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Untangling Medicaid myths

Posted by Marjorie Pritchard  November 7, 2011 02:18 PM

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By Kate Nordahl and Sarah Iselin

The Medicaid program, which provides health care coverage to almost 60 million Americans, has the dubious distinction of being able to generate political heat both in Washington, D.C. and in state houses across the nation. It is squarely in the sights of the congressional deficit-reduction “super committee” that is trying to find $1.2 trillion in federal savings over the next decade. Dozens of states whose budgets have been strained by rising unemployment and falling revenues during the recession have targeted the program for cuts. And several of the presidential candidates want Washington to give the states “block grants” so they can run their Medicaid programs as they see fit.

Medicaid is jointly funded by the federal government and states, and administered by the individual states. The national health reform law requires states, as of 2014, to offer Medicaid coverage to almost all low-income individuals and families that fall within certain income guidelines. With so much at stake, it is vitally important for policymakers and the public to have an accurate understanding of the role Medicaid plays in our nation's health care system.

Although there is variation among states' Medicaid programs, findings from a recent analysis of MassHealth – the Massachusetts Medicaid program – could help clear away some of the misconceptions that muddy the debate about the future of Medicaid. Here are a few key facts:

  • MassHealth is an essential health safety net for more than 1.3 million of the state's adults and children. Almost 98.1 percent of Massachusetts residents have health insurance, and among children and seniors, the rate is even higher at more than 99 percent. Although Massachusetts has by far the highest rate of employer-sponsored health coverage in the nation, MassHealth and other publicly subsidized programs have protected access to needed care and helped maintain the state’s nearly universal coverage through the depths of the economic downturn.
  • MassHealth covers a broad cross-section of the population. Adults and children with disabilities comprise 20 percent of MassHealth members, and seniors make up another 11 percent. Nearly two-thirds of the program's spending is for the care of members with disabilities and for seniors. More than half of all people with disabilities and two-thirds of nursing home residents rely on MassHealth.
  • MassHealth supports workers’ access to private insurance. MassHealth benefits help make employer-offered health insurance more affordable for eligible low-wage workers and their children by paying the employee share of the premium and by covering most of the cost of copayments and deductibles. In addition, MassHealth benefits make it possible for many people with disabilities to remain in the workforce.

  • MassHealth is an important source of income for physicians, hospitals, and other providers that low-income and uninsured individuals of all ages depend on for their care. MassHealth is the second largest insurer for health care services in the Commonwealth. Community health centers and nursing homes receive at least half of their total patient revenues from MassHealth. In addition, MassHealth covers more than a quarter of all prenatal care, which is provided by a mix of providers, and one-third of all births.

  • MassHealth spending has increased at a slower pace than premiums in the private sector. The amount MassHealth spends for each member's coverage rose by 1.6 percent in 2010, while individual premiums for employer sponsored health insurance in Massachusetts grew by an average of 8.4 percent. The biggest driver of MassHealth spending in recent years has been the increase in MassHealth members due to the recession, not the amount spent for each member. Enrollment grew by five percent per year from 2005 to 2010, while spending per member increased by an average of just one percent per year.

Policymakers, including the “super committee,” are certainly justified in looking for ways to make Medicaid more efficient and effective, but they would do well to draw upon the lessons from states where it is working well. As our research demonstrates, the Massachusetts version of Medicaid – MassHealth – is the financial backbone of the state's nearly universal coverage and provides an essential health safety net for people who are most affected by high unemployment, declining incomes, and the nation's relentless increase in health care costs.

Kate Nordahl is director of the Massachusetts Medicaid Policy Institute, a program of the Blue Cross Blue Shield of Massachusetts Foundation. Sarah Iselin is president of Blue Cross Blue Shield of Massachusetts Foundation.

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