Medicaid and Long-Term Care Services
Medicaid was established as Title IX of the 1965 Amendment to the Social Security Act while Medicare was established at the same time as Title VIII of the Act. Medicaid is a health insurance program for certain low-income people. These include: certain low-income families with children; aged, blind, or disabled people on Supplemental Security Income; certain low-income pregnant women and children; and people who have very high medical bills. Medicaid is funded and administered through a state-federal partnership. Although there are broad federal requirements for Medicaid, states have a wide degree of flexibility to design their program. States have authority to establish eligibility standards, determine what benefits and services to cover, and set payment rates. All states, however, must cover these basic services: inpatient and outpatient hospital services, laboratory and X-ray services, skilled nursing and home health services, doctor’s services, family planning, and periodic health checkups, diagnosis and treatment for children.
Long-term care recipients of Medicaid come almost exclusively from the aged, blind and disabled group of eligible beneficiaries but very few of those are actually receiving SSI (Supplemental Security Income). SSI is a welfare payment for certain disabled or handicapped individuals who are unable to work, have no assets and have no extended family financial support. Certain provisions of the enabling Act, as well as congressional amendments since 1965 have allowed the aged, blind and disabled who don't qualify for SSI to receive Medicaid under an alternate set of eligibility rules.
Medicaid enrollment almost doubled over the period of 1990 to 1998 from about 25 million U.S. recipients to about 40 million in 1998. Today, 47 million people--a little over 1 in 7 of all Americans--are receiving Medicaid. In 1998 about 10.6 million aged, blind and disabled were receiving Medicaid assistance, primarily in the form of long-term care services. Although this group only represented 1 in 4 of all Medicaid recipients in 1998, the group accounted for a larger portion of the budget. Medicaid spends more per long term care recipient than for any other group.
During the 1990's there was a large one-time influx of younger enrollees due to changes in governing Federal law. This skewed the picture such that growth of long-term care services was hidden. But in the future, a growing larger proportion of aged and disabled are expected to receive benefits. Still, the number of long-term care enrollees went up by 80% between 1990 and 1998. As alarming as that may appear, actual spending on long-term care increased 3 times faster than enrollment. From 1990 to 1998, Medicaid spending for long-term care skyrocketed an astronomical 225%.
Federal Medicaid grants to States now account for the fifth largest federal budget item, after Social Security, defense, federal debt and Medicare. And State Medicaid budgets in some states account for the second or third largest budget item expenditures. A doubling in expenditures every 7 years, which we experienced this last decade, would eventually bankrupt government budgets. The growth of Medicaid spending, especially for long-term care, cannot go unchecked without some sort of offsetting reduction in services.
Federal and State Partnership
Congress determines the rules under which Medicaid operates but the States have broad discretion in determining who gets covered and how they qualify financially. States also determine reimbursement rules under Federal guidelines and disperse funds to providers. In order to receive Federal grant money, certain groups must be covered. These are mentioned above. The Feds may also withhold funds if mandatory provisions in the form of occasional Congressional amendments are not followed.
Federal reimbursement for Medicaid is in the form of block grants to States. The Federal Medical Assistance Percentage (FMAP) is determined annually for each State by a formula that compares the State's average per capita income with the national average. By law, the FMAP can be no higher than 83% nor lower than 50%. As an example, in 2000, Connecticut, Massachusetts, New Jersey, New York and Maryland had the highest per capita income in that order. Federal matching funds for Connecticut will be 50% and the other 50% will come from its state budget. On the other hand, Mississippi, West Virginia, Arkansas, New Mexico, Montana and Utah had the lowest per capita income in that order. In this case, the Federal grant for Mississippi will 83% of its Medicaid costs and the other 17% will come from its state budget. All other states fall somewhere between 50% and 83% for FMAP.
Overall the Federal Government provides about 70% of total Medicaid costs and the States provide the other 30%. From 1990 to 1998, Federal outlays for Medicaid rose about 12% a year. Estimates for the longer period from 1990 to 2001 put the average annual increase at about 11%. Total combined State and Federal Medicaid costs from 1990 to 1998 went up about 10.2% per year. The higher Federal rate compared to a lower combined rate means the Federal Government has been shouldering an ever-increasing share of costs whereas the States' portion has been decreasing. Total Medicaid spending is estimated to be a little over $200 billion for 2002. Medicaid costs will soon surpass those of Medicare, since Medicaid is going up at a much faster rate.
Congress is concerned about rising Medicaid costs and over the years, attempts have been made to curtail spending. In 1988, legislation was directed at tightening financial eligibility. This mostly affected the elderly population receiving long-term care since this is the fastest growing segment of expenses. In 1993, legislation directed States to implement a mandatory estate recovery program for recipients over age 55, who are receiving nursing home and community waiver care. And in 1998 Congress mandated that States set up recovery service agencies. Again the targeted group was primarily the elderly long-term care beneficiaries. Apparently Congress is concerned that some recipients are qualifying for Medicaid by shifting assets that could be used for care, to their children, thus forcing tax payers to pick up the cost.
States, on the other hand, are not so anxious to tighten up payment rules for long-term care recipients. States feel that most elderly long-term care recipients are truly impoverished by long-term care costs and attempts to "squeeze" these people only create a greater burden for overextended family members. West Virginia most recently lost a lawsuit over this issue. The West Virginia State Medicaid refused to enforce estate recovery rules and subsequently the Feds withheld matching funds. The state sued over withheld funds and lost. West Virginia is probably representative of many states. The feeling is that elderly recipients are truly deserving and shouldn't be punished. Besides, state governors and legislators are well aware of the political power of elderly Americans and the politicians probably tone down programs like estate recovery in order to avoid offending this group. Even states like California that seem to be more aggressive at weeding out undeserving Medicaid coverage, appear to exhibit more bark than bite.
The only state that has an effective recovery program is Oregon. As of 2004, a few states had no recovery program and it's estimated that all states recover about 0.3 % of state Medicaid budgets nationwide. So far recovery is a dismal failure.
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