Medicaid and poor adults:
Who’s left out?
How can federal policy help?
Stan Dorn
The Urban Institute
202.261.5561
[email protected]
http://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
“Parents and children” side of the program
dependent children
• Pregnant
• Elderly
• People with severe and
“Elderly and disabled” side of the
program
permanent disabilities
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Who’s left out?
• Adults without children
• Empty nesters
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Topics to cover
1.
2.
3.
The federal exclusion of non-categorical adults
Facts about uninsured, non-categorical adults
Federal policy options
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Part I
The federal exclusion
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What is the federal exclusion of noncategorical 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?
Comprehensive
Less than
comprehensive
1115 waivers
State-only funds
9 states: AZ,
3 states: DC,
DE, HA, ME,
MA, NM, NY,
OR, VT
MN, WA
12 states: AR,
1 state: PA
DC, IA, ID, IN,
MD, MI, MO,
MT, OK, TN, UT
Sources: Klein and Schwartz, 2008; Dorn, et al., 2005. Note: comprehensive programs provide (a) benefits
at 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 rendered
In 1935
About 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)
5.3
4.3
1.8
1.9
1.5
1.4
2.6
4.1
3.9
3.8
Children
Parents of
dependent children
6.9
300+% FPL
200-299% FPL
100-199% FPL
Under 100% FPL
8.9
Other adults
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%
Other Adults,
55%
Parents of
Dependent
Children, 25%
Total number: 16.6 million
Source: KCMU/UI, October 2007.
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Uninsured non-categorical adults, by
age, income, and eligibility for
Medicaid/SCHIP: 2004 (millions)
Eligible
Ineligible, income below 300% FPL
Ineligible, income at 300%+ FPL
1.5
7.9
1.9
1.1
1.3
3.2
2.9
3.6
1.1
0.2
0.3
0.3
19 to 29
30 to 39
40 to 49
50 to 64
Age
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
Not
Working
21%
Working
79%
Total number: 25.5 million
Uninsured, non-categorical
adults, by citizenship: 2006
Noncitizens
19%
U.S.
citizens
81% 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
Asian &
other,
7%
Uninsured, non-categorical
adults, by income 2006
301+%
FPL, 29%
0-100%
FPL, 29%
Latino,
26%
White,
51%
201300%
FPL, 17%
Black,
16%
101200%
FPL, 25%
Total number: 25.5 million
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
Uninsured
Insured
57%
45%
38%
37%
35%
31%
18%
17%
12%
Fill prescriptions
Necessary
specialist visits
11%
Medical test,
treatment, or
follow-up
Doctor visit for
medical problem
Any of these
services
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
Actual Insurance Coverage
Simulated Full Insurance Coverage
16.6%
13.3%
6.7%
3.9%
Death rate
4.0%
2.7%
Poor health
Excellent health
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 year
Is the third-leading cause of death, after cancer
and heart disease
Source: McWilliams et al., 2004
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Part III
Federal policy options
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Assumption: for the poorest, uninsured, noncategorical 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 - $1,747
Average co-pay - $28/$35, primary/specialty
•Effect of cost-sharing on indigent patients
MN 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 account
Eliminate budget neutrality requirement for waiver
coverage of poor adults
• Impact
Waivers more useful than today - but
Waivers are inherently limited
• Broader budget implications
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Medicaid approach #2 – change Medicaid from
categorical to purely income-based eligibility
• Advantages
Administrative efficiency
Equity
• Disadvantage – potentially eliminates current-law
coverage
Examples – nursing home coverage, families moving from
welfare to employment, working disabled, near-poor kids,
pregnant women, etc.
In 2006, Medicaid coverage >150% FPL included
4.4 million non-elderly adults
6.4 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 category
Other eligibility categories continue
• Disadvantages, compared to pure incomebased eligibility
Less 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 eligibility
Income
Assets
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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
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