Medicaid and poor adults: Who’s left out? How can federal policy help?

THE URBAN INSTITUTE 1

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


“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


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


Who’s left out?

•Adults without children•Empty nesters


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


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)


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.


The history of this exclusion

•Elizabethan Poor Law of 1601

•Social Security Act of 1935

•Medicaid’s creation in 1965

•Medicaid’s subsequent evolution


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?

THE URBAN INSTITUTE

Part II

Facts about uninsured, non-categorical adults


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.


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%


Total number: 16.6 million


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.


Uninsured, non-categorical adults broadly resemble other uninsured

Uninsured, non-categorical adults, by employment:

2006

Working 79%

Not Working

21%


Uninsured, non-categorical adults, by citizenship: 2006

U.S. citizens

81%

Non-citizens

19%




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%


Uninsured, non-categorical adults, by income 2006

101-200%

FPL, 25%

201-300%

FPL, 17%

301+% FPL, 29%

0-100% FPL, 29%




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.


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.


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

THE URBAN INSTITUTE

Part III

Federal policy options


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.


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


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


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


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


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


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

Medicaid and poor adults: Who’s left out? How can federal policy help?

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