History of Medicaid and Beneficiaries
Joint federal-state program enacted in 1965 as companion legislation to Medicare
Originally designed to provide coverage for the following groups of low-income individuals:
- Children
- Pregnant women
- The elderly
- People with disabilities
Expansions:
- 1996: Children’s Health Insurance Program (CHIP): Extended coverage for children in families with a higher threshold
- 2014 with the Affordable Care Act
Umbrella program
Administered by the states
Federal government reimburses states for 50-75% of the costs (higher for lower income states)
Medicaid Spending: Where does the money go to
Medicaid covers gaps in health care coverage
- Helps to cover for dual eligibles (beneficiaries eligible for Medicare AND Medicaid coverage):
- Part B and D premium
- Deductibles and coinsurance
- Services not included in Medicare: long term care
Medicaid is the main source of funding for long-term services and supports
- Nursing home
- Home and community based long term care services that support independent living
Dominant funding source for safety-net providers that serve low-income and uninsured populations:
- Disproportionate Share Hospital (DSH) payments to cover uncompensated care
Medicaid Administration of Health Insurance Coverage
- Medicaid insurance can be fee-for-service or through managed care programs
- MCO=Medicaid Managed Care Organizations
The ACA
- The Patient Protection and Affordable Care Act (PPACA, ACA in this class) was signed into law March 23, 2010
- Most of its features went into effect in 2014
- It is the most dramatic change to US health care policy since the enactment of Medicare in 1965
- The ACA is a package of reforms
What doesn’t work in pre-ACA US?
Large number of uninsured
Gap population
- Income too high to qualify for Medicaid
- Income insufficient to afford insurance in the private market
- Not offered insurance through employer
- Working in small firms
- Working part time
- Unemployed
Strategy in a Nutshell
- ) Expand Medicaid for adults with income up to 138% FPL
- ) Subsidize through taxes the purchase of health insurance for those with income between 138% and 400%
- Create a marketplace for exchanges
- Force healthy individuals to buy insurance so that the risk spreads—individual mandate
- Prohibit underwriting based on pre-existing conditions - ) Force employers with 50+employees to offer health insurance
Outcomes of Medicaid Expansion
Decreased uninsured rates
So what happens in states that decided not to expand Medicaid?
- There is a Medicaid expansion coverage gap
- People who originally qualified for medicaid on one end of the spectrum, then the people who have marketplace subsidies, and the people without coverage in middle (these are the people who were supposed to be covered under Medicaid but no expansion occurred in their state)
The Affordable Care Act and Underwriting
- One of the goals of the ACA was to improve affordability of health insurance for individuals with pre-existing conditions
- The ACA limited the variables that insurers can use for underwriting in the individual market to location, age, family size, and smoking status
- The key change is that insurers are not allowed to underwrite based on pre-existing conditions
- Individual mandate was designed as a measure to bring low-risk individuals to the pool and spread the risk
- Individual mandates consists on a tax penalty that individuals need to pay
Before and After ACA
BEFORE
- Pre-existing condition: Premium = 40k
- No PE condition: Premium = 8k
AFTER
- Don’t know if PE or not: Premium = 10k
