May 11, 2005 1

Overview of Medicare, Medicaid and

State Children’s Health Insurance Program

for

Citizens’ Health Care Working Group

William J. ScanlonHealth Policy R&D

National Health Policy Forum

May 11, 2005 2

Overview of Medicare, Medicaid and SCHIP

• Eligibility

• Services Covered

• Financing

May 11, 2005 3

EligibilityCategories Income

Medicare

-Aged

-Disabled

-ESRD Patients

All

Medicaid

-Children

-Parents

-Aged

-Disabled

Low Income--varies by state subject to federal limits

SCHIP -Children

Low Income--varies by state subject to federal limits

May 11, 2005 4

Services

Acute Care Chronic Care Long-term Care

Medical, nursing and pharmaceutical services for an immediate need

Medical, nursing and pharmaceutical services for an ongoing need

Supportive services to compensate for a disability

May 11, 2005 5

Services

Acute Care Chronic Care Long-term Care

Medicare X X

Medicaid X X X

SCHIP X X

May 11, 2005 6

Financing

• Medicare– Open Ended Entitlement– Federal

• Payroll Taxes• General Revenues

– Beneficiary Premiums

• Medicaid– Open Ended Entitlement– Federal and State General Revenues

• SCHIP– Fixed Federal Appropriation– Federal and State General Revenues– Beneficiary Premiums

May 11, 2005 7

Medicare

• 41 million beneficiaries

• $301 billion in 2004– 11.7% of Federal Budget– 2.6% of GDP (2003)

May 11, 2005 8

Medicare Program Structure

• “Original” or “Traditional” Medicare (also known as “Fee-for-Service” Medicare)

• Medicare Advantage—Private plan options

• Drug Benefit

Parts A and B

Part C

Part D

May 11, 2005 9

Medicare BenefitsMedicare Covers Acute and Chronic Care

• Part A– Inpatient hospital– Post-hospital skilled nursing facility (SNF) services– Home health– Hospice-care

• Part B– Physician and laboratory services– Outpatient hospital– Therapy– Durable medical equipment and supplies– Home health (not-covered under Part A)

• Part D– Drugs

May 11, 2005 10

Medicare Cost-Sharing

• Hospital Care– Days 1-60—Deductible ($912 in 2005)– Days 61-90—Per day coinsurance ($228 in

2005)– Days 91-150—Per day coinsurance ($456 in

2005) for 60 lifetime reserve days

• SNF– Days 21-100—Per day coinsurance ($114 in

2005)

May 11, 2005 11

Medicare Cost SharingContinued

Part B • Deductible: $110 in 2005• Coinsurance: 20% of Medicare approved

amount• Exceptions

– Mental health: 50% co-insurance– Hospital outpatient—Fixed amounts– Home health—none

• Over-billing limit: 15 % above Medicare approved amount on unassigned claims

May 11, 2005 12

Medicare Cost SharingContinued

Beneficiary cost sharing on Medicare

covered services can be substantial

Beneficiaries in 1998 paying more than:

Number of Beneficiaries Percent

$2,000 3.4 million 11.5 %

$5,000 736 thousand 2.5 %

$10,000 167 thousand 0.6 %

May 11, 2005 13

Medicare Supplementary Coverage

Vast majority of beneficiaries in traditional Medicare have supplementary coverage

Supplementary Coverage in 2000

May 11, 2005 14

Medicare Advantage—Part C

• Offers choice to join private plan

• Plan types include HMOs, PPOs, FFS, MSAs

• Plans paid monthly per enrollee fee regardless of services used

• Plan “savings” returned in extra benefits

May 11, 2005 15

Medicare Advantage—Part C

Plan and beneficiary participation have varied over time

0

50

100

150

200

250

300

350

400

1992 1994 1996 1998 2000 2002 2004

0

1

2

3

4

5

6

7

Plans

Enrollees

Plans Enrollees (millions)

May 11, 2005 16

Medicare Advantage—Part C

• Medicare Modernization Act changed Part C

– Increased payments to plans

– Provided for financial competition among plans and share of savings to Medicare

– Created regional PPOs to expand areas served

May 11, 2005 17

Medicare Advantage—Part CPPO Regions for 2006

May 11, 2005 18

Medicare Drug Benefit--Part D

• Begins January 1, 2006• Separate enrollment and premium• Monthly premium expected to average $37 nationally• Benefit provided by competing private stand-alone drug

plans or Medicare Advantage plans• Benefit

– $250 deductible– Coinsurance

• 25% from $250 to $2,250• 100% from $2,250 to $5,100• 5% on spending over $5,100

• Subsidies for premium and cost sharing for low income persons

May 11, 2005 19

Medicaid and SCHIP

Medicaid• over 52 million beneficiaries

• $ 309 billion in 2004

• Federal share– $176 billion or .8% of federal

budget

• State share– $133 billion or 22%* of state

budgets

*2003

SCHIP• ~ 6 million beneficiaries

• $6.1 billion in 2004≈ 75 % Federal

≈ 25 % State

May 11, 2005 20

Medicaid

Program Roles

• Primary health insurance—mostly families

• Medicare supplement—dual eligible aged and disabled beneficiaries

• Long-term care financer —beneficiaries with disabilities

May 11, 2005 21

Medicaid

May 11, 2005 22

Medicaid

Programs are state designed and administered subject to federal requirements

Result is 56 distinct Medicaid programs

May 11, 2005 23

MedicaidMandatory and Optional Eligibility

Selected CategoriesMandatory

• Children– 6-18 years up to 100%

FPL– 0-5 years up to 133%

FPL– Foster care

• Pregnant women– Up to 133% FPL

• SSI cash recipients

Optional• Children and

Pregnant women– Up to 185% FPL

• Elderly and Disabled – Up to 100%FPL

• Medically Needy

May 11, 2005 24

Medicaid Mandatory Medicare Supplementary Insurance

• Qualified Medicare Beneficiaries (QMBs)– Up to 100% FPL—Part B Premium and cost sharing

• Specified Low-Income Medicare Beneficiaries (SLMBs)– 100-120% FPL---Part B Premium

• Qualifying Individuals (QIs)– 120-135% FPL—Portion of Part B Premium

• Qualified Disabled Working Individuals (QDWIs)– Up to 200% FPL---Part A Premium

May 11, 2005 25

MedicaidMandatory and Optional Services

Selected TypesMandatory

• Physician• Hospital inpatient and

outpatient• Nursing Facility for

persons 21 and over• Lab and X-ray• EPSDT for persons

less than 21

Optional• Prescription Drugs• Dental services• ICF/MRs• Home and

community-based services

May 11, 2005 26

Medicaid Waivers

• Program Waivers– Mandatory managed care enrollment (1915(b))

• Section 1115 Demonstrations– Statewide experimentation with financing

mechanisms, managed care, coverage expansions– HIFA—Health Insurance Flexibility and Accountability

—tradeoff of more limited benefit packages and cost sharing for expanded coverage

May 11, 2005 27

SCHIP

Federal-State Partnership very different• Capped appropriation—not an entitlement

$39 billion for 10 years (reauthorization 2007)

• State Flexibility– States can cap/close enrollment

• 7 states froze enrollment at least temporarily between 2001 and 2004

• 3 had freezes in effect at end of 2004

May 11, 2005 28

SCHIPState Flexibility (Continued)

• Benefits– Medicaid Expansion– Distinct program with benefits similar to

• BC/BS plan; state employees plan; largest Medicaid HMO; or actuarially equivalent

– Combination

• Cost sharing– Very limited for children in families ≤ 150%FPL– For others, premiums and co-payments allowed if

≤ 5% of income

May 11, 2005 29

Changes in Health Insurance Coverage for Low-Income Children and Adults, 2000-

2003Percentage Point Changes

-5.2%-4.0%

7.5%

1.2%

3.2%

-1.6%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Employer Medicaid Uninsured

Children Adults

5.7 Million2.0 MillionChange in Population

3.9 Million-0.1 MillionChange in Uninsured

Note: Low-income is defined as less than <200% of poverty ($29,360 for a family of three)SOURCE: Urban Institute for the Kaiser Commission on Medicaid and the Uninsured, 2004

May 11, 2005 30

Medicaid as LTC Financer

• Pays close to half of all LTC expenditures

• Nursing homes≈46 percent of revenues

≈1 million or 2/3 of residents partially or fully financed

• Home and community services≈48 percent of expenditures

≈850 thousand recipients

May 11, 2005 31

Medicare and Medicaid as a Share of GDP

May 11, 2005 32

For more information

Understanding Medicare and Medicaid: Fundamentals and Issues for the New Congress

Briefing Book — January 26, 2005

www.nhpf.org