by Mike Miesen
Thanks to a certain saxophone-playing former President, and a noodling current Vice President candidate, Medicaid is actually being discussed in this year’s presidential race. As a burgeoning policy wonk, this is great news – Medicaid isn’t well understood, but it affects the lives of millions of Americans, in ways they mostly aren’t aware of.
Here’s the deal: Medicaid is complicated and confusing, and there are lots of simpler things to think about (10,000 people showed up to the Walker Art Center’s Cat Video Exhibition, where they sat and watched… cat videos). But it’s extremely important that we have a better grasp of who Medicaid helps and what it actually funds – for ourselves, our current/future families, and our parents.
This is my attempt to elevate Medicaid awareness to Cat Video levels.
What is it, and how is it funded? Medicaid is a health insurance program jointly-financed by the federal government and individual states, with the federal government picking up an average of 57% of the tab (using a formula known as the Federal Medical Assistance Percentage, or FMAP, with poorer states receiving a higher FMAP). The matching rate varies widely by state – anywhere between the floor of 50% in states like Massachusetts to 74% in the state of Mississippi.
At last count, in FY 2009 there were 62,594,979 Americans enrolled in a Medicaid plan.
Who is currently eligible?
Just like a girlfriend or boyfriend may have once told you: It’s complicated.
Medicaid eligibility varies significantly by state. Within each state, eligibility depends on a number of demographic factors: gender, disability, family size, number of children, and amount of assets.
An example may help clarify. Let’s say you and your husband/wife have a kid and live in Texas. You can make up to 26% of the Federal Poverty Level (FPL), which is $19,090 for a family of three. Pull out the old abacus and do the math – 26% of that is $4,963 (the lowest rate in the country for this cohort). For contrast, take Highway 35 all the way north to the great state of Minnesota, and the same family will be covered up to 215% of the FPL (or $41,043). (full disclosure: I’m from Minnesota, which is why I think it’s great. Salt of the earth people up there).
Take away the kid, and Texas (along with 41 other states) will not provide Medicaid to you, period (as it happens, Minnesota is one of the few states that does – up to 75% of the FPL). Generally speaking, state Medicaid programs are more generous to children (anywhere between North Dakota’s rate of 160% to New York’s 400%), the disabled, and the elderly.
So, moral of the story for the poor post-grad? Have a kid, pack up the car, and move to New York City. Or, skip the kid, grab your ramen and move to Minnesota (tourism note: our most prominent sculpture is a cherry on a spoon! Really.).
Who is eligible under the Affordable Care Act (ACA)?
Again: it’s complicated – though slightly less complicated than pre-ACA. Without the Supreme Court’s decision on the ACA, any American citizen that made up to 138% of the FPL would be eligible for a state’s Medicaid program – with many states continuing to have a higher threshold. If a state decided it did not want to expand Medicaid eligibility, it would lose all of its federal Medicaid money. As it happened, the Supreme Court ruled that a state could not be “coerced” into accepting the expansion, and ruled that pre-ACA Medicaid funding was safe, regardless of a state’s decision. As a result, six states have already declared they will not expand, and more are leaning towards doing the same (see the awesome graphic below from the Advisory Board Company, as of September, 2012).
After the Supreme Court ruled, the Congressional Budget Office (CBO) looked into the Medicaid expansion to see how the decision was likely to affect it. Their verdict? Six million fewer Americans enrolled in Medicaid or the Children’s Health Insurance Program in 2014; two million more are expected to enroll in the state health insurance exchanges instead of enrolling in Medicaid.
Something that isn’t well-known and is seldom reported is the fact that almost a third of Medicaid spending is on long-term care, generally for the elderly (see the breakout in pie form below; data taken from the Kaiser Family Foundation ). That’s a huge portion of the Medicaid budget.
If you look at the data, it’s crystal clear: Medicaid spending is highly skewed towards the aged and the disabled; very little is spent on non-disabled adults (again, check out the chart I cooked up below). It also should be clear that there’s very little cost in insuring increasing numbers of children and adults.
What does all of this mean? For starters: our parents and grandparents are at, or will be at, the age where long-term care may be a real need. As a great New York Times article pointed out, Medicaid is often the funding source for the elderly, after they’ve exhausted their savings. It’s a payer of last resort for these services, but check out the graphs – it pays a lot.
So, you know a lot about Medicaid now, right?
Well, hopefully you know a lot more than you did before, but…. It’s still complicated. Why? As should be of little surprise, President Obama and Governor Romney have divergent views on the future of Medicaid, with significant ramifications for current and future enrollees. I’ll cover their plans, and what they mean for Americans, in my next post.
Mike is a healthcare consultant specializing in hospital operations who graduated from the University of Wisconsin-Madison. Follow him on Twitter @MikeMiesen.