 |
 |
|
|
Medicare - federal insurance program created by Title XVIII of the Social Security Act of 1965. It was originally designed to protect people over 65 years of age and older from the rising costs of health care. In 1972, permanently disabled workers, their dependents, and people with end-stage renal disease were added to the program. There are two parts to the program:
All persons age 65 and older are eligible for Part A simply by enrolling, although there are deductible and co-insurance provisions.
A premium must also be paid for those eligibles, for part B coverage, that includes a deductible and co-insurance.
Medicare is financed by a combination of general federal tax revenues and federal payroll taxes levied on employers and employees in addition to the enrollee payments. In 1990, Medicare covered more than 34 million people; if financed 45% of the public share of personal health care spending and 18.6% of total personal health care spending. Between 1970 and 1990, Medicare expenditures increased at an annual rate of 14.3%.
Medicaid is a jointly funded federal-state-local program designed to make health care more available to the poor. Eligibility requirements for Medicaid and program benefits vary even though the federal government requires that people receiving Supplementary Security Income (SSI) and families qualifying for Aid to Families with Dependent Children (AFDC) as well as pregnant women, children under 6, Medicare enrollees, and recipients of foster care and adoption assistance who do not quality for SSI or AFDC cash benefits be covered by the program.
Federal and state funds paid through Medicaid for personal health care amounted to $71.3 billion for 25.3 million recipients in 1990. The elderly, blind, and disabled accounted for nearly 3/4 of the funds even though they represent less than 1/3 of recipients. On the other hand, more than two-thirds of Medicaid recipients were members of an AFDC family, but they used only 1/4 of program benefits.
The Medicare and Medicaid programs are examples of "entitlement" programs. This means that people receive benefits automatically when they qualify for the programs (in the case of Medicare Part B, qualifying includes payment of a premium). The number of people covered is determined primarily by the number of people 65 and older for Medicare and by the number of people below a designated income/assets line for Medicaid. As the population ages and as more and more people fall into financial straits, more people have qualified for programs and their costs have skyrocketed. The government thus has little control over number of participants and can restrain the costs of the programs only by tightening eligibility requirements (which are already very tight) or withdrawing benefits (from already near-minimal or less-than-minimal coverage in most states) or reducing reimbursements to health care providers.
Both Medicare and Medicaid are in serious financial difficulty. The trust fund that contains money for Medicare Part A is predicted to be exhausted as early as 2002. The significant growth in home health payments by Medicare, originally seen as just clarifying Medicare rules for eligibility and coverage of services, is partly fueling this fire. It is not inflation in the cost of home health charges per visit BUT the absolute demand, the increase in the number of persons served and, in the number of visits per home health recipient. Finding that untargeted home health care DOES NOT substitute for in hospital services, and therefore, is not saving money on that front either. While included in the Republican Medicare legislative proposal are provisions for enrollment in HMOs and the establishment of Medical IRA accounts, the main cost savings--$152 billion of the $270 billion over 7 years--would be achieved by limiting payments to doctors, hospitals, nursing homes and home-care agencies. Rural hospitals are likely to be hard hit since Medicare today pays them only about 88% of true costs; with proposed cuts, this would be 75%.
Most states are having a very difficult time and are failing to balance their budgets due, in part, to their Medicaid expenditures. Moreover, state and local government expenditures for health care are expected to leap from $89.4 billion in 1990 to an estimated $238.9 billion in the year 2000. This cost squeeze notwithstanding, both Medicare and Medicaid leave huge gaps in covered services. It is estimated that each senior in 1991 paid more than $3300 for health care, including premiums for Medicare coverage and uncovered services. With skyrocketing costs for nursing homes and drugs, two items particularly relevant to seniors, their out-of-pocket expenses will continue to increase swiftly.
Medicaid is a very expensive program. The federal government and most state governments feel besieged by the difficult-to constrain costs. Does Medicaid do any good? Of course. Many low-income persons across the country receive health care that they would have gone without were it not for Medicaid. But Medicaid's has problems beyond its very high price tag. It does not cover many of the country's poor, and it provides inadequate reimbursement to providers.
About half of all persons under age 65 below the poverty level in the US are NOT covered by Medicaid. How can this happen? In 1990, the poverty level for a family of three was approximately $10,500. But in Alabama, a family of three would not qualify for Medicaid if its annual income exceeded $1,416--only 14% of the poverty threshold. An income of $150/mo places the family way over the Medicaid line. In Delaware, the figure was $3990, 1/3 poverty level. Recent rules changes will help somewhat: Children under age 6 with income up to 133 percent of the poverty line and children age 6 to 18 up to 100% of the poverty line must now be covered. But millions of low-income people remain uncovered. Disparities between states is predicted to increase if Medicaid money is distributed to states via block grants.
Is Medicaid such a spendthrift because it is overcompensating providers? No. There are constant complaints that Medicare inadequately reimburses physicians, and Medicaid reimbursement is less than 3/4 of that of Medicare. Almost every state in the country now has some problem (and some states have major problems) with physicians refusing to see Medicaid patients because reimbursement is so inadequate. A recent study of Medicaid in 46 states and the District of Columbia found that average reimbursement for pediatricians, family practice physicians, and general practitioners was less than two-thirds of prevailing market rates. The sad irony created is that even persons with Medicaid can have a difficult time getting seen by a physician.
Managed care is the buzzword of the year and Congress is looking to managed care as one way to control costs and utilization.. Its predicted success is unknown however. Though 75% of Medicare enrollees live in areas where there are HMO options, only 9% are currently enrolled (about 60% of workers are enrolled in HMOs). There is also concern that managed care organizations will only attract the healthiest of eligibles leaving the regular Medicare system to still pick up the major burden of the expenses. Note that about 10% of Medicare enrollees generate about 70% of the costs.
Wisconsin has had an "experiment" going for about 10 years where the Medicaid population in Milwaukee, Dane, and most recently Eau Claire counties, has had both required, and now voluntary, enrollment in an HMO. The only solid evaluation data about this program shows that children enrolled get more immunizations than those who use the traditional Medicaid payment system. Plans are being finalized to expand this managed care requirement to all Medicaid recipients across the state (with lots of discussion and dissent along the way). Given the current state of uncertainty about Medicaid block grants to states and the recent resignation of the head of the Division of Health, the timeframe for implementation is uncertain.
-----------------------------
Roberta Riportella-Muller
University of Wisconsin Cooperative-Extension
October 1995
|
||||
