Health Policy Center, independent research for better health policy: The Urban Institute

Medicaid provides acute and long term care services to low income Americans including children, parents, the disabled and elderly.  The program is a federal and state partnership with the federal government making matching contributions to states that are inversely related to state per capita income.

Medicaid has provided great benefits to low income populations in the U.S.  The program provides insurance to over 40 million Americans, most of whom would not have had coverage without the program in place.  Medicaid pays for about half of all births; helps low income elderly and disabled with their Medicare premiums; is a major source of support for safety net providers and is the backbone of the nations’ long term care system.  There is, however, significant variation in Medicaid program generosity across the states.

The Affordable Care Act will bring about a major expansion of Medicaid, beginning in 2014.  The Congressional Budget Office estimates that Medicaid will have 16.0 million new enrollees under the reform, many of whom will be childless adults.  The number could be higher if advocacy and outreach efforts are successful.  Most of the new cost of the expansion will be borne by the federal government.  States will pay a small share of the costs for the additional coverage but will save money in other areas because they will no longer need to fund indigent care programs or support hospitals and other health care providers who provide uncompensated care to the uninsured.  A disproportionate share of the Medicaid expansion and the associated federal funding will be felt in the south and many western states.

The Health Policy Center has conducted a wide range of studies on the Medicaid program.  Over the years, we have systematically examined the causes of Medicaid’s often explosive spending growth.  We have shown that the problem is not the rich benefit package or low cost sharing.  The real reasons for high growth rates are: increases in enrollment due in part to eroding employer-sponsored insurance and increasing income inequality; increases in the incidence of and recognition of disability; and health care inflation.  We have also examined the issue of the relative costs of care in the Medicaid program, showing that when health status and chronic conditions are controlled for, the cost of serving the Medicaid population is lower than if the same people were enrolled in private insurance plans.

We have analyzed the cost of expanding Medicaid to cover additional people.  These include parents and children with higher incomes, but also childless adults.  Two of the issues that arise in thinking about Medicaid expansion are the issues of low participation rates and crowd out--the displacement of private coverage in response to a public expansion.  Health Policy Center researchers have examined the factors behind low participation rates and have studied approaches that states have made to improving outreach and easing enrollment barriers to increase participation rates.  The Health Policy Center has also led in conducting research on the crowd out issue.  Analysts have produced original research measuring the extent of crowd out and have synthesized the literature on the issue.

We have analyzed various ways Medicaid could be restructured.  This would include increasing federal matching payments, shifting some or all of the cost of dual eligibles to the federal government, and eliminating or reforming the disproportionate share hospital program.  As part of our analysis of Medicaid reform, we have recommended that cost containment be focused on high cost beneficiaries, that provider payment rates be improved, that creative financing arrangements that lack real state/local matching funds be eliminated, and that the federal matching rate formula be restructured.

Other research papers include analyses of:

• the state-by-state impacts of the Medicaid provisions in the Affordable Care Act;

• the distribution of health care spending for different Medicaid populations, such as the disabled, and elderly, e.g., how much is spent by the most costly beneficiaries;

• the use of services and expenditures by dual eligibles, those covered by both Medicare and Medicaid;

• the implications for states of block grants proposals;

• the impacts of waiver programs in Florida and Illinois, New Jersey, Michigan and others.