the basics of medicare and medicaid judith r. lave university of pittsburgh
TRANSCRIPT
The Basics of Medicare and Medicaid
Judith R. LaveUniversity of Pittsburgh
Medicare Eligibility
Individuals age 65 or over Individuals who have been on Social
Security Disability for two years. Individuals with End Stage Renal
Disease (Kidney Failure) -2 year waiting period does not apply
Medicare is Made Up of Four Parts
Medicare Part A HI- hospital insurance
Medicare Part B SMI – Supplemental Medical Insurance
Medicare Part C Medicare Advantage
Medicare Part D Medicare Drug Coverage
Medicare Part A
Helps pay For Inpatient hospital care (all types) Skilled nursing care Hospice Care Limited home health (up to 100 days post
hospital discharge ) People are entitled to Part A if they or
their spouse have paid payroll taxes for 40 quarters or more
Medicare Part A
Part A is funded primarily by a dedicated tax of 2.9% of earnings (no limit) paid by employers and employees (1.45% each) Paid into a dedicated Trust Fund
There is some cost-sharing (2007) Hospital: $992 deductible per spell of
illness; $248 per day for days 61-90; $286 per day for days 91 – 150, 100% after day 150
Skilled Nursing Home: $124 per day 21 through 100 each benefit period.
Medicare Part B
Pays for Physician services, outpatient hospital
services, certain home health services and durable medical equipment
Cost Sharing (2007 Deductible of $131.00 per year 20% of approved charges after deductible No cost sharing on home health
Medicare Part B
Medicare Part B is financed through premiums (about 25%) and general revenues
2007 Premium was $93.50 a month Premium is higher if income is above
$80,000 (individuals) or $160,000 (families)
Medicare Part C
Part C provides care through managed care plans, regional PPOs and private fee for service plans.
It is called Medicare Advantage
About 20% of Medicare beneficiaries are currently in Medicare Advantage
Note
People who do not enroll in a Medicare Advantage Plan are said to stay in
Traditional Medicare or Fee-for-service Medicare
Part C
Plans must cover the same services as Part A and Part B
It is financed by fixed payments from CMS tied to the gov’t cost of traditional Medicare.
People in Part C must be enrolled in both Parts A&B.
An Issue of Controversy
MA plans receive a capitated payment that is higher than the government’s average cost of covering Medicare beneficiaries that stay in traditional Medicare by about 10%
These additional payments increase attractiveness of MA plans by allowing them to reduce cost-sharing or offer additional benefits.
Part D
Voluntary drug program Provided by private stand-alone drug plans or
Medicare Advantage plans Subsidies for individuals with low income and
assets Financed by beneficiary premiums of about
$22 per month, general revenues and state payments (state clawbacks)
Complicated cost-sharing structure – plans may offer actuarial equivalent coverage
Standard Medicare Drug Benefit, 2006
$386 average annual premium***
$250 Deductible
$2,250 in Total Drug Costs*
$5,100 in Total Drug Costs**
25%
5%
$2,850 Gap: Beneficiary Pays 100%
Medicare Pays 75%
Medicare Pays 95%
No Coverage (the “doughnut hole”)
Catastrophic Coverage
Partial Coverageup to Limit
Beneficiary Out-of-PocketSpending
*Equivalent to $750 in out-of-pocket spending. **Equivalent to $3,600 in out-of-pocket spending.***Based on $32.20 national average monthly beneficiary premium (CMS, 8/2005).SOURCE: KFF analysis of standard drug benefit described in Medicare Modernization Act of 2003.
Exhibit 8
Return to KaiserEDU.org
Total = $374 billionNote: Does not include administrative expenses such as spending forimplementation of the Medicare drug benefit and the Medicare Advantage program. SOURCE: Congressional Budget Office, Medicare Baseline, March 2006.
Medicare Benefit Payments By Type of Service, 2006 (KFF)
Hospice2%
Payments to Drug Plans4%
Other Facility Services5%
Hospital Outpatient5%
Physician and Other Suppliers
24%
Home Health3%
Managed Care(Part C)
14%
Skilled Nursing Facilities5%
Hospital Inpatient34%
Payments to Union/Employer-Sponsored Plans
1%
Low-Income Subsidy Payments
3%
Exhibit 11
Part A
Part B
Parts A and B
Part D
KFF –Kaiser Family Foundation
These slides were downloaded from tutorials on the Kaiser Family Foundation Web-site.
www.KFF.org
Ten Percent of All Medicare Beneficiaries Account For More than Two Thirds of
Medicare Spending (KFF)
25%
11%
7%
9%
8%
16%
53%
2%
54%
4%
4%
$25,000 or More
$15,000-$24,999
$10,000-$14,999
$5,000-$9,999
$1,000-$4,999
$0-$999
SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2002 Cost and Use File.
Total Number of Beneficiaries: 41.8 million
Total Medicare Spending: $224.5 billion
6% 10%
69%
Exhibit 13
2002 average = $5,370 per capita
Number of Medicare Beneficiaries 2005
Total: 42,394,929 % disabled (age < 65): 15.8%
(Note % disabled is increasing over time: 1980, 10.4%, 1995, 11/7%)
http://www.cms.hhs.gov/MedicareEnrpts/
Value of Medicare
Pays for the majority of health care services for people 65 and over and the disabled.
Leads to an increase in life expectancyLeads to an increase in quality of life
Trusted Program
Problems With Medicare
Medicare does not cover many services – long term care, vision, hearing Average Medicare beneficiary has out of pocket
expenditures of $3,765, Medicare paid for 46% of health care expenditures for elderly.
Payment system needs to be revised – major changes in hospital payments this year
Medicare payments per beneficiary vary widely dramatically geographically with no measurable affects on health
Some Challenges
Improve payment system to promote quality and increase efficiency
Improve coverage for the chronically ill and address long term care problems
Determine balance between Traditional Medicare and Medicare Advantage Should Medicare Advantage be Subsidized?
MAJOER CHALLENGE
Medicare’s Cost Pressures
Composition of Federal Spending in FY 2007
SOURCE: OMB, Fiscal Year 2007 Budget, February 2006.
2007 Total Outlays = $2.77 trillion
Exhibit 12
Medicare14%
Medicaid and SCHIP
7%
Other12%
Net Interest9%Nondefense
Discretionary18%
Social Security21%
Defense Discretionary
19%
Return to KaiserEDU.org
Medicare Expenditures1998-2005
NOTE: Per capita amounts based on July 1 Census resident based population estimates for each year. Numbers and percents may not add to totals because of rounding. $ amounts shown are in current dollars.SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Bureau of the Census.
Amount in Billions
202.4 206.1 216.4239.9
257.6275.6
303.4331.4
0
50
100
150
200
250
300
350
1998 1999 2000 2001 2001 2003 2004 2005
Medicare
Historical and Projected Number of Medicare Beneficiaries and Number of Workers Per
Beneficiary
39.7
46.5
61.6
2000 2006 2010 2020 2030
SOURCE: 2001 and 2006 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
Number of beneficiaries (in millions)
Number of workers per HI beneficiary
3.7
2.9
2000 2006 2010 2020 2030
Exhibit 15
42.7
78.6 4.0
2.4
3.9
Return to KaiserEDU.org
Key Dates for Medicare Part A Trust Funds
First year outgo exceeds Income excluding interest 2007
First year outgo exceedsIncome including interest 2011
Year Trust Funds are Exhausted 2019
Medicare Expenditures as a % of GDP
WHY ARE WE FOCUSING ON MEDICARE AND NOT SOCIAL SECURITY?
Social Security and Medicare Cost as a Percent of GDP
Why is Medicare Growing So Much faster than Social Security
Technological change in the absence of any effective restraining mechanism Technological change – which both increases the number of people who can get a given treatment (i.e. bypass) and the treatments available lead to increasing costs.
Questions?
Does Society want to allocate such a high proportion of its GDP to Medicare (note its somewhat limited benefits)
Does Society want to raise taxes to enable Medicare beneficiaries to get these services
Does Society want to allocate such a high proportion of its overall resources to the health of the elderly.
Medicaid
Established in 1965 States manage the program subject to
Federal guidelines States must cover certain groups
(defined by age, disability and income) and may cover other groups
State must cover certain services and may cover other services.
Medicaid Financing
The federal government shares in the cost of the Medicaid.
The Federal Match varies across the states from 50% to 78%
Federal Match in PA is 54.39%
Medicaid Eligibility & Benefits for Medicare Beneficiaries, 2005
Pathway Income Eligibility
Asset LimitIndividual/Couple
Medicaid Benefits
Medicare Premiums & Cost-sharing
SSI Cash Assistance
< 74% of poverty(SSI income eligibility)
$2,000$3,000
X X
Qualified Medicare Beneficiary (QMB)
< 100% of poverty $4,000$6,000
X
Specified Low-Income Beneficiary (SLMB) Copied from Medicaid
100-120% of poverty
$4,000$6,000
Premium only
Mandatory Populations: (Medicaid 101. ww.kaiser.edu)
Medicaid Eligibility & Benefits for Medicare Beneficiaries, 2005
(cont’d)
Pathway Income Eligibility
Asset LimitIndividual/ Couple
Medicaid Benefits
Medicare Premiums & Cost-sharing
Medically Needy
Individuals who spend income down to a specified level
$2,000$3,000
X* X
Poverty Level < 100% of poverty $2,000$3,000
X X
Special Income Rule for Nursing Home Residents
Institutionalizedindividuals withincome < 300% of the SSI level
$2,000$3,000
X X
HCBS Waivers Must be eligible for institutional care
X X
Optional Populations
*Medicaid benefits may be more limited than for SSI.
Eligibility and Covered Services for PA
M Costlow and J. lave, Faces. www.PAMedicaid.pitt.edu
Federal Poverty Level 2007
Persons in Family Guideline 1 $10,210 2 13,690 3 17,170 4 20,650
Medicaid Benefits
Physician services
Laboratory and x-ray services
Inpatient hospital services
Outpatient hospital services
Early and periodic screening, diagnostic, and treatment (EPSDT) services for individuals under 21
Family planning
Rural and federally-qualified health center (FQHC) services
Nurse midwife services
Nursing facility (NF) services for individuals 21 or over
Prescription drugs
Clinic services
Dental services, dentures
Physical therapy and rehab services
Prosthetic devices, eyeglasses
Primary care case management
Intermediate care facilities for the mentally retarded (ICF/MR) services
Inpatient psychiatric care for individuals under 21
Home health care services
Personal care services
Hospice services
“Mandatory” Items and Services “Optional” Items and Services
Other Medicare
Beneficiaries32.4 Million
82%
Full Dual Eligibles
6.1 Million 15%
Partial DualEligibles
1.1 Million 3%
Total Medicare Beneficiaries = 40 million
SOURCE: KCMU estimates based on CMS data and Urban Institute analysis of data from MSIS.
Total Duals =
7.2 million
Medicaid Status of Medicare Beneficiaries, FFY 2002
Medicaid Payments Per Enrolleeby Acute and Long-Term Care, 2003
Children Adults Disabled Elderly
$1,700 $1,900
$12,300 $12,800
SOURCE: KCMU estimates based on CBO and Urban Institute data, 2004.
Long-TermCare
AcuteCare
Some PA Data
Medicaid covers about 14.8% of Pennsylvanians on an average month
Medicaid covers 44% of all children Medicaid expenditures are = $14.4
billion dollars ($7.6 Billion Federal) It accounts for 19% of general
fundspending
Figure 5: Percent of Pennsylvania Citizens Enrolled in Medicaid by Age
September 2006
Note. Data provided by PA DPW: Commonwealth of Pennsylvania, Department of Public Welfare (PA DPW). (2006). Medical Assistance Eligibility Statistics, (PA DPW). Provided to authors by Director, August–December 2006.
18%
29%
7%
22%
13%
11%
under age 6
age 6 to 17
age 18 to 21
age 22 to 45
age 46 to 64
age 65 and older
Figure 4: Distribution of Pennsylvania Medicaid Recipients and Expenditures by Broad Eligibility
Category in 2005
State Only, 6% State Only, 8%
Children & Families, 24%
Children & Families, 61%
Disabled, 33%
Disabled, 20%Elderly, 35%
Elderly, 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
# of Eligibles By Expenditure
Note. Data provided by PA DPW: Commonwealth of Pennsylvania, Department of Public Welfare, Office of Medical Assistance Programs. (2006). 2005/2006 Annual Report. Retrieved February 22, 2007, from http://www.dpw.state.pa.us/Resources/Documents/Pdf/AnnualReports/OMAP05-06AnnualReport.pdf.
Figure 6: The Proportion of Medicaid Recipients to Pennsylvania County Populations in 2006
Note. Data Provided by PA DPW. Other information from U.S. Census Bureau, 2006.[1]Pennsylvania map provided via 'Do It Yourself' Color-Coded State Maps, http://monarch.tamu.edu/~maps2/, Texas A&M University System.Commonwealth of Pennsylvania, Department of Public Welfare (PA DPW). (2006). Medical Assistance Eligibility Statistics, (PA DPW). Provided to authors by Director, August–December, 2006. and U.S. Census Bureau. (2006). State and County QuickFacts. Retrieved November 15, 2006, from http://quickfacts.census.gov/qfd/states/42000.html
Figure 3: Pennsylvania Medicaid Recipients from
1997–2005
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
1997–98 1998–99 1999–00 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06
Years
Num
be
r o
f Reci
pie
nts
Year Totals
Children and Families
Note. Data provided by PA DPW: Commonwealth of Pennsylvania, Department of Public Welfare (PA DPW). (2006). Medical Assistance Eligibility Statistics, (PA DPW). Provided to authors by Director, 1997–2006.
COST PROBLEMS COME TO MEDICID
Medicaid Expenditures1998-2005
NOTE: Per capita amounts based on July 1 Census resident based population estimates for each year. Numbers and percents may not add to totals because of rounding. $ amounts shown are in current dollars.SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Bureau of the Census.
Amount in Billions
158.2171.3
187208.9
230.7250.9
269.9289.3
0
50
100
150
200
250
300
350
1998 1999 2000 2001 2001 2003 2004 2005
Medicaid
5.3%6.6%
5.2% 5.1%
2.0%3.2%
4.9%
-3.5%
-7.8%
6.4%
9.2%
10.6%
12.7%
8.5%7.9% 7.5%
5.3%
3.8%
1997 1998 1999 2000 2001 2002 2003 2004 2005
State Tax Revenue Medicaid Spending Growth
Underlying Growth in State Tax RevenueCompared with Average Medicaid Spending
Growth, 1997 - 2005
NOTE: State Tax Revenue data is adjusted for inflation and legislative changes. Preliminary estimate for 2005.
SOURCE: KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates and KCMU / HMA Survey for 2005 Medicaid Growth Estimates; Analysis by the Rockefeller Institute of Government for State Tax Revenue.
Composition of Federal Spending in FY 2007
SOURCE: OMB, Fiscal Year 2007 Budget, February 2006.
2007 Total Outlays = $2.77 trillion
Exhibit 12
Medicare14%
Medicaid and SCHIP
7%
Other12%
Net Interest9%Nondefense
Discretionary18%
Social Security21%
Defense Discretionary
19%
Return to KaiserEDU.org
Changes in Medicaid
Medicaid is changing due in part to the addition flexibility given to the states under the Deficit Reduction Act.
Trend did turn down this year.
What’s at Stake in Medicaid Reform (KFF)
Health Insurance Coverage
25 million children and 14 million adults in low-
income families; 6 million persons with disabilities
State Capacity for Health Coverage
43% of federal funds to states
MEDICAID
Support for Health Care System
17% of national health spending
Assistance to Medicare
Beneficiaries
7 million aged and disabled — 18% of
Medicare beneficiaries
Long-Term Care Assistance
1 million nursing home residents; 43% of long-
term care services