Kinh tế học - Medicaid - Professor vivian ho health economics fall 2009

MedicaidProfessor Vivian HoHealth Economics Fall 20091TopicsCoverage and FinancingCurrent ChallengesRestraining costsImproving health2Medicaid Trends1972 17,606 1975 22,007 1985 21,814 1988 22,907 1989 23,511 1990 25,255 1995 36,282 1998 40,0962001 45,766 2005 57,300 $ 6,300 12,242 37,508 48,710 54,500 64,859 120,141 142,318 186,905 298,200Year# ofRecipients (m)Total Cost ($m)3Medicaid Recipients, 2005 (2008 Edition) % of recipients % of payments Average payment Kids(7m in 2007.Income eligibility levels vary from 300% of federal poverty level in Connecticut, to 133% in Wyoming9Medicaid & the Nursing Home MarketIndividuals who meet certain low-income and disability requirements qualify for nursing home care covered by MedicaidMedicaid reimburses nursing homes on a fixed price basis (e.g. price per day)10Medicaid & the Nursing Home MarketHow can the Medicaid program set prices in order to insure adequate access, but also restrain costs?Keep in mind that nursing homes can choose to serve private pay or Medicaid patients11Medicaid & the Nursing Home MarketWe assume that most nursing homes have a local monopolyi.e. Most nursing homes face a downward sloping demand curveA nursing home with monopoly power which serves only private-pay patients will set price where MR=MC12Medicaid & Nursing Homes$NH patient daysATCMCDemandMRQ0P013Medicaid & the Nursing Home MarketNow, assume instead that there are no private patients, and the gov’t must set a reimbursement level for care provided to Medicaid patientsIf the gov’t wants care provided at the lowest possible cost per day, it will choose a price equal to the minimum of the average total cost curve14Medicaid & Nursing Homes$NH patient daysATCMCDemandMRQ3PMMRM15Medicaid & the Nursing Home MarketNow, consider the graph when a nursing home can serve private pay patients and/or Medicaid patientsThe demand curve for private pay patients indicates that some are willing to pay more than PM for nursing home care16Medicaid & Nursing Homes$NH patient daysATCMCDemandMRQ3PMMRMThe nursing home will now view its MR curve as the line ABMRMAB17Medicaid & the Nursing Home MarketFor all private pay patients “up to” point B on the MR curve, the nursing home knows that its MR will be greater than the Medicaid reimbursement rateThus, for private pay patients, the nursing home no longer prices at MR=MC. Instead, it serves the number of private pay patients “at” point B18Medicaid & Nursing Homes$NH patient daysATCMCDemandMRQ3PMMRMThe nursing home will care for Q1 private pay patients and Q3-Q1 Medicaid patients.ABQ1P019Medicaid & the Nursing Home MarketPolicy challenge: Medicaid can increase access to nursing homes by raising PMHowever, raising the reimbursement rate will lead to higher expendituresSome patients who might have been willing to pay out-of-pocket without Medicaid now may get Medicaid coverageGov’t attempts to subsidize care for low-income individuals can lead to “crowd-out” of private care202122Does Medicaid “work?”In late 1980’s, income ceilings for Medicaid coverage were raisedPregnancy care for women with incomes <133% of povertyChildren <6 covered if family income <133% of povertyChildren <9 covered if family income <100% of poverty23Did health insurance coverage for the poor increase, or did it “crowd out” private insurance?Some low income people may have dropped private insurance to go on MedicaidDid health status among the poor improve?241987-1992: Medicaid coverage of children rose (15%21%), but private insurance coverage fell (77%69%)But private insurance may have fallen for other reasons (e.g. 1990-91 recession)States could increase eligibility beyond federal minimumsCompare increases in Medicaid coverage and falls in private insurance across states25ResultsThe Medicaid expansion increased coverage for 1.5 million childrenBut decreased private insurance by .6 millionSimilar results for women of childbearing ageThe expansions lowered infant mortality by 8.5%; child mortality by 5.1%Cost per life saved: $1-1.6m26Was the expansion worth it?Should Medicaid be “better targeted?”In 2002, Medicaid surpassed Medicare as nation’s largest health insurance programCould we have gotten the same result cheaper?27Current challenges to MedicaidRising Medicaid costs have strained state budgets during recessionsProblematic, because most state governments required by law to balance their budgetsMany states have made Medicaid program changes281) Modest reductions in fundingLower physician, nursing home reimbursement ratesLimits on prescription drug useNoncoverage of optical, dental care2) Expansion of Medicaid managed care3) Cost shifting to the federal governmentStates shifting all state-run health programs into Medicaid, in order to receive matching funds29Medicaid and Managed CareStates vary widely in financing and delivery arrangements for managed care plansLow-intensity: primary care case management (PCCM)Gatekeeper bears no risk for cost overrunsHigh-intensity: mandatory enrollment in fully capitated plans30Impact of Medicaid managed careMedicaid managed care grew rapidly in mid 1990s due to attractive business opportunities“Foot in the door” for providing state employee health care coverageInsurers didn’t have to pay commercial rates to providers, could also transfer riskHMO industry was making high profits at this time31Impact of Medicaid managed careIn early 2000’s, HMO profits disappearedMirrors problems w/ health care costs in private sector and MedicareStill have 2-fold variation in capitation rates across statesDifficult to monitor qualityTennCare had significant differences in LBW babies and death in 1st 60 days across its Medicaid managed care programs32Future challenges to MedicaidHMOs have enrolled AFDC beneficiaries, but not the higher cost elderly, or chronically disabledHigh-cost populations may require carve-out programs33Eligibility, Marketing, and EnrollmentIntermittent eligibility as enrollees cycle in and out of welfareHigh turnover forces HMOs to market aggressively, to maintain revenues (costs up to 1 month’s capitation per member)34Traditional providers may not be able to compete with commercial HMOsCommunity health centers, urban hospital outpatient programs, indigenous community-based physicians have provided much care to Medicaid beneficiariesSubsidized in past due to high level of uncompensated careIf forced to close, creates access problems for persons w/o coverage35Wrap-upFunding the Medicaid program provides health benefits, but sometimes at significant costsFuture decisions on Medicaid should be made within the context of wider welfare reform36