformance(P4P) systemsinmoststatesfinanciallyrewardhighperformancebyMCOsand/orphysicians, hospitals,nursinghomes,andotherproviders.34 Statesareusinghealthinformationtechnology(HIT)inavarietyofwaystoimprove qualityandsafetyinMedicaid.Medicaid programsinmoststatesareparticipatingin electronicprescribingandelectronichealthrecord(EHR)orelectronicmedicalrecord (EMR)initiatives topromotebettercoordination ofcare.Somestates areusingMedicaid claimsdata todesignevidencebasedrecommendations forcare;somearefacilitating datasharingamongagenciesandprovidersthatcareforchildren. 35HHSisdevelopinga coresetofchildrenshealthcarequalitymeasuresforchildrenenrolledinMedicaidor CHIPthatwillbeusefulinstateeffortsto evaluatethemeaningfuluseofHIT,a criterionforqualifyingfornewHITpaymentincentivesto providers(describedbelow). SubstantialnewfederalinvestmentsarelikelytofosterincreasedHITinitiativesinMedicaid. ARRAprovided$21.6billioninMedicaidfundingtoencouragephysicians,hospitals,andother healthcareproviderstoadoptandmeaningfullyusecertifiedEHRs.Illustrationsof meaningfuluseincludeuseforelectronicprescribing,electronicexchangeofhealth informationtoimprovequalityofcare,andreportingonclinicalqualitymeasures.Fullfederal fundingisinitiallyavailableforMedicaidincentivepaymentstoeligibleproviderstohelp offsetthecostsofpurchasing,implementing,operating,maintaining,andusingthe technology,training,andothercosts.Generally,toqualifyforincentivepayments,providers mustserveaminimumlevelofMedicaidandotherlowincomepatients.ARRAalsoprovides 90%federalfundingforstatestoadministertheEHRincentives,includingactionsto encourageadoptionofEHRandtrackmeaningfuluse.TheHITinvestmentsareestimatedto generate$12billioninsavingsattributabletoimprovedquality,carecoordination,and reductionsinmedicalerrorsandduplicativecare.ComplementingthefundsforHITincentive paymentsaretwocompetitivegrantprogramsforstates,onetoenablestatestomakeloans toprovidersfortechnologypurchasingandtraining,andanotherforstatestofacilitateand expandelectronicexchangeofhealthinformationamongorganizations.36
MEDICAID: A PRIMER
21
HOW MUCH DOES MEDICAID COST?

In 2008, Medicaid spending totaled about $339 billion. Spending is distributed across a broad array of health and long-term care services. Medicaid spending is high because of the extensive health needs of many of its beneciaries. The top 5% percent of spenders in Medicaid account for nearly 60% of total spending. Also, close to half of Medicaid spending is attributable to low-income Medicare beneciaries who also qualify for Medicaid. Total Medicaid spending will rise under health reform as millions of people become eligible for the program. The Congressional Budget Oce projects that the expansion will cost states $20 billion over the next decade, an increase of 1.25 percent over what they would otherwise have spent; the federal government will nance 96% of the cost of the coverage expansion over the ten years.
What does Medicaid cost currently?

In 2008, total federal and state Medicaid spending on services was nearly $339 billion (Figure 12). Over 60% of spending was attributable to acute care, including payments to managed care plans. More than a third (34%) of spending went toward long-term care. Medicaid administrative costs were 5% (not shown).
Figure 12
Medicaid Expenditures by Service, 2008

Home Health and Personal Care 14 14.1% 1% Mental Health 1.4% DSH Payments 5.2% Inpatient 14.0%
Physician/ Lab/ X-ray 3.7% Outpatient/Clinic 6.8% Drugs 4.5% Other Acute 8.3% Payments to MCOs 20.2%
Long-Term Care 33.9%
ICF/MR 3.7% Nursing Facilities 14.7%
Acute Care 60.9%
Payments to Medicare 3.5%
Total = $ $338.8 billion

NOTE: Total may not add to 100% due to rounding. Excludes administrative spending, adjustments and payments to the territories. SOURCE: Urban Institute estimates based on data from CMS (Form 64), prepared for the Kaiser Commission on Medicaid and the Uninsured.
Medicaid makes special payments to hospitals that serve a disproportionate share of lowincome and uninsured patients. About 5% of Medicaid spending is attributable to supplemental payments to hospitals that serve a disproportionate share of low-income and uninsured patients, known as DSH. DSH payments help to support the safety-net hospitals that provide substantial uncompensated care.
22
WhatdrivesMedicaidspending?
ChildrenandtheirparentsmakeupthemajorityofMedicaidenrollees,butmostMedicaid spendingisattributabletotheelderlyandpeoplewithdisabilities.Children,parents,and pregnantwomenmakeupthreequartersoftheMedicaidpopulationbutaccountforonly aboutathird(32%)ofMedicaidspending.Theelderlyanddisabledmakeuponequarterof theMedicaidpopulationbutaccountforroughlytwothirdsofspending.(Figure13)

Figure 13
Medicaid Enrollees and Expenditures by Enrollment Group Group, 2007

Elderly 10% Disabled 15% Adults 25% Children 49% Elderly Eld l 25% Disabled 42% Adults 12% Children 20%
Enrollees
Total = 58 million
Expenditures on benefits
Total = $300 billion
SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on 2007 MSIS and CMS64 data.
Medicaidspendingperenrolleevariessharplybyeligibilitygroup.In2007,thepercapita costforchildrencoveredbyMedicaidwasabout$2,100,comparedto$2,500peradult, $14,500perdisabledenrolleeand$12,500perelderlyenrollee(Figure14).Higherpercapita expendituresfordisabledandelderlybeneficiariesreflecttheirintensiveuseofbothacute andlongtermcareservices.

Figure 14
Medicaid Payments Per Enrollee b A t and dL T C by Acute Long-Term Care, 2007

$14,481 $12,499
Long-Term Care Acute Care
$2,135
$2,541
Children
Adults
Disabled
Elderly
SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on 2007 MSIS and CMS64 data.
MEDICAID: A PRIMER
23
Morethan45%ofallMedicaidspendingformedicalservicesisattributabletodualeligibles. In2005,dualeligibleslowincomeindividualswhoareenrolledinbothMedicareandMedicaid madeup18%oftheMedicaidpopulation,butaccountedfor46%ofMedicaidspending.More thanhalfofMedicaidspendingfordualeligiblesisforlongtermcareservices.Until2006, MedicaidprovidedprescriptiondrugcoveragefordualeligiblesbecauseMedicaredidnot includeadrugbenefit.BeginningJanuary2006,Medicarecoversprescriptiondrugsunderthe newPartD,butstatesmakeamonthlyclawbackpaymenttothefederalgovernmenttohelp financethebenefit.Thepaymentsroughlyreflectwhatstateswouldhavespentifthey continuedtopayforoutpatientprescriptiondrugsthroughMedicaidonbehalfoftheirdual eligibles.In2006,stateclawbackpaymentstotaled$6.6billion. DesirablecoordinationbetweenMedicareandMedicaidbenefitsandintegrationofacuteand longtermcarefordualeligibleshaslongbeenapolicygoal.Tosupportimprovedcoordination ofcarefordualeligibles,aswellasbettercoordinatedpayment,thehealthreformlaw establishedafederalCoordinatedHealthCareOfficewithinCMS. ThefivepercentofMedicaidbeneficiarieswiththehighestcostsaccountforoverhalfofall Medicaidspending.Medicaidspendingishighlyskewed;averysmallgroupofhighcostenrollees accountsforalargeshareofMedicaidspending.In2004,the1%ofMedicaidenrolleeswiththe highesthealthandlongtermcarecostsaccountedforonequarterofMedicaidspending,andthe highestcost5%ofenrolleesaccountedfor57%ofallprogramspending(Figure15).Thispattern,in whichthehighcostsofasmallshareofenrolleesdrivetotalspending,holdsineachofMedicaidsfour majoreligibilitygroups.
Figure 15
5% of Medicaid Enrollees Accounted for 57% of Medicaid Spending in 2004

Enrollees Spending
43%
Bottom 95% of Spenders
57%
Top 5% of Spenders
Children 0.3% Ad lt 0.2% 0 2% Adults Disabled 2.3% Elderly 2.2%
Total = 57.4 million
Total = $265.4 billion
SOURCE: Kaiser Commission in Medicaid and the Uninsured and Urban Institute estimates based on 2004 MSIS.
Underhealthreform,anewCenterforMedicareandMedicaidInnovationisestablished withinCMS.TheCenterischargedwithtesting,evaluating,andexpandinginnovativeservice deliveryandpaymentmodelsinMedicare,Medicaid,andCHIPtofosterpatientcenteredcare andimprovequalitywhilereducingspending.
24
HoweffectivelyisMedicaidspendingmanaged?
Medicaidisalowcostprogramwhenthehealthneedsofitsbeneficiariesaretakeninto account.MedicaidspendingishighprimarilybecauseofthehighneedpeopleMedicaid serves.Medicaidenrolleesoverallareinsignificantlyworsehealththanthelowincome, privatelyinsuredpopulation.Whenhealthstatusdifferencesarecontrolledtomakethe Medicaidandlowincome,privatelyinsuredpopulationsmorecomparable,percapita spendingforbothadultsandchildrenislowerinMedicaidthanunderprivateinsurance. Medicaidslowerspendinglevelsareduemostlytoitslowerproviderpaymentrates; differencesinaccesstospecialistsandexpensivetechnologyforthoseinfairorpoorhealth mayalsobeafactor.38 Medicaidspendingpercapitahasnotrisenfasterthanprivatehealthspendingpercapita. Onapercapitabasis,Medicaidacutecarespendinghasbeengrowingatthesamerateas privatehealthspendingandlessthanmonthlypremiumsforprivateinsurance(Figure16). From2000to2008,theincreaseinacutecarespendingperMedicaidenrolleeaveraged5% peryear,asdidgrowthinpercapitaprivatehealthcarespending.Overthesameperiod, monthlypremiumsforjobbasedcoverageforanindividualrose8%peryearonaverage.
Figure 16
AlongwiththehealthneedsoftheMedicaidpopulation,growthinMedicaidenrollmentand risinghealthcarecostsaremajordriversofMedicaidcosts.Between2000and2007, Medicaidenrollmentincreasedfrom31.8millionto42.3million,oratanaverageannualrate of4.2percent.37BetweenJune2008andJune2009,inthemidstofthecurrentrecession, enrollmentgrewby3.3million,or7.5%.SeveralfactorsfuelMedicaidenrollment.Whenstate economiesarestrong,statesseekingtobroadencoveragemayexpandMedicaideligibility.In economicrecessions,joblossandresultinglossesofjobbasedinsuranceanddeclining incomecausemorepeopletoqualifyforMedicaid.Ongoingerosioninemployersponsored insurancecontributesaswell.Medicaidspendingtrendsalsoreflecthealthcarecostinflation, asystemicproblemthatdriveshealthspendingacrossourentiresystem.
Growth in Medicaid Acute Care Spending vs. Private Health Spending, 2000-2008
A Average Annual A lG Growth th 2000 2000-2008: 2008
8% 5% 5%
Medicaid Acute Care Spending Per Enrollee1

1
Per Capita Private Health Care Spending2
Monthly Premiums For Employer-Sponsored Insurance3
Kaiser Commission on Medicaid and the Uninsured and Urban Institute analysis of MSIS, CMS-64, and Kaiser Commission on Medicaid and the Uninsured/Health Management Associates data, 2010. 2005-07 data adjusted for shift to Medicare of dual eligibles prescription drug spending. 2 National Health Expenditure Accounts, 2010. 3 Kaiser/HRET Survey of Employer-Sponsored Health Benets, 2000-2008. Data reported are for single premiums. Family premium growth averaged 8.8% over the period.
MEDICAID: A PRIMER
25
Programmanagementtoolsatthefederalandstatelevelhelptoensureproperpayment andimproveMedicaidsefficiency.In2006,CongressestablishedafederalMedicaidIntegrity Program(MIP)withinCMSandprovidedsubstantialresourcesannuallyforaudits, identificationoffraudandabuseandotheroverpayments,educationregardingprogram integrityandqualityofcare,andotherpurposes.39Mostoperationalprogramintegrity responsibilitiesrestwiththestates,buttheMIPgreatlyenlargedthefederalgovernments commitmenttoandCMSaccountabilityforsoundandefficientmanagementoftheMedicaid program. AseparatemechanismforensuringMedicaid(andCHIP)integrityisthePaymentErrorRate MeasurementProgram(PERM).Underthisinitiative,arandomsampleofclaims(bothfeefor serviceandmanagedcare)andeligibilitydeterminationsarereviewedinathirdofthestates eachyeartodetermineerrorrates.Errorsincludepaymentsthatshouldnothavebeenmade orweremadeinthewrongamount,andalsopaymentsthatwereincorrectlydenied.CMS calculatesstateandnationalerrorratesandreportstoHHSandtheOfficeofManagement andBudget.StatesmustsubmitacorrectiveplantoCMSandreimbursethefederal governmentforitsshareofanyoverpayments.
26
HOW IS MEDICAID FINANCED?

Medicaid is nanced through a federal-state partnership in which the federal government matches each states spending based on a statutory formula. Under the normal formula, the federal government funds about 57% of all Medicaid spending, but with a temporary increase in the federal match rate to provide scal relief to states during the recession, the overall federal share is 66%. Under health care reform, the federal-state partnership in nancing Medicaid will continue. However, the federal government will nance the full cost of the new coverage in the rst three years of reform and the lions share in subsequent years.
Who pays for Medicaid?

Medicaid is nanced through a partnership between the federal government and the states. The federal government matches state spending on Medicaid. The federal match rate is known as the Federal Medical Assistance Percentage, or FMAP, and it varies based on state per capita income relative to the national average. The FMAP is at least 50% in every state. It is higher in relatively poor states, reaching 76% in the poorest state, Mississippi (Figure 17). The federal match rate for most Medicaid administrative costs is 50%. Federal matching dollars are guaranteed and ow to states based on need (as reected by state spending), rather than on the basis of a pre-set formula or projected need. Overall, the federal government funds about 57% of Medicaid spending. The American Recovery and Reinvestment Act (ARRA), enacted in February 2009 to boost the ailing economy, provided for a temporary increase in the FMAP. This federal relief supports the states in a period when they are facing rising Medicaid enrollment but are least able to aord it. With the ARRA adjustment, the FMAP for scal year 2010 ranges from 56% to 85%. The FMAP enhancement increases federal Medicaid spending by about $87 billion over the period October 1, 2008 through December 31, 2010, and increases the federal share of total Medicaid spending from 57% to 66%.40 The enhanced FMAP rates will expire at the end of 2010, unless extended by Congress.
Figure 17
Enhanced Federal Medical Assistance Percentages (FMAP), FY 2010

WA MT OR ID WY NV CA UT CO SD NE IA IL KS MO TN AR MS TX AK FL HI 78%+ (12 states including DC)
Note: Enhanced FMAP as provided by American Recovery and Reinvestment Act of 2009 (ARRA). FMAPs are for 2nd quarter of 2010. SOURCE: Kaiser Commission on Medicaid and the Uninsured calculations based on FY2010 FMAPs published in Federal Register, Vol. 75, No. 83.
NH VT ND MN WI MI PA IN KY OH WV VA NC SC AL GA MD DC NJ DE NY RI CT ME MA
AZ
NM
OK
LA
72 - 77% (12 states) 66 - 71.9% (10 states) 65% (17 states)
MEDICAID: A PRIMER
27
HowwelldoesMedicaidsfinancingstructuresupporttheprogram?
StatescommitsubstantialfundstoMedicaid.Onaverage,statesspendabout16%oftheir generalfundsonMedicaid,makingitthesecondlargestiteminmoststatesgeneralfund budgets,followingspendingforelementaryandsecondaryeducation,whichrepresented35%of stategeneralfundspendingin2008.43Medicaidspendingpressuresareaperennialissueatthe statelevel.Thisissobecausestateshavelimitedfiscalcapacitytomeetthemanycompeting demandstheyfaceandmustbalancetheirbudgets.Statebudgetpressuresintensifyduring economicdownturns,whenstaterevenuesdeclinejustasenrollmentinMedicaidandother assistanceprogramsisgrowing. Medicaidisamajorengineinstateeconomies.EconomicresearchshowsthatstateMedicaid spendinghasamultipliereffectasthemoneyinjectedintothestateeconomythroughthe programgeneratessuccessiveroundsofearningandpurchasingbybusinessesandresidents.This economicactivitysupportsjobsandyieldsadditionalincomeandstatetaxrevenues.Compared withotherstatespending,Medicaidspendingisespeciallybeneficialbecauseitalsotriggersan infusionofnewfederaldollarsintothestateeconomy,intensifyingthemultipliereffect.44
Medicaidisamajorsourceoffederalrevenuetothestates.AtthesametimethatMedicaidisa majorspendingprogram,itisalsothelargestsourceoffederalrevenuetothestates.Federal Medicaiddollarsarethesinglelargestsourceoffederalgrantsupporttostates,accountingforan estimated44%ofallfederalgrantstostatesin2008.41Medicaidcurrentlyaccountsforabout7% offederalbudgetoutlays.42
Medicaidsfinancingstructuregivesstatesflexibilitytorespondtochangingandemerging needsandsupportsstateeffortstoexpandcoveragetotheuninsured.Whenstatesspend theirdollarsonMedicaid,federalmatchingdollarsfollow.Thematchingsystemincreases statescapacitytorespondtochangesinneeds,economicconditions,anddemographics, andtodisastersandepidemics.Guaranteedfederalmatchingpaymentsprovidean incentivetostatestoinvestinhealthcareanddiscouragethemfromreducingcoverage.At thesametime,statesincentivestocontroltheircostsconstrainstateMedicaidspending, andthus,federalMedicaidspendingaswell. Federalmatchingratesarebasedonlaggeddatathatmaynotreflectcurrenteconomic conditions.TheFMAPformulathatdeterminesthefederalshareofMedicaidspendingin eachstateisbasedontherelationshipbetweenthestatespercapitaincomeandthe nationalaverage.However,becausetheincomedatausedintheFMAPformulaarelagged, astatesmatchratemayreflecteconomicconditionsthatdifferdramaticallyfromcurrent conditions.Forexample,inaneconomicdownturn,somestatesmayactuallyreceivea reducedfederalmatchbecausethedatausedintheFMAPcalculationreflectadifferentset ofeconomiccircumstances.
28
ThecurrentfinancingsystemforMedicaiddoesnotadequatelyaccountforthe countercyclicalnatureoftheprogram.Bydesign,duringeconomicdownturnssuchasthe currentrecession,whenpeoplelosetheirjobsandtheirhealthcoverageandincomedecline, Medicaidexpands.However,economicdownturnsalsocausestatetaxrevenuestoshrink, reducingstatecapacitytoaffordincreasedenrollmentjustwhenitismostlikelytooccur.The currentFMAPformula,whichuseslaggeddataandisbasedsolelyonpercapitaincome,does notprovideaneffectivecountercyclicaladjustmenttoincreasefederalassistancetostates duringeconomicdownturns.ThetemporaryincreaseintheFMAPprovidedbyARRAwasa legislativeresponsetothisproblem.Ineffect,theFMAPincreaseisacountercyclical adjustmentthatbooststhefederalshareofMedicaidcoststemporarily,whilestatesare crunchedbetweenrisingdemandsforMedicaidcoverageanddwindlingcoffersduetothe recession.Asaconditionofreceivingtheenhancedfederalmatch,statescannotreduce Medicaideligibilityorusemorerestrictiverulesfordeterminingeligibility.Similartorelief providedin2003duringthelasteconomicdecline,theARRAFMAPincreasehasbeen instrumentalinhelpingstatestoavoidadditionalanddeeperreductionsintheirMedicaid programs,addressbudgetshortfalls,andpreservecoverage. Underhealthreform,thefederalgovernmentwillfinancethevastmajorityofthecostsof newMedicaidcoverage.Thefederalstatefinancingpartnershipthatsupportsthecurrent Medicaidprogramwillcontinueunderhealthreform.However,thecostofthenewMedicaid coveragestemmingfromhealthreformwillbefullyfinancedbythefederalgovernmentinthe firstthreeyearsofreform(20142016);insubsequentyears,thefederalgovernmentwill continuetofinancethelionsshare,phasingdownto90%in2020andthereafter.Overall, federalfundswillfinance96%ofthecostoftheMedicaidexpansionoverthefirstdecade.
MEDICAID: A PRIMER
29
HOW DOES HEALTH REFORM RESHAPE MEDICAID FOR THE FUTURE?

The Aordable Care Act establishes a national framework for near-universal health coverage. Under the law, beginning in 2014, a new individual mandate will require most individuals to obtain coverage. At the same time, access to aordable health coverage will be improved through a signicant expansion of the Medicaid program, the creation of new health insurance exchanges, and reforms of the private health insurance market. The major expansion of Medicaid and health reforms reliance on the program as the foundation for coverage of lowincome people give Medicaid both a much larger and a distinctively national coverage role going forward. Medicaid eligibility reform. Under health reform, Medicaid eligibility for people under age 65 will be based solely on income. With categorical restrictions abolished for this population, Medicaid coverage will be extended to millions more low-income people, including both parents and adults without dependent children. In addition, a national Medicaid eligibility oor will apply, all states will count income using a specied, uniform method, and there will be no asset test. As a result of these provisions, nearly everyone under age 65 with income below 133% of the poverty level will qualify for Medicaid, signicantly reducing uninsurance and state variation in coverage. These changes dene Medicaid as the national coverage pathway for low-income individuals and families; they also introduce a degree of standardization in eligibility across state Medicaid programs to permit necessary coordination between Medicaid and the health insurance exchanges in the new national system. Simplied enrollment. The simplied, uniform methods for determining Medicaid eligibility help set the stage for simplied Medicaid enrollment procedures. Further, the new law requires that states streamline and coordinate their Medicaid and exchange enrollment systems in a no wrong door approach, to promote coverage, minimize the burden on people seeking coverage, and ensure their enrollment in the appropriate program. Additional requirements, investments, and incentives in the law push toward increased use of automation and technology in Medicaid to optimize participation and stable coverage. Improved access to care. The law includes an array of measures to increase physician participation and access to care in Medicaid, especially primary care. Full federal nancing is provided to raise Medicaid payment rates for primary care to Medicare levels in 2013 and 2014. The law also gives states nancial incentives to cover preventive care for adults in Medicaid. Other provisions seek to correct shortcomings in the healthcare workforce that hit underserved communities especially hard. The newly created Medicaid and CHIP Payment and Access Commission (MACPAC) is charged to assess access issues broadly. Innovation in service delivery is another focus of the law. For example, the law includes nancial incentives for states to provide health home services to better coordinate care for Medicaid enrollees with chronic conditions, and new options to increase access to community-based long-term care. Also, a new federal oce is established to coordinate care and nancing for dual eligibles.
30
Financing.About16millionmorepeopleareprojectedtogainMedicaidorCHIPcoverage by2019duetotheexpansionofMedicaideligibilityandincreasedparticipationthatis expectedasthepublicrespondstohealthreform.TheCongressionalBudgetOffice estimatesthatthefederalgovernmentwillfinanceabout96%ofthecoverageincreases associatedwithreformbetween2010and2019($434billion),andstateswillcontribute4% ($20billion). Asthenationpreparestoimplementhealthreform,understandingMedicaidismoreimportant thanever.Keyinformationabouthowtheprogramoperatesandfitsintooursystemtodaycan helptogroundpolicymakersandtheinterestedpublic,orientingthemtoMedicaidscurrent scopeandrole,whileprovidingperspectiveonhowhealthreformreshapestheprogramforthe future,preparingitforthecentralroleitistoplayinthenationalplanforcoveringourpeople.
MEDICAID: A PRIMER
31
Endnotes
Holahan and Garrett, Rising Unemployment, Medicaid, and the Uninsured, prepared for the Kaiser Commission on Medicaid and the Uninsured, January 2009. #7850. 2 Georgetown University Health Policy Institute analysis of data from the 2005 National Health Interview Survey and 2004 National Nursing Home Survey. See Medicaid and Long-Term Care Services and Supports, Kaiser Commission on Medicaid and the Uninsured, February 2009. #2186-06. 3 Kaiser Commission on Medicaid and the Uninsured estimates based on CMS National Health Accounts data, 2008. 4 Medicaid and Long-Term Care Services and Supports. 5 Americas Public Hospitals and Health Systems, 2004, National Association of Public Hospitals and Health Systems, October 2006; Kaiser Commission on Medicaid and the Uninsured analysis of 2006 UDS Data from Health Resources and Services Administration. 6 Personal Responsibility and Work Opportunity Reconciliation Act ( P.L. 104-193). 7 Childrens Health Insurance Program Reauthorization Act of 2009 (P.L. 111-3). 8 Section 6036 of the Decit Reduction Act of 2005, (P.L. 109-171). 9 Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on data from FY 2007 MSIS, 2010. 10 http://www.cms.hhs.gov/Nationa lSCHIPPolicy/downloads/SCHIPEverEnrolledYearFY2007FINAL.PDF . 11 MCH Update 2005: State Coverage of Pregnant Women and Children, National Governors Association Center for Best Practices. 2006. Medicaids Role in Family Planning, Kaiser Family Foundation and Guttmacher Institute, October 2007. #7064-03. 12 National Survey on the Publics Views about Medicaid, 2005, Kaiser Family Foundation. #7338 13 2007 Kaiser Survey of Childrens Health Coverage, Kaiser Commission on Medicaid and the Uninsured; Rising Health Pressures in an Economic Recession: A 360-Degree Look at Four Communities, August 2009, Kaiser Commission on Medicaid and the Uninsured. #7949; Enrolling Children in Medicaid and SCHIP: Insights from Focus Groups with LowIncome Parents, May 2007, Kaiser Commission on Medicaid and the Uninsured. #7640. 14 A Foundation for Health Reform: Findings of a 50-State Survey of Eligibility Rules, Enrollment and Renewal Procedures, and Cost-Sharing Practices in Medicaid and CHIP for Children and Parents During 2009, December 2009, Kaiser Commission on Medicaid and the Uninsured. #8028. 15 Where Are States Today? Medicaid and State-Funded Coverage Eligibility Levels for Low-Income Adults, December 2009, Kaiser Commission on Medicaid and the Uninsured. #7993 16 Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of 2009 ASEC Supplement to the Current Population Survey. 17 Where Are States Today? op.cit. 18 Medicaid Citizenship Documentation Requirement is Taking a Toll, February 2007 and New Childrens Health Law Reduces Harmful Impact of Documentation Requirement, April 2009, Center on Budget and Policy Priorities. 19 Medicaid Enrollment and Spending by Mandatory and Optional Eligibility and Benet Categories, June 2005, Kaiser Commission on Medicaid and the Uninsured. #7332 20 Mark et al., Mental Health Treatment Expenditure Trends, 1986-2003, Psychiatric Services 58(8), August 2007. 21 Medicaid and HIV/AIDS, February 2009, Kaiser Family Foundation. #7172-04 22 Decit Reduction Act. op.cit. 23 Cost-Sharing and Premiums in Medicaid: What Rules Apply? February 2007, Center on Budget and Policy Priorities. 24 The Crunch Continues: Medicaid Spending, Coverage and Policy in the Midst of a Recession. Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2009 and 2010, September 2009, Kaiser Commission on Medicaid and the Uninsured. #7985. 25 Medicaid Beneciaries and Access to Care, April 2010, Kaiser Commission on Medicaid and the Uninsured. #800002. 26 Marquis and Long, The Role of Public Insurance and the Public Delivery System in Improving Birth Outcomes for Low-Income Pregnant Women, Medical Care 40(11), November 2002. 27 Perry and Kenney, Preventive Care for Children in Low-Income Families: How Well Do Medicaid and State Childrens Health Insurance Programs Do? Pediatrics 120(6), December 2007. 28 Selden and Hudson, Access to Care and Utilization Among Children: Estimating the Eects of Public and Private Coverage, Medical Care 44(5 Suppl), May 2006. 29 Long et al., How Well Does Medicaid Work in Improving Access to Care? Health Services Research 40(1), February 2005. 30 Alker et al., Children and Health Care Reform: Assuring Coverage that Meets their Health Care Needs, September 2009, Kaiser Commission on Medicaid and the Uninsured. #7980.
1
32
ShenandMcFeeters,OutofPocketHealthSpendingBetweenLowandHigherIncomePopulations:WhoisatRisk ofHavingHighExpensesandHighBurdens?MedicalCare44(3),March2006. 32 Zuckermanetal.,TrendsinMedicaidPhysicianFees20032008,HealthAffairsWebExclusive28(3),April2009. 33 Nietertetal.,TheImpactofanInnovativeReformtotheSouthCarolinaDentalMedicaidSystem,HealthServices Research40(4),August2005. 34 TheCrunchContinues.op.cit. 35 EHealthSnapshot:ALookatEmergingHealthInformationTechnologyforChildreninMedicaidandSCHIP Programs,November2008,KaiserCommissiononMedicaidandtheUninsuredandTheChildrensPartnership. #7837. 36 FederalSupportforHealthInformationTechnologyinMedicaid:KeyProvisionsintheAmericanRecoveryand ReinvestmentAct,August2009,KaiserCommissiononMedicaidandtheUninsuredandTheChildrensPartnership. #7955. 37 HolahanandYemane,EnrollmentisDrivingMedicaidCostsButTwoTargetsCanYieldSavings,HealthAffairs 28(5),September/October2009. 38 HadleyandHolahan,IsHealthCareSpendingHigherunderMedicaidorPrivateInsurance?Inquiry40,Winter 2003/2004. 39 DeficitReductionAct.op.cit. 40 http://www.statehealthfacts.org/comparemapreport.jsp?rep=45&cat=17. 41 StateExpenditureReport2008,Fall2009,NationalAssociationofStateBudgetOfficers. 42 BudgetoftheUnitedStatesGovernment,FiscalYear2009,U.S.OfficeofManagementandBudget. 43 StateExpenditureReport2008.op.cit. 44 Medicaid:GoodMedicineforStateEconomies,May2004,FamiliesUSA;TheRoleofMedicaidinStateEconomies:A LookattheResearch,January2009,KaiserCommissiononMedicaidandtheUninsured.#7075.
31
MEDICAID: A PRIMER
33
TABLES
Table 1: Medicaid Expenditures by Type of Service, FFY 2008 Table 2: Federal Medical Assistance Percentages, FY 2006-2010 Table 3: Medicaid Enrollment by Group, FFY 2007 Table 4: Medicaid Payments by Group, FFY 2007 Table 5: Medicaid Payments Per Enrollee by Group, FFY 2007 Table 6: Medicaid Income Eligibility as a Percent of Federal Poverty Level (FPL), 2009
MEDICAID: A PRIMER
35
Table 1
Medicaid Expenditures by Type of Service, FFY 2008

Expenditures (in millions)
Total State United States Alabama Alaska Arizona** Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming $ $338,791 4,078 890 7,506 3,287 38,748 3,169 4,544 1,102 1,446 14,691 7,338 1,207 1,207 11,602 6,151 2,844 2,274 4,809 6,068 2,253 5,701 10,822 9,847 6,978 3,812 7,090 776 1,588 1,317 1,257 9,425 3,045 47,618 10,162 534 13,054 3,539 3,220 16,300 1,834 4,437 656 7,176 21,461 1,517 973 5,384 6,293 2,278 4,989 493 Acute Care* $ $206,256 2,292 533 5,594 2,074 24,125 1,832 1,878 755 980 10,054 5,056 770 771 8,289 3,607 1,501 1,268 3,246 3,218 1,451 3,585 7,670 7,042 3,882 2,401 4,620 432 861 836 495 4,189 2,245 24,284 6,680 191 7,044 2,231 1,961 8,916 1,025 2,863 382 5,080 14,827 1,099 545 3,094 3,894 1,299 3,034 257 % 61% 56% 60% 75% 63% 62% 58% 41% 68% 68% 68% 69% 64% 64% 71% 59% 53% 56% 68% 53% 64% 63% 71% 72% 56% 63% 65% 56% 54% 63% 39% 44% 74% 51% 66% 36% 54% 63% 61% 55% 56% 65% 58% 71% 69% 72% 56% 57% 62% 57% 61% 52% Long-Term Care* $ % $114,797 34% 1,358 33% 342 38% 1,797 24% 1,167 36% 12,457 32% 1,171 37% 2,384 52% 342 31% 396 27% 4,305 29% 1,881 26% 406 34% 414 34% 3,119 27% 1,966 32% 1,293 45% 926 41% 1,367 28% 1,885 31% 752 33% 2,005 35% 3,152 29% 2,319 24% 2,956 42% 1,215 32% 1,800 25% 329 42% 701 44% 398 30% 539 43% 3,709 39% 801 26% 20,324 43% 3,065 30% 342 64% 5,371 41% 1,257 36% 1,187 37% 6,586 40% 581 32% 1,132 26% 272 41% 1,930 27% 5,176 24% 398 26% 392 40% 2,117 39% 2,073 33% 906 40% 1,800 36% 236 48% DSH Payments $ $17,739 428 16 115 46 2,166 166 281 6 70 331 401 31 22 194 578 50 81 196 965 50 111 0 486 139 195 670 15 27 83 223 1,527 -1 3,011 417 1 639 51 73 798 228 442 1 165 1,459 20 36 173 326 73 156 0 % 5% 11% 2% 2% 1% 6% 5% 6% 1% 5% 2% 5% 3% 2% 2% 9% 2% 4% 4% 16% 2% 2% 0% 5% 2% 5% 9% 2% 2% 6% 18% 16% 0% 6% 4% 0% 5% 1% 2% 5% 12% 10% 0% 2% 7% 1% 4% 3% 5% 3% 3% 0%
Source: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on data from CMS (Form 64). Note: Does not include administrative costs, accounting adjustments, or the U.S. Territories. Total Medicaid spending including these additional items was $352.1 billion in FFY 2008. Figures may not sum to totals due to rounding. * Acute care services include inpatient, physician, lab, X-ray, outpatient, clinic, prescription drugs, family planning, dental, vision, other practitioners'' care, payments to managed care organizations, and payments to Medicare. ** Long-term care services include nursing facilities, intermediate care facilities for the mentally retarded, mental health, home health services, and personal care support services. "DSH" refers to disproportionate share hospital payments.
MEDICAID: A PRIMER
37
Table 2
Federal Medical Assistance Percentages, FY 2006-2010

Federal Funds Sent to State for Each Dollar State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming FY 2006 69.5% 57.6% 67.0% 73.8% 50.0% 50.0% 50.0% 50.1% 70.0% 58.9% 60.6% 58.8% 69.9% 50.0% 63.0% 63.6% 60.4% 69.3% 69.8% 62.9% 50.0% 50.0% 56.6% 50.0% 76.0% 61.9% 70.5% 59.7% 54.8% 50.0% 50.0% 71.2% 50.0% 63.5% 65.9% 59.9% 67.9% 61.6% 55.1% 54.5% 69.3% 65.1% 64.0% 60.7% 70.8% 58.5% 50.0% 50.0% 73.0% 57.7% 54.2% FY 2007 68.9% 57.6% 66.5% 73.4% 50.0% 50.0% 50.0% 50.0% 70.0% 58.8% 62.0% 57.6% 70.4% 50.0% 62.6% 62.0% 60.3% 69.6% 69.7% 63.3% 50.0% 50.0% 56.4% 50.0% 75.9% 61.6% 69.1% 57.9% 53.9% 50.0% 50.0% 71.9% 50.0% 64.5% 64.7% 59.7% 68.1% 61.1% 54.4% 52.4% 69.5% 62.9% 63.7% 60.8% 70.1% 58.9% 50.0% 50.1% 72.8% 57.5% 52.9% FY 2008 67.6% 52.5% 66.2% 72.9% 50.0% 50.0% 50.0% 50.0% 70.0% 56.8% 63.1% 56.5% 69.9% 50.0% 62.7% 61.7% 59.4% 69.8% 72.5% 63.3% 50.0% 50.0% 58.1% 50.0% 76.3% 62.4% 68.5% 58.0% 52.6% 50.0% 50.0% 71.0% 50.0% 64.1% 63.8% 60.8% 67.1% 60.9% 54.1% 52.5% 69.8% 60.0% 63.7% 60.5% 71.6% 59.0% 50.0% 51.5% 74.3% 57.6% 50.0% FY 2009* 77.5% 61.1% 75.9% 80.5% 61.6% 61.6% 61.6% 61.6% 79.3% 67.6% 74.4% 67.4% 79.2% 61.9% 74.2% 70.7% 69.4% 79.4% 80.8% 74.4% 61.6% 61.6% 70.7% 61.6% 84.2% 73.3% 77.1% 67.8% 63.9% 60.2% 61.6% 79.4% 61.6% 74.5% 70.0% 72.3% 75.8% 72.6% 65.6% 63.9% 79.4% 70.6% 74.2% 69.9% 80.0% 70.0% 61.6% 62.9% 83.1% 69.9% 58.8% FY 2010* 77.5% 62.5% 75.9% 81.2% 61.6% 61.6% 61.6% 61.8% 79.3% 67.6% 75.0% 67.4% 79.2% 61.9% 75.7% 72.6% 69.7% 80.1% 81.5% 74.9% 61.6% 61.6% 73.3% 61.6% 84.9% 74.4% 78.0% 68.8% 63.9% 61.6% 61.6% 80.5% 61.6% 75.0% 70.0% 73.5% 76.7% 72.9% 65.9% 63.9% 79.6% 70.8% 75.4% 70.9% 80.8% 70.0% 61.6% 62.9% 83.1% 70.6% 61.6% in State Medicaid Spending, FY 2010 $3.45 $1.66 $3.15 $4.31 $1.60 $1.60 $1.60 $1.62 $3.83 $2.09 $2.99 $2.06 $3.80 $1.62 $3.11 $2.64 $2.30 $4.04 $4.40 $2.98 $1.60 $1.60 $2.74 $1.60 $5.61 $2.91 $3.54 $2.20 $1.77 $1.60 $1.60 $4.13 $1.60 $3.00 $2.33 $2.77 $3.30 $2.69 $1.93 $1.77 $3.90 $2.42 $3.06 $2.44 $4.20 $2.33 $1.60 $1.70 $4.90 $2.40 $1.60
Source: Kaiser Commission on Medicaid and the Uninsured calculations based on FFY 2006-2009 FMAPs as published in the Federal Register as follows: FY 2006 FMAP Vol. 69, No. 226, pp. 68370-28373; FY 2007 FMAP Vol. 70, No. 229, pp. 71856-71857; FY 2008 FMAP Vol. 71, No. 230, pp. 69209-6921 FY 2009 FMAP Vol. 74, No. 234, pp. 64697-64700; FY 2010 FMAP Vol . 75, No. 83, pp. 22807-22809 Note: FY2006 and FY2007 for Alaska are from Federal Register, May 15, 2006 (Vol. 71, No. 93), pp. 28041-28042. FY 2009 and FY2010 FMAPs relfect additional federal Medicaid funding available through the American Recover and Reinvestment Act (ARRA) of 2009, P.L. 111-5. * FY 2009 FMAPs are for the 4th Quarter of that scal year, and FY2010 FMAPs are for the 2nd Quarter of 2010.
38
Table 3
Medicaid Enrollment by Group, FFY 2007

Enrollment (rounded to nearest 100)
State United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Total Number 58,106,000 918,800 120,800 1,455,800 692,300 10,511,100 553,800 530,300 184,900 164,900 2,842,400 1,685,000 216,600 212,500 2,322,500 1,022,700 470,000 352,900 833,900 1,096,500 350,100 753,100 1,402,500 1,855,500 785,600 750,400 1,001,800 110,800 240,900 247,000 143,500 954,000 501,300 4,954,600 1,645,900 69,400 2,067,300 719,200 512,600 2,090,200 195,400 891,600 122,700 1,447,100 4,170,100 291,000 157,600 863,300 1,163,300 392,300 990,000 78,100 Aged Number 5,934,900 124,800 8,500 90,700 64,800 952,500 48,300 65,700 13,900 14,600 399,500 166,000 22,900 16,200 219,300 82,100 42,500 35,500 95,900 112,200 55,400 72,500 157,900 136,400 93,500 93,200 94,100 10,500 24,200 24,200 14,700 146,200 35,000 555,700 182,900 9,300 177,800 66,200 51,500 233,300 24,700 84,400 12,500 149,500 428,900 15,200 19,900 103,500 86,900 40,200 153,300 5,500 % 10% 14% 7% 6% 9% 9% 9% 12% 8% 9% 14% 10% 11% 8% 9% 8% 9% 10% 12% 10% 16% 10% 11% 7% 12% 12% 9% 9% 10% 10% 10% 15% 7% 11% 11% 13% 9% 9% 10% 11% 13% 9% 10% 10% 10% 5% 13% 12% 7% 10% 15% 7% Disabled Number 8,789,500 194,500 14,900 137,900 120,200 964,300 76,700 68,200 22,300 33,200 469,400 258,400 25,100 35,900 292,700 151,600 72,000 64,100 215,500 199,000 61,500 128,000 425,500 306,800 114,200 157,300 177,500 19,600 34,200 37,300 23,000 162,500 57,100 635,300 286,600 10,600 358,300 104,400 82,200 510,700 40,600 142,300 16,600 296,200 535,700 35,900 21,500 156,900 173,700 109,000 142,700 9,800 % 15% 21% 12% 9% 17% 9% 14% 13% 12% 20% 17% 15% 12% 17% 13% 15% 15% 18% 26% 18% 18% 17% 30% 17% 15% 21% 18% 18% 14% 15% 16% 17% 11% 13% 17% 15% 17% 15% 16% 24% 21% 16% 14% 20% 13% 12% 14% 18% 15% 28% 14% 13% Adult Number 14,627,000 158,400 24,500 545,700 133,700 4,318,100 98,900 116,900 69,600 40,200 514,100 276,800 72,800 28,600 498,700 189,900 130,600 53,000 132,200 163,200 107,600 168,100 366,500 378,200 187,500 123,900 178,000 19,900 39,400 48,100 18,900 135,900 106,800 1,805,200 311,400 14,600 476,300 121,100 112,900 387,800 39,500 207,200 20,200 288,100 526,900 79,900 50,400 134,500 269,700 57,000 268,200 11,600 % 25% 17% 20% 37% 19% 41% 18% 22% 38% 24% 18% 16% 34% 13% 21% 19% 28% 15% 16% 15% 31% 22% 26% 20% 24% 17% 18% 18% 16% 19% 13% 14% 21% 36% 19% 21% 23% 17% 22% 19% 20% 23% 16% 20% 13% 27% 32% 16% 23% 15% 27% 15% Children Number 28,754,500 441,100 72,900 681,400 373,700 4,276,200 329,800 279,500 79,100 76,900 1,459,400 983,800 95,800 131,800 1,311,800 599,200 225,000 200,300 390,300 622,200 125,600 384,600 452,600 1,034,000 390,500 376,100 552,200 60,800 143,100 137,500 86,900 509,300 302,400 1,958,400 864,900 35,000 1,055,000 427,400 266,000 958,400 90,600 457,600 73,400 713,300 2,678,600 160,000 65,900 468,400 633,000 186,100 425,800 51,100 % 49% 48% 60% 47% 54% 41% 60% 53% 43% 47% 51% 58% 44% 62% 56% 59% 48% 57% 47% 57% 36% 51% 32% 56% 50% 50% 55% 55% 59% 56% 61% 53% 60% 40% 53% 50% 51% 59% 52% 46% 46% 51% 60% 49% 64% 55% 42% 54% 54% 47% 43% 65%
Note: Totals may not sum due to rounding. Source: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on data from FY 2007 MSIS, 2010.
MEDICAID: A PRIMER
39
Table 4
Medicaid Payments by Group, FFY 2007

Payments (in millions)
Total State United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming $ $300,001 $3,625 $944 $6,331 $2,904 $33,301 $2,733 $3,901 $1,002 $1,308 $12,753 $6,559 $1,065 $1,082 $12,510 $4,766 $2,422 $2,088 $4,373 $4,448 $1,930 $5,227 $10,505 $8,646 $6,049 $3,0 62 $5,780 $707 $1,460 $1,133 $971 $7,454 $2,563 $41,869 $9,329 $506 $11,951 $3,305 $2,789 $14,963 $1,719 $3,697 $610 $6,954 $18,996 $1,378 $850 $4,682 $5,427 $2,138 $4,803 $434 Aged $ $74,180 $1,066 $163 $315 $818 $9,017 $725 $1,413 $213 $280 $3,375 $1,204 $259 $201 $2,098 $1,006 $585 $502 $892 $850 $553 $1,181 $2,853 $2,286 $1,510 $852 $1,218 $225 $378 $228 $263 $2,349 $400 $12,314 $1,785 $182 $3,216 $647 $742 $4,830 $424 $810 $143 $1,200 $3,619 $166 $244 $1,179 $1,210 $481 $1,613 $98 % 25% 29% 17% 5% 28% 27% 27% 36% 21% 21% 26% 18% 24% 19% 17% 21% 24% 24% 20% 19% 29% 23% 27% 26% 25% 28% 21% 32% 26% 20% 27% 32% 16% 29% 19% 36% 27% 20% 27% 32% 25% 22% 23% 17% 19% 12% 29% 25% 22% 22% 34% 23% Disabled $ % $127,278 42% $1,338 37% $346 37% $1,500 24% $1,266 44% $13,921 42% $1,185 43% $1,477 38% $358 36% $640 49% $5,481 43% $2,342 36% $363 34% $548 51% $5,382 43% $2,082 44% $1,207 50% $987 47% $2,038 47% $2,324 52% $865 45% $2,510 48% $4,528 43% $3,535 41% $2,915 48% $1,287 42% $2,412 42% $266 38% $611 42% $533 47% $404 42% $3,345 45% $998 39% $17,930 43% $4,280 46% $214 42% $5,616 47% $1,367 41% $1,062 38% $6,264 42% $821 48% $1,494 40% $239 39% $3,029 44% $7,271 38% $587 43% $354 42% $2,161 46% $2,258 42% $1,066 50% $2,080 43% $194 45% Adult $ $37,166 $271 $125 $1,727 $131 $4,185 $255 $306 $255 $177 $1,467 $1,044 $241 $105 $1,617 $539 $253 $152 $506 $532 $174 $541 $1,285 $1,148 $564 $299 $600 $71 $103 $105 $60 $586 $358 $7,035 $1,079 $43 $1,354 $329 $437 $1,324 $153 $461 $68 $1,180 $1,678 $235 $107 $398 $739 $155 $569 $39 % 12% 7% 13% 27% 5% 13% 9% 8% 25% 14% 12% 16% 23% 10% 13% 11% 10% 7% 12% 12% 9% 10% 12% 13% 9% 10% 10% 10% 7% 9% 6% 8% 14% 17% 12% 8% 11% 10% 16% 9% 9% 12% 11% 17% 9% 17% 13% 9% 14% 7% 12% 9% Children $ % $61,378 20% $951 26% $311 33% $2,788 44% $690 24% $6,178 19% $568 21% $706 18% $176 18% $211 16% $2,429 19% $1,968 30% $202 19% $228 21% $3,413 27% $1,138 24% $377 16% $447 21% $936 21% $741 17% $339 18% $996 19% $1,839 18% $1,677 19% $1,060 18% $624 20% $1,550 27% $146 21% $369 25% $266 24% $245 25% $1,174 16% $806 31% $4,590 11% $2,184 23% $67 13% $1,764 15% $962 29% $548 20% $2,545 17% $321 19% $932 25% $160 26% $1,545 22% $6,429 34% $390 28% $146 17% $944 20% $1,220 22% $437 20% $540 11% $104 24%
Source: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on data from FY 2007 MSIS and CMS-64 reports, 2010.
40
Table 5
Medicaid Payments Per Enrollee by Group, FFY 2007

State United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Total $5,163 $3,945 $7,815 $4,348 $4,195 $3,168 $4,935 $7,357 $5,421 $7,932 $4,487 $3,892 $4,918 $5,091 $5,386 $4,660 $5,154 $5,916 $5,244 $4,056 $5,514 $6,941 $7,490 $4,660 $7,700 $4,080 $5,769 $6,385 $6,062 $4,586 $6,769 $7,814 $5,112 $8,450 $5,668 $7,288 $5,781 $4,595 $5,441 $7,159 $8,796 $4,146 $4,972 $4,805 $4,555 $4,737 $5,394 $5,424 $4,665 $5,450 $4,851 $5,561 Payments per Enrollee Aged Disabled $12,499 $8,538 $19,143 $3,473 $12,617 $9,467 $15,003 $21,507 $15,350 $19,188 $8,449 $7,254 $11,307 $12,391 $9,567 $12,255 $13,771 $14,128 $9,303 $7,577 $9,976 $16,289 $18,069 $16,762 $16,153 $9,146 $12,947 $21,385 $15,620 $9,438 $17,905 $16,069 $11,443 $22,159 $9,758 $19,572 $18,087 $9,772 $14,407 $20,702 $17,171 $9,594 $11,415 $8,026 $8,437 $10,952 $12,246 $11,388 $13,919 $11,961 $10,523 $17,805 $14,481 $6,879 $23,194 $10,880 $10,529 $14,437 $15,447 $21,650 $16,041 $19,289 $11,677 $9,065 $14,472 $15,273 $18,386 $13,736 $16,758 $15,396 $9,456 $11,678 $14,062 $19,606 $10,641 $11,521 $25,525 $8,181 $13,586 $13,578 $17,854 $14,279 $17,550 $20,584 $17,481 $28,223 $14,935 $20,194 $15,674 $13,093 $12,914 $12,266 $20,220 $10,500 $14,413 $10,226 $13,572 $16,364 $16,453 $13,775 $12,999 $9,777 $14,574 $19,762 Adult $2,541 $1,709 $5,108 $3,164 $982 $969 $2,583 $2,615 $3,667 $4,396 $2,854 $3,773 $3,308 $3,678 $3,242 $2,839 $1,941 $2,861 $3,831 $3,262 $1,618 $3,216 $3,506 $3,036 $3,008 $2,410 $3,370 $3,544 $2,604 $2,192 $3,165 $4,312 $3,356 $3,897 $3,466 $2,940 $2,844 $2,716 $3,873 $3,414 $3,869 $2,224 $3,367 $4,097 $3,185 $2,940 $2,124 $2,962 $2,741 $2,713 $2,123 $3,326 Children $2,135 $2,155 $4,261 $4,092 $1,846 $1,445 $1,723 $2,527 $2,225 $2,740 $1,665 $2,000 $2,111 $1,728 $2,602 $1,899 $1,675 $2,234 $2,399 $1,192 $2,698 $2,590 $4,064 $1,622 $2,714 $1,659 $2,807 $2,406 $2,579 $1,938 $2,816 $2,305 $2,664 $2,344 $2,525 $1,908 $1,672 $2,251 $2,061 $2,656 $3,542 $2,036 $2,182 $2,165 $2,400 $2,434 $2,209 $2,015 $1,927 $2,348 $1,269 $2,038
Source: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on data from FY 2007 MSIS and CMS-64 reports, 2010. Note: Data in this table do not include spending when the service or basis of eligibility of the enrollee is unknown; national per capita spending amounts shown elsewhere in this report are adjusted to include this unknown spending and dier slightly from the totals shown here.
MEDICAID: A PRIMER
41
Table 6
Medicaid Income Eligibility as a Percent of Federal Poverty Level (FPL), 2009
State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Infants 133% 175% 140% 200% 200% 133% 185% 200% 300% 200% 200% 300% 133% 200% 200% 300% 150% 185% 200% 200% 300% 200% 185% 280% 185% 185% 133% 200% 133% 300% 200% 235% 200% 200% 133% 200% 185% 133% 185% 250% 185% 140% 185% 185% 133% 300% 133% 200% 150% 300% 133%
Children 1-5 133% 175% 133% 200% 133% 133% 185% 133% 300% 133% 133% 300% 133% 133% 150% 133% 133% 150% 200% 150% 300% 150% 150% 275% 133% 150% 133% 200% 133% 185% 133% 235% 133% 200% 133% 200% 185% 133% 133% 250% 150% 140% 133% 133% 133% 300% 133% 200% 133% 300% 133%
Children 6-19 100% 175% 100% 200% 100% 100% 185% 100% 300% 100% 100% 300% 133% 133% 150% 133% 100% 150% 200% 150% 300% 150% 150% 275% 100% 150% 133% 200% 100% 185% 133% 235% 100% 100% 100% 200% 185% 100% 100% 250% 150% 140% 100% 100% 100% 300% 133% 200% 100% 300% 100%
Pregnant Women 133% 175% 150% 200% 200% 200% 250% 200% 300% 185% 200% 185% 133% 200% 200% 300% 150% 185% 200% 200% 250% 200% 185% 275% 185% 185% 150% 185% 185% 185% 200% 235% 200% 185% 133% 200% 185% 185% 185% 250% 185% 133% 250% 185% 133% 200% 200% 185% 150% 300% 133%
Working Parents* Childless Adults* 24% 81% 106% 17% 106% 66% 191% 121% 207% 53% 50% 100% 27% 185% 25% 83% 32% 62% 25% 206% 116% 133% 64% 215% 44% 25% 56% 58% 88% 49% 200% 67% 150% 49% 59% 90% 47% 40% 34% 181% 89% 52% 129% 26% 44% 191% 29% 74% 33% 200% 52% NA NA 110% NA NA NA NA 110% NA NA NA 100% (closed) NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 100% NA NA NA NA NA NA NA NA NA NA NA NA 160% NA NA NA NA NA
Source: A Foundation for Health Reform: Findings of a 50 State Survey of Eligibility Rules, Enrollment and Renewal Procedures, and Cost-Sharing Practices in Medicaid and CHIP for Children and Parents During 2009 . Data based on a national survey conducted by the Center on Budget and Policy Priorities for the Kaiser Commission on Medicaid and the Uninsured, December 2009. Available at http://www.k.org/medicaid/kcmu120809pkg.cfm. See note below for source of parents and childless adult eligibility levels * Eligibility for Medicaid or Medicaid Look-Alike coverage. For eligibility levels for programs oering more limited coverage or premium assistance, please see Where Are States Today: Medicaid and StateFunded Coverage Eligibility Levels for Low-Income Adults , Kaiser Commission on Medicaid and the Uninsured analysis of state policies through program websites and contacts with state ocials, December 2009. Available at: http://www.k.org/medicaid/upload/7993.pdf.
42
Selected Publications from the Kaiser Family Foundation Available at www.k.org

The Medicaid Program at a Glance
http://www.k.org/medicaid/7235.cfm
Medicaid Beneciaries and Access to Care

Health Coverage of Children: The Role of Medicaid and CHIP

http://www.k.org/uninsured/7698.cfm
Early and Periodic Screening, Diagnostic, and Treatment Services

Medicaid and Managed Care: Key Data, Trends, and Issues

Filling an Urgent Need: Improving Childrens Access to Dental Care in Medicaid and SCHIP
Dual Eligibles: Medicaids Role for Low-Income Medicare Beneciaries

State Fiscal Conditions and Medicaid

Summary of Coverage Provisions in the Patient Protection and Aordable Care Act
http://www.k.org/healthreform/8023.cfm
Medicaid and Childrens Health Insurance Program Provisions in the New Health Reform Law
Optimizing Medicaid Enrollment: Perspectives on Strengthening Medicaids Reach Under Health Care Reform
Expanding Medicaid under Health Reform: A Look at Adults at or below 133% of Poverty
Financing New Medicaid Coverage Under Health Reform: The Role of Federal Government and States
Medicaid Long-Term Services and Supports: Key Changes in the Health Reform Law
The Uninsured: A Primer

http://www.k.org/uninsured/7451.cfm
Medicare: A Primer
http://www.k.org/medicare/7615.cfm
MEDICAID: A PRIMER
43
The Henry J. Kaiser Family Foundation

Headquarters 2400 Sand Hill Road Menlo Park, CA 94025 Phone 650-854-9400 Fax 650-854-4800
Washington Offices and Barbara Jordan Conference Center 1330 G Street, NW Washington, DC 20005 Phone 202-347-5270 Fax 202-347-5274
www.kff.org
This report (#7334-04) is available on the Kaiser Family Foundations website at www.kff.org.
The Kaiser Family Foundation is a non-profit private operating foundation, based in Menlo Park, California, dedicated to producing and communicating the best possible analysis and information on health issues.

Week 1 - Medicaid

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Week 1 - Medicaid

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Medicaid

Who is Covered by Medicaid?.................................................................7

What Services Does Medicaid Cover?....................................................14

How Much Does Medicaid Cost?............................................................22

How is Medicaid Financed?....................................................................27

How Does Health Reform Reshape Medicaid for the Future?..................30

Medicaid in the Health System, 2008

Total National Spending (billions)

Total Health Services and Supplies

Nursing Home Care

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

What is Medicaids role in the U.S. health care system?

Medicaids Role for Selected Populations

Aged & Disabled

Medicaid Financing of Safety-Net Providers

Health Center Revenues by Payer, 2008

Medicare 21% Medicaid 33% Commercial 26%

Medicaid 37% Federal Grants 20%

State/Local/ Other 20%

Total = $40 billion

Total = $10 $10.1 1 billion

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

How is Medicaid structured?

Percent of Residents Covered by Medicaid, by State, 2007-2008

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

WHO IS COVERED BY MEDICAID?

What is Medicaids coverage role?

Health Insurance Coverage by Poverty Level Level, 2008

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

Median Medicaid/CHIP Income Eligibility Thresholds, 2009

Non-Working Childless Adults Parents

Elderly and Individuals with Disabilities

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

Health Insurance Coverage of Low-Income Children and Adults, 2008

Adults without Children

Medicaid Eligibility for Working Parents by Income Income, December 2009

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

WHAT SERVICES DOES MEDICAID COVER?

What does the Medicaid benet package include?

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

Recentfederalregulationsfurtherdelineatethescopeofstateflexibilityregardingbenchmarkpackages.Tocomply withtheserules,oneofthestatesthatrestrictedbenefits(WV)hasdiscontinueddoingso;otherstatesmayalsohave toreexaminetheirbenchmarkpoliciesinlightofthenewrules.

Medicaid Managed Care Penetration Rates y State, , 2008 by

U.S. Average = 70%

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

Access to Care, b Insurance Ins rance Status Stat s by

U Usual lS Source of Care

Check Ch k up in i Past 2 Years

Pap P T Test i in Past 3 Years

U Usual lS Source of Care

Abl Able to S See S Specialist i li if Needed

Medicaid-To-Medicare Provider Fee Ratios for All Services

U S Average = 72% of Medicare fees U.S.

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED

HOW MUCH DOES MEDICAID COST?

What does Medicaid cost currently?

Medicaid Expenditures by Service, 2008

Long-Term Care 33.9%

ICF/MR 3.7% Nursing Facilities 14.7%

Acute Care 60.9%

Payments to Medicare 3.5%

Total = $ $338.8 billion

THE KAISER COMMISSION ON MEDICAID AND THE UNINSURED