Assessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and social services. Alan Weil is the project director. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively.
Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute's Web site. This paper is one in a series of discussion papers analyzing information from these and other sources.
The project has received funding from the Annie E. Casey Foundation, the W.K. Kellogg Foundation, the Robert Wood Johnson Foundation, the Henry J. Kaiser Family Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation, the David and Lucile Packard Foundation, the McKnight Foundation, the Commonwealth Fund, the Stuart Foundation, the Weingart Foundation, the Fund for New Jersey, the Lynde and Harry Bradley Foundation, the Joyce Foundation, and the Rockerfeller Foundation.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
Introduction
Medicaid is an important source of health insurance for low-income aged, blind, and disabled people, covering 10.9 million people nationwide in federal fiscal year (FFY) 1997.
1 These groups often face barriers to private insurance coverage (e.g., limits due to preexisting conditions, unaffordable premiums) because they tend to require more health care, and often more expensive types of care, than other groups. Lack of Medicaid coverage can impose substantial financial burdens on low-income aged, blind, and disabled persons. One recent study found that noninstitutionalized elderly Medicare beneficiaries with incomes below 200 percent of the federal poverty level (FPL) and no other source of insurance spent between 22 and 35 percent of their incomes on out-of-pocket medical expenses, while "dual eligibles" (people covered by both Medicare and Medicaid) spent just 4 to 8 percent of their incomes on out-of-pocket medical expenses (AARP/Lewin, 1997).
For low-income aged, blind, and disabled people who are not eligible for Medicare, Medicaid provides a full range of acute and long-term care benefits at little or no cost to enrollees. For people eligible for both programs, Medicaid helps to pay Medicare's cost-sharing requirements and covers prescription drugs, nursing homes, and other long-term care services-benefits that Medicare does not provide. Lastly, some low-income Medicare beneficiaries who are not eligible for full Medicaid benefits may be eligible to receive assistance from Medicaid with their Medicare premiums and cost-sharing requirements. In this manner, Medicaid helps to fill in gaps left by other public and private insurance plans.
Medicaid spending for aged, blind, and disabled people dominates the program. While just over one-quarter of Medicaid enrollees in 1997 were aged, blind, or disabled, they accounted for 72 percent ($104.9 out of $145.2 billion) of Medicaid spending on medical services. Long-term care, particularly in institutional settings, is a significant contributor to these expenditures. States spent $57.9 billion on long-term care for the aged, blind, and disabled in 1997, including $42.6 billion for nursing facilities and intermediate care facilities for the mentally retarded (ICF/MRs). Other significant contributors to the high cost of coverage for these enrollees are inpatient hospital care ($13.6 billion, mostly for the blind and disabled) and prescription drugs ($8.5 billion).
Federal law requires that Medicaid programs cover certain low-income aged, blind, and disabled people, primarily recipients of Supplemental Security Income (SSI). In addition, most states use at least one of several optional categories of Medicaid eligibility to insure other aged, blind, and disabled people. Nonetheless, in 1995, only 42 percent of people age 65 and older with family incomes below 100 percent of the FPL were covered by Medicaid.2 Although several changes to eligibility policies in the last decade were designed to increase coverage of the low-income, uninsured population, nearly all of these expansions have targeted children and pregnant women. Federal Medicaid eligibility policies for aged, blind, and disabled people have remained virtually unchanged since the mid-1980s.
This paper presents data on state Medicaid eligibility policy for aged, blind, and disabled people drawn from a 1998 Urban Institute survey of state Medicaid programs, as well as information collected by the National Academy for State Health Policy (Horvath, 1997) and Commerce Clearing House, Inc. (CCH, 1998). In brief, analysis of these data suggests that Medicaid eligibility for the aged, blind, and disabled is very complex and confusing, with multiple ways of covering the same population. Coverage of the aged, blind, and disabled populations varies considerably by state, with many states not taking advantage of available options to extend coverage beyond that required by federal law. At the same time, federal rules limit state flexibility to expand or simplify coverage in some areas. For example, income requirements for medically needy coverage, which provide Medicaid to people with high medical expenses but incomes initially too high for Medicaid, tend to be very low, in part due to a federally imposed ceiling that links maximum income levels to the old Aid to Families with Dependent Children (AFDC) payment standards.
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Notes
1. All Medicaid expenditure and enrollment statistics presented in this paper are the authors' estimates based on state reports to the Health Care Financing Administration (HCFA).
2. The percentage of elderly individuals enrolled in Medicaid is the authors' calculation based on revised Current Population Survey (CPS) data from the Urban Institute's TRIM2 micro-simulation model, which imputes Medicaid coverage to some individuals on the CPS to better reflect Medicaid's administrative records. By contrast, original CPS data show only 30 percent of elderly people with incomes under 100 percent of the federal poverty level (FPL) covered by Medicaid in 1995 (Committee on Ways and Means, 1998). The number of Medicaid recipients shown by the CPS is lower than the number in Medicaid administrative data due to underreporting by CPS respondents. Note that the percentages given do not include younger persons with disabilities. The percentage of younger disabled people with incomes under 100 percent of the FPL covered by Medicaid is around 80 percent using data from the TRIM2 model. Comparable data are not available from the original CPS.
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