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Medicaid and poor adults: Who’s left out? How can federal policy help?
Stan Dorn The Urban [email protected]://www.urban.org/health_policy/ http://www.urban.org
September 15, 2008
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“Medicaid covers the poor … while Medicare is primarily designed for the elderly…”
H. Sheppard, “States Get A Handle On Medicaid: Better Economy, Federal-law Changes Help,” Los Angeles Daily News, 11/28/06
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Medicaid covers the poor only if they are - •Children•Currently caring for
dependent children•Pregnant
•Elderly •People with severe and
permanent disabilities
“Parents and children” side of the program
“Elderly and disabled” side of the program
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Who’s left out?
•Adults without children•Empty nesters
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Topics to cover
1. The federal exclusion of non-categorical adults2. Facts about uninsured, non-categorical adults3. Federal policy options
THE URBAN INSTITUTE
Part I
The federal exclusion
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What is the federal exclusion of non-categorical adults?
•Federal matching funds are limited to the categorically eligible•States can obtain 1115 waivers, but
Federal budget neutrality rules = no new money (at least in theory)
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How many states cover non-categorical adults?
1115 waivers State-only funds
Comprehensive 9 states: AZ, DE, HA, ME, MA, NM, NY, OR, VT
3 states: DC, MN, WA
Less than comprehensive
12 states: AR, DC, IA, ID, IN, MD, MI, MO, MT, OK, TN, UT
1 state: PA
Sources: Klein and Schwartz, 2008; Dorn, et al., 2005. Note: comprehensive programs provide (a) benefitsat least as generous as typical ESI to (b) at least all adults up to 100% FPL.
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The history of this exclusion
•Elizabethan Poor Law of 1601
•Social Security Act of 1935
•Medicaid’s creation in 1965
•Medicaid’s subsequent evolution
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In short:•It is not clear how much thought federal
policymakers gave to this Medicaid exclusion.•Basic judgment underlying the exclusion:
Able-bodied adults should be able to support themselves and so do not need federally-funded cash assistance.
Judgment renderedIn 1935About cash assistance
Can poor, able-bodied adults provide themselves with health coverage in 2008?
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Part II
Facts about uninsured, non-categorical adults
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Low-income, non-categorical adults outnumber all uninsured children and all uninsured parents
Uninsured, by income and relationship to children: 2006 (millions)
3.9 3.88.92.6 4.1
6.9
1.41.9
4.3
1.51.8
5.3
Children Parents ofdependent children
Other adults
300+% FPL
200-299% FPL
100-199% FPL
Under 100% FPL
Source: KCMU/UI, October 2007.
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More than half of all poor uninsured are non-categorical adults
Uninsured with incomes below FPL, by relationship to children: 2006
Children, 20%
Parents of Dependent
Children, 25%
Other Adults, 55%
Source: KCMU/UI, October 2007.
Total number: 16.6 million
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Uninsured non-categorical adults, by age, income, and eligibility for Medicaid/SCHIP: 2004 (millions)
1.1 0.2 0.3 0.3
7.9
3.2 2.9 3.6
1.5
1.1 1.31.9
19 to 29 30 to 39 40 to 49 50 to 64Age
Eligible Ineligible, income below 300% FPL Ineligible, income at 300%+ FPL
Source: Holahan, et al., February 2007.
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Uninsured, non-categorical adults broadly resemble other uninsured
Uninsured, non-categorical adults, by employment:
2006
Working 79%
Not Working
21%
Total number: 25.5 million
Uninsured, non-categorical adults, by citizenship: 2006
U.S. citizens
81%
Non-citizens
19%
Total number: 25.5 million
Source: KCMU/UI, October 2007.
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Uninsured, non-categorical adults broadly resemble other uninsured (continued)
Uninsured, non-categorical adults, by race and
ethnicity: 2006
Black, 16%
Asian & other,
7%
Latino, 26%
White, 51%
Total number: 25.5 million
Uninsured, non-categorical adults, by income 2006
101-200%
FPL, 25%
201-300%
FPL, 17%
301+% FPL, 29%
0-100% FPL, 29%
Total number: 25.5 million
Source: KCMU/UI, October 2007.
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Percentage of adults ages 19–29 reporting going without various services because of cost, by health insurance status: 2005
38% 37% 35%
45%
57%
17%12% 11%
18%
31%
Fill prescriptions Necessaryspecialist visits
Medical test,treatment, or
follow-up
Doctor visit formedical problem
Any of theseservices
Uninsured Insured
Source: Collins, et al., 2007.
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Impact of health insurance coverage on health status for adults ages 55–64, controlling for multiple factors: 1992–2000
6.7%
4.0%
13.3%
3.9%2.7%
16.6%
Death rate Poor health Excellent health
Actual Insurance Coverage Simulated Full Insurance Coverage
Source: Hadley and Waidmann, 2006.
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Effect of uninsurance on adults ages 55-64, controlling for multiple factors•Uninsurance increases risk of death:
From 7.5 percent to 10.5 percent among all adults age 55-64
From 9.4 percent to 14.1 percent in the lowest income quartile of such adults
•The lack of insurance among these adults Causes more than 13,000 deaths a yearIs the third-leading cause of death, after cancer
and heart diseaseSource: McWilliams et al., 2004
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Part III
Federal policy options
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Assumption: for the poorest, uninsured, non-categorical adults, Medicaid is the policy vehicle •100% FPL = $851/month for an individual in ‘07•Median cost-sharing, non-group plans, ’06-07
Average PPO deductible - $1,747Average co-pay - $28/$35, primary/specialty
•Effect of cost-sharing on indigent patientsMN study - $1/$3 drug copays caused 52% of affected Medicaid beneficiaries to go without necessary medicine; among this group, 34% used the ER or were admitted to the hospital.RAND study – among low-income adults with hypertension, cost-sharing increased blood pressure, raising risk of death by 14%Quebec study – maximum $12/month copays for welfare recipients increased ER use by 78%, hospitalization/institutionalization/death by 88%California study – $1/visit copays in the 1970s increased inpatient utilization by 17%
Sources: AHIP, 2006-2007 Individual Market Survey; M. Mendiola, et al., “Consequences of Tiered Medicaid Prescription Drug Copayments Among Patients in Hennepin County, Minnesota,” presented at Society of General Internal Medicine National Conference, May 2005; J. Gruber, The Role of Consumer Copayments for Health Care: Lessons from the RAND Health Insurance Experiment and Beyond, KFF, October 2006; Robyn Tamblyn, et al., “Adverse Events Associated with Prescription Drug Cost-Sharing among Poor and Elderly Persons,” JAMA 285(4): 421-429, January 2001; J. Helms, et al., “Copayments and the Demand for Medical Care: The California Medicaid Experience,” Bell Journal of Economics, 9:192-209, 1978.
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For non-categorical adults at higher income levels, reasonable to consider other policy remedies•Refundable, advanceable
federal income tax credits •Medicare buy-in for the
near-elderly
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Medicaid approach #1 – change budget neutrality requirements for waivers•Policy variants
Take Medicare savings into accountEliminate budget neutrality requirement for waiver
coverage of poor adults
•ImpactWaivers more useful than today - butWaivers are inherently limited
•Broader budget implications
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Medicaid approach #2 – change Medicaid from categorical to purely income-based eligibility•Advantages
Administrative efficiencyEquity
•Disadvantage – potentially eliminates current-law coverageExamples – nursing home coverage, families moving from
welfare to employment, working disabled, near-poor kids, pregnant women, etc.
In 2006, Medicaid coverage >150% FPL included4.4 million non-elderly adults6.4 million children
•Variation – Medicaid coverage up to threshold, state options to structure coverage above threshold (NASHP)Potential cost increase above income threshold
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Medicaid approach #3 – add coverage of poor adults
•Idea All adults with incomes below a certain threshold
receive Medicaid, regardless of categoryOther eligibility categories continue
•Disadvantages, compared to pure income-based eligibilityLess efficiency savings Fewer equity gains
•Advantage - above income threshold, retains existing coverage without increasing costs
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Medicaid policy questions, regardless of approach•Optional or mandatory eligibility?•Federal funding – standard or enhanced?
If standard, limited state implementation or unfunded mandate
If enhanced, many ways to deliver funds:Enhanced match for this category;Program-wide increase in federal funding;Higher federal match for dual eligibles;Uncapped FMAP or SCHIP-style state allotments; Etc.
•Financial eligibilityIncomeAssets
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Conclusion•Low-income, non-categorical adults comprise
the largest group of uninsured•They suffer serious harm, particularly among
older adults•Serious policy design questions need to be
answered in deciding how best to provide coverage