Just before the holidays, I summarized potential courses of action that the new Congress and administration likely will take on the “repeal” of the Affordable Care Act (ACA). I outlined the pitfalls of each option, together with a recommended response by us to each alternative. Here, I would like to do the same for Medicaid “reform."
Members of the new Congress and administration already have expressed a strong desire to “reform” Medicaid, although specifics are quite scarce. Both historical precedent and often-stated hopes of previous Republican administrations suggest, however, that an effort will be made to change Medicaid from a joint federal-state entitlement program to one based upon some type of fixed federal payment to each state in return for greater state flexibility in the use of federal funds.
Before exploring some likely potential “reform” options, it is important to summarize the complex nature of the Medicaid program.
Overview of Medicaid
Medicaid is a joint federal-state entitlement program of health insurance for persons who are poor. Coverage is provided to single adults and families with dependent children, persons who are disabled, and persons with designated illnesses, e.g., HIV-AIDS. The Children’s Health Insurance Program (CHIP) expanded Medicaid health insurance coverage to a broader array of children in poverty, and ACA expanded coverage to a broader array of adults in poverty, at state option.
Because Medicaid is jointly operated by the federal government and the states, considerable variability exists from state to state in the populations covered and the actual benefits offered. The percent of federal financial participation also varies depending upon the percent of a state’s population that lives in poverty.
Several important facts about the Medicaid Program deserve emphasis.
First, it is very clear that Medicaid and CHIP are essential health insurance programs for persons and families living in poverty. In September 2016, nearly 74.4 million persons were enrolled in Medicaid and CHIP, of which 5.5 million were enrolled in the latter. Two out of three enrollees reside in the 31 states that undertook the ACA Medicaid expansion. Between 2013 and 2016, about 17 million persons newly enrolled in Medicaid and CHIP. Most of this growth occurred in large western states that implemented the Medicaid expansion.
Second, Medicaid is a very important as a source of health insurance for persons with disabilities. When a person qualifies for Supplemental Security Income (SSI) because of a disability, then s/he qualifies immediately for Medicaid. In November 2016, 8.3 million persons were receiving federal SSI payments and Medicaid health insurance.
Approximately 40% were persons with mental illness, and about 12% were persons with intellectual and developmental disabilities (ID/DD). Persons with substance use conditions were excluded from the SSI program beginning in 1998, but more recently have been able to enroll in Medicaid through the state Medicaid expansion.