Matthew Holt

POLICY: Medicaid as the route to universal insurance?

During the Dolphin Group webinar I was presenting on today, I was asked if Medicaid would become a communal buying pool that would solve the unisurance problem. I rather fliply dismissed the idea, and Scott Tiazkun, healthcare analyst, IDC Research mentioned that something like that was going on in Massachusetts. Now there have been local changes in how many people Medicaid covers — for instance Tennessee put almost all its uninsured into Medicaid in the mid 1990s and more recently threw most out, and Utah changed the way it paid for Medicaid and enrolled more people — but we’re nowhere near the Clinton plan of putting all of Medicaid, all the uninsured and most small business employees in big buying pools. So I felt fairly safe saying what I said, but I also wasn’t exactly working from the latest data in my head. (Remember this was a webinar about health plan web strategies!)

To be honest I knew that Medicaid had picked up its enrollment relative to private payers in recent years — particularly in the recent recession, and as I really hadn’t looked much at this recently, I spent a bit of time today digging. What I did know is that the restrictions on Medicaid eligibility were greatly slackened at the end of the first Bush Administration and (from memory) the numbers on Medicaid went from the mid-20 millions in 1989 to nearer 35 million in the mid 1990s (with most of the rise during to the 1990-2 recession). Then under the SCHIP (health insurance for children) program in the mid-to late 1990s, another several million kids were put into Medicaid. Now some 5 million of that 35 million were dual eligibles (poor seniors on Medicaid and Medicare) and were double counted, but nevertheless the number of Medicaid recipients has gone up quite a bit. USA today reported last week (chart lifted from their site) that the number went from 34 million in 1999 to 47 million this year.

Us_mcaid The reason they gave in a companion article was that because welfare had essentially been abolished back in 1996, states no longer gave Medicaid only to AFDC recipients, but now have the freedom to base eligibility on income. And although eligibility has toughened up and rolls have been cut somewhat in most places during the most recent recession, in general states are getting more relaxed about eligibility requirements and some states such as Minnesota and Massachusetts are actually trying to add to their rolls.

I went to look at my estimates for the IFTF/RWJ 1997 Ten Year Forecast and I then estimated mostly just on population growth that by 2006 some 35m would be on Medicaid (which equates to 40-42m if you count in the dual eligibles). So things have progressed faster than I thought. The Center for Health System Change reported that despite a rise in the number of Americans getting employment based-insurance in the boom times, that number fell from 67% of the under-65 population in 2001 to 63% in 2003, and that most of that decline was replaced by people moving into Medicaid, although the number of uninsured did rise slightly too. Clearly at the margin Medicaid is replacing employer-based insurance. But have the numbers within Medicaid really gone up quite so much?

Using some data from 1993 that CMS has available, it looks as though some 5 million children got into Medicaid (or separate but equal SCHIP programs) between 1998 and 2003, and this seems equivalent to the data that HSC used in its study. Kaiser Family Foundation (which is a wealth of information about Medicaid) in a January 2005 fact sheet said that in 2003 Medicaid covered 25 million children, 14 million adults (primarily low-income working parents), 5 million seniors and 8 million persons with disabilities. That gets us to a total of 53 million, or 48 million not counting the seniors (who are dual eligible). CMS said in 2004 using FY 2001 data that 46 million people received Medicaid services. But CMS says in another data sheet that in 2004 there are 42 million enrollees and 52 million beneficiaries. A beneficiary is someone who receives a (payment for a) service from Medicaid. Now we are getting somewhere near the nub of the issue, in that people go in and out of Medicaid often on a monthly basis.

My assumption is that the "snapshot" is the 42 million, which seems much lower than the 47 million that USA Today reports citing CMS data that I cannot find on their web site. So I suspect (but please if you know I’m wrong email me) that the USA Today number is the 42 million plus some 5 million dual eligibles (although KFF says that the number of dual eligibles is now 7 million in this recent factsheet). So overall counting Medicaid enrollement is very hard to do, as you are counting several moving targets, and it’s a question of definition.

But what Scott said this morning was that Massachusetts was looking at Medicaid as becoming a way to provide universal health insurance.1121593676_3333jpg And judging by this article in the Boston Globe, that’s what Mitt Romney, (who is the guy who made me wait 2 hours to get into the Ski Jumping at the 2002 Winter Olympics, and incidentally) the Governor of Massachusetts, is saying he’s aiming for. Enrollement went from under 700,000 in 1997 to nearly 1,000,000 in 2002, back down to nearer 900,000 in 2003 and is now moving back up near to 1,000,000.

However, this is all a long way from saying that Medicaid is going to be the cure for uninsurance. There are two main reasons why.

First, most of the people going into Medicaid are effectively leaving employer-based insurance rather than moving from being uninsured to having Medicaid. Of course there may be people moving from being uninsured into Medicaid as featured in the USA Today story, but overall their places in the ranks of the uninsured (which is itself an extremely fluid population) are being taken by an equivalent amount of people losing employer-based insurance. So the overall number of uninsured is not being changed by this increase in Medicaid enrollment, other than the uninsured number would be much higher than the current 45 million (snapshot), had it not happened.

The second reason is the relative makeup of Medicaid and the uninsured. KFF also has a great fact sheet on the unisured.  Only 20% or 9 million of the 45 million uninsured are children, leaving 36 million adults, of whom 80% are in some type of work, or have a family member working. Medicaid now only covers 14 million adults. That means that Medicaid would have to double enrollment overall and nearly quadruple it amongst low-income adults to get rid of the uninsured, and given that half of those uninsured adults are over 35 and thus somewhat expensive, that would cost plenty.

This is just not going to happen in the current fiscal and political environment. So even though getting some of the working poor onto Medicaid is a good thing, it’s disingenous to say that Medicaid is going to be the solution to the uninsurance problem.

What we should so with the Medicaid population is move it en masse into some type of universal insurance pool, with the uninsured, and a bunch of other people.  But no one in Congress with any clout is going to be touching that with a ten-foot pole, and while Bush has noticed that health care is an issue, we all know this his "solutions" aren’t.

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California Health InsuranceAbbyMatthew HoltspikeRon Greiner Recent comment authors
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California Health Insurance
Guest

It would be great to use medicaid as a route to universal health insurance. Health insurance is a major aspect to many and I would like to see everyone covered.

Matthew Holt
Guest

To be fair to Ron, we did have a session about making his posts HSA free a while back, and the consensus was to let Ron keep on being Ron!

Ron Greiner
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Ron Greiner

Abby,
Are you saying that I should stop saying that Group Health Employee Plans terminate sick employees if they get too sick to work 30 hours per week?
HSA-free zone huh? You’re a hoot.

Abby
Guest
Abby

What Mitt Romney advocates is barely relevant to the debate in Massachusetts. There’s a veto-proof Democratic majority in both houses, and it looks like Romney won’t be running for re-election. He hasn’t officially announced anything yet, but he did write an op-ed saying that he thought that Roe v. Wade should go and abortion policy should be returned to the states. Hardly a popular position in Massachusetts. I haven’t heard much from Romney advocating for Medicaid expansion. His current thing is to require people to buy stripped-down policies. There is a coalition of groups called MassAct which is trying to… Read more »

Ron Greiner
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Ron Greiner

Matthew, I said give the poor the amount of their deductible in their HSA. It’s still a lot cheaper than paying for over-priced dangerous Medicaid to politically connected insurance companies.

Ron Greiner
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Ron Greiner

Very good Eric. Some want to eliminate the tax deduction for job based insurance. I don’t think that will happen and there really is no need. If we give individual health insurance consumers the right to deduct their insurance, the group employee health plans will fold anyway. Liberals see no need for individuals to be able to deduct the cost of their insurance. Liberals always support Group Health Plans. HRAs are ok if you want your balance stolen at retirement. HSAs are much better because, 1) you get tax free interest, 2) you keep the money for retirtement healthcare expenses.… Read more »

Matthew Holt
Guest

Wow, we’re busy today — 2 posts while I was writing mine. Eric — I am very suspicious of that “premiums down 15%” number from eHealthinsurance, as they dont state the other parts of the equation, that is, what’s the average deductible people are getting and how aggressive is the medical underwriting on those plans becoming. I am trying to get them to answer…

Eric Novack
Guest

Spike- you are right in the current environment (we must have posted simultaneously) that- all things being equal, not much will be saved (if any). The essential piece that is implicit in the HSA promoters’ plans- though rarely articulated– is the concept of personal responsibility and ownership over one’s own healthcare. To wit– one specific example and one general example: #1: 40 year old man plays basketball with his child on Sunday- on Monday knee is somewhat swollen and sore. Goes to orthopedist on Thursday. Doctor is suspicious for a “cartilage tear”. Fact- many with cartilage tears do better than… Read more »

Matthew Holt
Guest

Ron, I’ve missed you! Spike & Tom, Ron is kind of a one note tuba on the HSA issue…no one from the high deductible plan side has successfully answered the question about where does the money come from to pay for care for the sick if everyone only has a high deductible plan (i.e. the 80/20 rule)….but I may have another response to that if I can con Eric into doing some work…. However, I agree with Ron (mostly) about what a mess Medicaid is, and I don'[t believe in expanding Medicaid as is to all (which appears to be… Read more »

Ron Greiner
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Ron Greiner

Spike, after the deductible the HSA insurance pays 100%, including drugs. Now Medicaid is charging co-pays so it’s cheaper for the poor. Plus, Medicaid is very dangerous. If you are on Medicaid and get diagnosed they terminate you if you start making a dollar. With individual insurance the poor can’t be terminated because they find some employment. That is much safer spike. Same with SCHIP for children. If a child become diagnosed they are terminated on their 19th birthday. Come on spike, terminating a young girl with no hair because of cancer, just because they reached their 19th birthday is… Read more »

Eric Novack
Guest

Tom- I would like you to expand on your pay-or-play plan- I will grant you that in the current environment, large and small companies are involved in a perverse balancing act around health benefits. As you are aware, companies currently have a serious disincentive to give many employees adequate hours of work per week– the primary reason is the cost of health benefits. Here is a several step proposal: 1. Make the cost of health benefits a line on your W-2. This means you know at the end of the year how much of your compensation package is health benefits.… Read more »

spike
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spike

Ron, your solution doesn’t do anything. It’s just shifting money around and providing even more incentive for poor people to avoid healthcare until the situation is truly dire. What happens once the $1000 deductible is exhausted? Who pays for it then? Wouldn’t Medicaid? Why would overall costs go down just because the people are in an HSA. In fact, all that’s happening is that not only are you still spending the same amount on poor people (maybe more because of the disincentive to seek preventive care), you’re also losing $1000 per year for each healthy person. I feel like I’m… Read more »

Ron Greiner
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Ron Greiner

Sorry Tom you are wrong. Conservatives want tax credits for the poor to purchase low cost HSA insurance in the free and open market. Medicaid in Iowa has just passed an HSA option, the first state to do so. Buy the poor low cost HSA insurance with a $1,000 deductible then the state deposits $1,000 in their tax free HSA. This would still slash the costs of Medicaid. If the poor get sick they have the money to pay their deductible and if they don’t get sick they can save the money with tax free interest or put the HSA… Read more »

TomHilliard
Guest

Hmm. Not sure what HSAs would do for the poor. Interestingly, the Cato Institute (and other conservative analysts as well) objects to converting Medicaid into an HSA-based program, noting that the government would have to put money into a personal savings account, which would then become a potent incentive to stay in Medicaid and turn down private insurance. But if that’s not the solution, we still have all those poor people who get sick a lot. Or is their welfare less important than our free-market principles?

Ron Greiner
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Ron Greiner

Medicaid is pitiful, get real. The New York Times reported that Medicaid costs $10,600 a year, per person in New York. What would the family of 5, I just enrolled in Michigan for $190 a month on HSA insurance, cost if those New Yorkers had their way — $53,000 a year!!!! — Federal tax payers are paying half the bill!!!!!! You are so wrong Matthew, tax free HSA enrollments are exploding. I predict 4 million HSAs by the ’06 election and 15 million by the ’08 Presidential election. Poor uninsured people all over America are paying taxes so New Yorkers… Read more »