By Grace-Marie Turner, Galen Institute and Robert Helms, Ph.D., American Enterprise Institute
Helping the Most Vulnerable
Medicaid’s historic and most important job is to take care of the nation’s most vulnerable and truly needy citizens. It was created in 1965 to finance care for certain lower-income Americans through a program that is jointly funded by the federal and state governments. Medicaid was designed to complement the Medicare program, which was created at the same time as a federal program to finance health care services for senior citizens.
But the Medicaid program is aging. States must petition Washington to make even minor changes in their Medicaid programs, and state officials complain that the red tape and bureaucracy wastes taxpayer money, health care resources, and often leaves recipients with substandard care. Changes are needed so the program has the resources and states have the flexibility they need to meet the challenges of a new century. Today, more than 63 million Americans are enrolled in Medicaid, and combined federal and state spending in 2010 was nearly $400 billion. Because Medicaid expenditures represent a large and growing share of state budgets, taxpayers need relief from the program’s rising costs and assurances that Medicaid money is being spent to get the best value for the dollar.
An important group for policymakers’ attention should be those who need Medicaid the most, those who have the fewest resources to receive care outside the program, and those who consume the greatest share of Medicaid’s resources. That would suggest that those dually eligible for Medicare and Medicaid should be the first focus of attention. Dual-eligibles are patients who are eligible for Medicaid by virtue of their low incomes and for Medicare based upon their age or disability status.
Dual eligibles are Medicaid’s most vulnerable recipients, yet they often fall into a fragmented care delivery system that perpetuates episodic rather than coordinated care. Patients may have difficulty accessing the medical care they need, and information about their care can be scattered among providers and facilities facing two or more different payment systems and sets of program rules.
More than nine million Medicaid recipients (15%) are dual eligibles, accounting for 39% of Medicaid spending. On average, total spending for duals, including Medicare and Medicaid contributions, is twice as high as that for non-duals – $28,518 a year compared to $14,204. Most dual eligibles have very low incomes, substantial health needs, and are more likely to live in nursing homes compared to other beneficiaries. Long-term care services account for the majority (69%) of Medicaid expenditures for dual eligibles.
Because physicians and others treating these patients often don’t have the patient’s complete medical profile, patients can face gaps as well as duplication in treatments with no one to help coordinate their care. Too often, they fall between the cracks of the two cumbersome and highly-regulated programs. In addition, providers are paid for procedures, regardless of outcomes and without rewards for improving quality. This often leads to worse care for patients and a waste of taxpayer dollars.
Medicaid will be most effective if these patients are managed at the state and local level. To achieve that goal, changes are needed in federal Medicaid policy to adopt new incentives to implement more flexible and more effective care-coordination and disease-management programs for recipients, especially those with disabilities and chronic illnesses.