Medicaid has been at the center of much of the health care and budget debate this year in Washington and Baton Rouge. Here is a primer on the program.
What is Medicaid?
It’s a government program that provides health care primarily for low-income people. Also qualified for Medicaid are middle-class people who are blind, elderly or have other disabilities. The federal government pays for most of the Medicaid program; Louisiana and other states share some of the costs.
The program was created by Congress and President Lyndon Johnson in 1965. During President Barack Obama‘s administration, Congress broadened Medicaid in 2010 to cover more people by passing the Affordable Care Act. Medicaid is the country’s largest insurer.
How many people are covered?
About 74 million people — 1 in 5 five Americans — are enrolled in Medicaid. Louisiana is more dependent, with 1.6 million — about 1 in 3 residents — using the program.
Of the total Medicaid population in Louisiana, about 1.2 million people are enrolled in conventional Medicaid. Another 440,000 people have enrolled under the expansion made possible by the 2010 federal law.
About 73 percent of Louisiana residents on Medicaid would have been entitled to coverage even if Obama’s health care law had never passed. The other 27 percent just started receiving Medicaid benefits in 2016, when Gov. John Bel Edwards accepted the expansion funding offered by the federal government.
Who is covered in Louisiana?
Pregnant women, children and elderly people who are poor, as well as some disabled people, have been entitled to Medicaid since the beginning of the program. With the 2016 expansion, Louisiana has also been offering coverage to adults who are poor but don’t have a disability and aren’t pregnant. To qualify, these people must make no more than $34,000 per year for a family of four and $16,000 per year for a single person.
Children make up about 45 percent of all people enrolled in Medicaid in Louisiana. Another 11 percent of Louisiana enrollees are blind or otherwise disabled. Slightly less than 4 percent are elderly, according to the state Health Department.
Additionally, Medicaid paid the cost of 66 percent of births in Louisiana in 2016; that’s about 42,000 births. Across the country, Medicaid covers about half of all births.
How much does Medicaid cost Louisiana?
The federal government picks up the bulk of the tab for the Medicaid program. For every dollar the state puts into Medicaid, the federal government supplies about $1.74, according to the Louisiana House budget office.
The state Health Department’s budget is about $13.6 billion in the fiscal year that started July 1. That’s almost half of the total state budget of $28.3 billion.
Of the Health Department’s budget, about $10 billion is federal funding, mostly for Medicaid. Louisiana is chipping in about $3.8 billion, mostly for Medicaid, through fees for service, dedicated funding and tax revenue. About $2.4 billion of that funding is considered “discretionary,” meaning it’s not dedicated via a fee or other mechanism and could be used for other purposes, such as higher education, if officials change their mind.
How does Medicaid affect the state’s budget?
Medicaid and health care consume more of the state government’s discretionary money than anything except elementary and secondary education. To put it in perspective, about $3.6 billion of the state’s discretionary tax revenue will be spent this year on K-12 education, $2.4 billion on health care (mostly Medicaid) and $1 billion on higher education.
The amount of state discretionary money spent on Medicaid has more than doubled since 2007-08. In that fiscal year, the figure was $1.1 billion.
That is, in part, because there is no cap on Medicaid costs. If a person qualifies for Medicaid, he or she is entitled to be enrolled regardless whether the state has prepared for the expense. As the program grows, so does the cost to the state, even if the federal government pays for most of the services.
Not all Medicaid programs cost the state the same amount of money, however. For example, the conventional Medicaid program is much more expensive for the state to run than Medicaid expansion.
Why is conventional Medicaid more expensive?
The federal government reimburses the state at different rates for people enrolled through conventional Medicaid and the Medicaid expansion. For conventional Medicaid, the state is obligated to pay 25 percent to 50 percent of the costs.
Until 2020, the state must cover only 5 percent of the costs of people enrolled in Medicaid expansion. This makes it much cheaper for the states to provide Medicaid expansion than the conventional Medicaid program, which is one reason that so many states have accepted expansion. Louisiana also increased a tax on insurance premiums, paid by insurance companies, to pay for the state’s share of Medicaid expansion bills.
After 2020, the state must 10 percent of the costs of the Medicaid expansion.
What control does Louisiana have over costs?
Because people who qualify for Medicaid are entitled to it, regardless of the cost, controlling costs is difficult. And many of the ways that Louisiana might curb its Medicaid expenses aren’t very desirable.
The federal government mandates every state that offers conventional Medicaid (currently all 50 states) cover certain groups: pregnant women, blind people and certain people with other disabilities. There are some “optional” services that could be eliminated in tough budget times, but several of them aren’t the type that lawmakers want to cut:
- Services for children and disabled adults, to pay for everything from equipment to home health care and adult programs
- Mental health services that teach life skills and provide full-time supervision to people with severe illnesses
- A program that covers multiple prescriptions for a person, instead of just one or two at a time.
State lawmakers have not shown a willingness to cut these services. They debate it every time they are faced with too much overall government spending and not enough revenue, and there is pushback from advocates for poor and disabled people.
Another reason not to cut optional services is that Louisiana would lose some federal matching money. For every dollar the state cuts from a particular Medicaid program, it loses at least a dollar, and typically more, in federal money. That’s generally not the case in most other areas of the state budget.
What challenges exist for people on Medicaid?
One of the biggest challenges for people on Medicaid in Louisiana is finding doctors and clinics to treat them. In order to stretch its own dollars, Edwards and lawmakers have set the reimbursement rate it gives providers for treating Medicaid patients as low as the federal government will allow. This means the money paid to someone for treating a Medicaid patient isn’t always worth the time for the provider to give the treatment. That makes it more difficult for people with Medicaid to find doctors and other health care professionals who will see them.
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