July 3, 2017

Summary

Healthcare in America is expensive.  The share of the U.S. economy devoted to healthcare spending is currently 17.5 percent, and the Centers for Medicare & Medicaid Services (CMS) projects it will reach 19.6 percent by 2024.  Estimates put total U.S. spending on healthcare at more than $5.4 trillion by that point, with both the private and public sectors each contributing approximately 50 percent of costs.  While spending for both sectors may be equal, according to the Commonwealth Fund, Medicaid patients may be receiving better care on some measures than private sector patients. 

The Commonwealth Fund’s 2016 Biennial Health Insurance Survey measured statistics related to access to care, quality of care and problems related to medical bills.  The study found Medicaid recipients rated the care they received as equal to or higher than the care provided by private payers.  The areas where Medicaid excelled were better access to healthcare and fewer problems related to medical bills.  The results of the survey demonstrate that Medicaid can go head-to-head with private insurance providers and, in some measures, come out on top.

The History of Medicaid

Medicaid is a publicly funded health coverage program for low-income Americans.  It has become the main source for healthcare services for the disadvantaged since the 2010 passage of the Affordable Care Act (ACA).

The Center for Medicaid and CHIP Services (CMCS) serves as the focal point for all national program policies and operations related to Medicaid, the Children's Health Insurance Program (CHIP) and the Basic Health Program (BHP).  These public health coverage programs serve a growing population of millions of low-income families, children, pregnant women, adults without children, seniors and people living with disabilities.

Medicaid was signed into law in 1965 alongside Medicare.  All states, including the District of Columbia and U.S. territories, have Medicaid programs designed to provide health coverage for low-income people.

The federal government mandates certain structures for states to follow; each state is in charge of administering their Medicaid program based on the needs of its constituents.  This arrangement results in dissimilarities in Medicaid coverage across the country.

In 2014, the ACA provided states the ability to expand Medicaid eligibility to individuals under the age of 65 in families with incomes below 133 percent of the Federal Poverty Level.  It also standardized the rules for determining eligibility and providing benefits through Medicaid, CHIP and the health insurance marketplace.

Medicaid has grown substantially since the inception of the ACA.  Spending grew 9.7 percent to $545.1 billion in 2015 or 17 percent of total national health expenditures.  The following graphic depicts how Medicaid spending compares with other programs.

Understanding Medicaid

The Medicaid program has numerous requirements that can be confusing and difficult to understand.  The following five questions and answers provide clarity about the program and how it serves children, the disabled and lower-income populations.

1. Approximately what percent of Americans receive health insurance coverage through Medicaid at some point during the year?
   About 20 percent.  Medicaid plays an important role in providing health insurance to nearly one-in-five individuals and families across the country who do not have access to other affordable coverage options.
2. True or False:  The Medicaid program is the same in all states.
   False.  States have the flexibility to design their own Medicaid programs within broad federal guidelines.
3. Of the nearly 70 million people served by Medicaid each year, approximately how many are children?
   The answer is 40 percent.  In the federal fiscal year 2016, of the 70 million Medicaid enrollees, about 28 million were children.
4. Which group accounts for most Medicaid spending?
   The elderly and disabled adults.  Although elderly and disabled adults only make up one-quarter of Medicaid beneficiaries, they account for 66 percent of total costs.
5. Which type of coverage is the primary payer for long-term care services and support for elderly and disabled individuals?
   The correct answer is Medicaid.  Medicaid is the primary payer for long-term care services and support for low-income individuals across the age spectrum.

Commonwealth Study Results

The goal of the Commonwealth Fund’s 2016 Biennial Health Insurance Survey was to compare experiences of adults age 19 to 64 who had coverage for one year from a private employer or individual insurance, were covered by Medicaid or were uninsured all or part of the year.

The survey was conducted by Princeton Survey Research Associates International from July 12 to November 20, 2016 and used a representative sample of 6,005 adults living in the U.S.  In all, they conducted 8,267 interviews.

The sample was designed to represent the U.S. adult population and to allow separate analyses of responses from low-income households.  The conclusions indicated that, for the first time, Medicaid services equaled or surpassed private health payers.  The following are seven key findings from the report.

1. Medicaid enrollees report better care experiences than the uninsured and similar experiences as the privately insured.  Adults insured all year with Medicaid or private coverage were significantly more likely to have a regular source of care and rate their healthcare highly compared with uninsured adults.
2. Medicaid enrollees receive preventive services at higher rates than people who are uninsured.  Adults insured all year with Medicaid or private coverage reported using preventive care services at significantly higher rates than adults uninsured during the year.
3. Medicaid enrollees had fewer problems paying medical bills and fewer cost-related access problems than the privately insured and the uninsured.  Adults insured all year with Medicaid coverage reported lower rates of medical bill problems than adults with private coverage and uninsured adults.
4. Medicaid enrollee coverage rates for individuals throughout the year indicated that 91 percent had a consistent source of care, versus 93 percent of those with private insurance.  Seventy-seven percent of uninsured people reported coverage for some part of the year.
5. Medicaid enrollees gave the highest satisfaction ratings, with 57 percent of Medicaid members reporting the care they received as very good to excellent compared to 52 percent of the privately insured and 40 percent of the uninsured.
6. Medicaid members reported fewer issues with cost-related access to healthcare.  Medicaid beneficiaries were less likely to avoid or defer needed prescriptions, routine tests or specialty care due to financial concerns.
7. Private health insurance plans and Medicaid provided nearly equal levels of preventative and clinical care.  Statistics for members receiving blood pressure and cholesterol checks, flu shots, cancer screenings and other services were equal with both coverage types.

Summary

Medicaid has gotten a bad rap in the industry.  Compared to private insurance, it is often thought of as insurance coverage that offers inferior care.  Perhaps this is because private payers set their rules and control the entire insurance and care continuum, therefore giving the perception that private insurance delivers better quality services than Medicaid. 

Alternatively, it could be that Medicaid appears to provide lesser care because it is administered separately by the states, which create optional benefits that vary.  Regardless of the reasons, the survey indicates that Medicaid now holds its own against private insurance. 

“There is a common misperception that Medicaid is not good health insurance, and all indicators tell us that simply isn’t the case,” said Sara Collins, vice president for healthcare coverage and access at the Commonwealth Fund.  “Medicaid is giving people what they want and need—affordable health insurance and access to care.”

The survey suggests that, compared with being uninsured, having Medicaid coverage considerably increases access to services and reduces the financial burdens of obtaining care.  Compared to adults with private coverage, Medicaid enrollees have almost the same access to care.  Medicaid coverage also seems to offer better financial security than private insurance against the cost of treating illness.  After 52 years of existence, Medicaid appears to have hit its stride.

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With best wishes,

Tony Mira
President and CEO