The Center's work on 'Medicaid' Issues


Projected Health Spending Has Fallen Since 2010, Even With Health Reform’s Coverage Expansions

January 28, 2015 at 11:20 am

The Congressional Budget Office (CBO) now projects that federal health spending — including the costs of health reform’s coverage expansions — will be about $600 billion less over 2011-2020 than CBO projected in January 2010 without health reform (see figure).

In other words, projected health spending over the decade has fallen by $600 billion since 2010, despite $1 trillion in additional spending for premium tax credits and expanded Medicaid to help cover 27 million more Americans.

The decline in projected spending, which continues a pattern of downward revisions to CBO’s projections in recent years, stems from several factors.  One is health reform’s cuts in payments to Medicare providers and health plans.  Another is the recession, which has reduced the demand for health care services by slowing income growth.

But CBO and other experts have also concluded that a substantial part of the health care cost slowdown reflects structural changes in the health care system.  Professional associations, hospitals, and doctors are taking steps to curb costly and ineffective procedures and treatments.

CBO’s new report says, “Although views differ on how much of the slowdown is attributable to the recession and its aftermath and how much to other factors, the slower growth has been sufficiently broad and persistent to persuade [CBO and the Joint Committee on Taxation] to significantly lower their projections of federal health care spending.”

Health reform itself has most likely contributed to the slowdown as well.  As Kaiser Family Foundation President Drew Altman has written, “Even though its direct effects on system-wide costs may be limited so far, I believe Obamacare is having a significant indirect effect, although cause and effect and the magnitude are hard to prove. . . .  [It] is entirely likely that Obamacare has played and will continue to play a role in the slowdown in health-care cost growth and accelerating market change.”

To be sure, federal health spending — even if cost growth remains moderate — will keep rising as more baby boomers become eligible for Medicare and Medicaid.  Making the U.S. health care system more efficient thus remains a major budget challenge.  But CBO’s latest projections show that we’ve already made substantial progress.

Medicaid Eligibility for Low-Income Adults Lags Badly in Non-Expansion States

January 22, 2015 at 12:51 pm

The 23 states that haven’t expanded Medicaid as part of health reform have very limited Medicaid eligibility for non-elderly low-income adults, the latest annual survey of state health program officials from Georgetown University’s Center for Children and Families and the Kaiser Family Foundation finds.  That’s a key reason why 4 million uninsured adults remain in a “coverage gap” in non-expansion states, with incomes too high for Medicaid but loo low for subsidies to buy coverage through health reform’s marketplace.

By and large, non-expansion states have kept Medicaid eligibility for low-income adults at the very low income levels in place before health reform took effect.  In the typical non-expansion state, parents only qualify for Medicaid if they have incomes less than 45 percent of the poverty line, or less than $9,000 a year for a family of three, according to the report.  And in nearly every non-expansion state, non-disabled non-elderly adults without children don’t qualify for Medicaid no matter how low their income is.  (See chart.)

By comparison, in the 27 states and the District of Columbia that have expanded Medicaid, non-elderly adults with incomes below 138 percent of the poverty line ($27,000 for a family of three) are eligible for Medicaid.

Most of the 4 million adults in the coverage gap either work or are in a family with a worker, the Kaiser Family Foundation previously reported.  Research shows that for most low-wage workers, their employer either doesn’t offer coverage or doesn’t offer coverage that they can afford.

States that have expanded Medicaid have enjoyed especially large gains in insurance coverage since health reform’s major coverage expansions took effect in January 2014.  For states like Idaho, Utah, and Montana, which are seriously considering expanding Medicaid this year and have very limited Medicaid eligibility, the Medicaid expansion offers a surefire way to achieve similar progress.

Medicaid-Eligible Children Grow Up to Earn More and Pay More in Taxes

January 21, 2015 at 12:01 pm

People eligible for Medicaid in childhood earn more as adults, and thus contribute more in federal taxes, than other low-income people who weren’t eligible, a recent promising study published by the National Bureau of Economic Research (NBER) finds.  And those benefits, which help offset the cost of providing Medicaid coverage, grow with each year of eligibility.

These findings are the most recent evidence of Medicaid’s wide-ranging benefits to the nation as well as enrollees.  Nearly 30 million Medicaid enrollees — half of all people with Medicaid coverage — are age 18 or under.

Analysts from the Treasury Department and Yale University examined IRS data for people born just before Congress expanded Medicaid coverage for children in the mid- to late 1980s.  These people contributed $186 more in total taxes through age 28 for each additional year they were likely Medicaid-eligible as children.

Other findings from the study suggest potential explanations:  People with more years of likely Medicaid eligibility received less from the Earned Income Tax Credit, had lower mortality rates, were more likely to attend college, and (among women) had higher wages, for example.

Because of their increased tax contributions, “we conclude that the government recoups 14 cents for each dollar that it spent on Medicaid for children by the time they reach age 28,” the authors conclude.  By age 60, they add, the government recoups 56 cents on the dollar.

Although more research is needed to confirm these findings, the NBER-published study — the first to examine the long-term economic impacts of additional years of Medicaid eligibility — contributes to a larger body of research on Medicaid’s positive impacts both in and beyond health care.

Recent research in Oregon, for example, shows that enrolling in Medicaid improves access to health care and reduces medically related financial hardships.  Studies have also shown the long-term health benefits of expanding Medicaid, such as a national study finding that people more likely to be eligible for prenatal and infant care through Medicaid were healthier in young adulthood.

Further Health Coverage Gains, Especially in Medicaid Expansion States

December 17, 2014 at 2:08 pm

The number of uninsured Americans fell by 6.8 million over the first two quarters of 2014, preliminary data from the Centers for Disease Control and Prevention’s (CDC) National Health Interview Survey show.  These are the most up-to-date government survey data on the early impacts of health reform’s major coverage expansions, which took effect in January.  And they show a widening coverage gap between states that have adopted health reform’s Medicaid expansion and other states.

Superseding earlier CDC estimates, the new figures that the CDC released yesterday include the second quarter of 2014, when enrollment surged in state Medicaid programs and health reform marketplaces.  Together, the two reports show consistent progress across the year in reducing the ranks of the uninsured.

Some 12.2 percent of Americans were uninsured in the first six months of 2014, the CDC data show, a 2.2 percentage-point decline from 2013 and the lowest rate since the CDC first collected these data in 1997.  The uninsured rate has fallen by nearly a quarter since peaking at 16.0 percent in 2010.

Coverage gains were greatest among the population groups that have been least likely to have coverage.  The uninsured rate for people in families between 100 and 200 percent of the poverty line plummeted from 29.3 percent to 24.1 percent between 2013 and the first half of 2014.  Adults under age 26, Latinos, African Americans, and people with less than a high school education also experienced disproportionate gains.

Coverage gains among non-elderly adults were nearly twice as large in states that have expanded Medicaid as in non-expansion states, widening the gap between the uninsured rates in the two groups of states from 4.3 percentage points to 6.1 percentage points.  (See graph.)  Several more states are considering adopting the expansion, which would lead to further coverage gains.

The new CDC figures are consistent with four independent surveys showing significant coverage gains in 2014, particularly among Medicaid expansion states.

While the CDC data were collected in January through June, private survey data from the Urban Institute show further coverage gains in the third quarter of 2014, while survey data from Gallup show coverage rates holding steady over this period.

Tennessee Proposal Shows Growing Momentum for Medicaid Expansion

December 16, 2014 at 12:44 pm

Contrary to some predictions, November’s election results haven’t stalled momentum among states to adopt health reform’s Medicaid expansion.  Tennessee Governor Bill Haslam yesterday became the sixth governor — and third Republican — in the past two months to announce an expansion plan.  Twenty-seven states and Washington, D.C. have already expanded (see map).

If the federal government and Tennessee’s legislature approve it, Governor Haslam’s “Insure Tennessee” plan would extend coverage to more than 200,000 uninsured Tennesseans through a demonstration project, or “waiver.”  The federal government has approved four states’ expansion waiver proposals, which give them added flexibility over their Medicaid programs.

Insure Tennessee contains elements that the federal government has approved for other state waivers.  As in Michigan, for example, newly eligible Tennesseans with incomes above the poverty line would make monthly contributions to individual accounts to cover their premiums and cost-sharing charges.  As in New Hampshire, newly eligible Tennesseans who had an offer of coverage from their employer but couldn’t afford the premiums would get help buying it.

To date, only three southern states have expanded Medicaid, which means most of the region isn’t experiencing the positive impacts from expansion.  The Kaiser Family Foundation reported that 86 percent of Americans in the “coverage gap” — with incomes too high for Medicaid but too low for federal subsidies to buy coverage through the marketplace — live in the South.

Among the three southern states that have expanded Medicaid, Arkansas and Kentucky report the nation’s largest drops in their uninsured rates this year (10.1 and 8.5 percentage points, respectively), and West Virginia’s uninsured rate has dropped 5.7 points.

Elsewhere in the South, Virginia Governor Terry McAuliffe will include a Medicaid expansion in his forthcoming budget, North Carolina Governor Pat McCrory has softened his opposition to expansion, and a group of Florida business leaders have unveiled their own expansion proposal.  These states, along with Tennessee, could take a big step toward closing the nation’s coverage gap.