Announcements For Wed Nov 8 … please be sure to read the NYT article in your course packet about Wal-Mart and health care Problem Set #4 due next Thursday Exam is next Monday November 13 Similar format to exam 1 Half T/F and multiple choice Half longer questions

Medicaid November 6, 2006

Medicaid Established in 1965 along with Medicare Medicaid is a federal and state program that helps low income and disabled individuals pay for health care expenses Medicaid rules vary from state to state (though there are federal standards that often set minimums and maximums) Low income elderly can qualify for both Medicaid and Medicare – if so, nearly all expenses are covered

Medicaid Eligibility Federal statutes identify over 25 different eligibility categories for which federal funds are available. These fall roughly into 5 groups: Pregnant women Children / teenagers Aged Blind Disabled Means-tested

Means Testing Income and Asset Tests Income test is usually a multiple of the Federal Poverty Level (FPL) In 2003, FPL = $15,260 for family of 3 Asset tests also very stringent Eligibility differs depending on group Pregnant women and children under 6 with incomes below 133% of poverty line ($20,256 in 2003) Children 6 – 18 in families with incomes < 100% of FPL qualify. 36 states have extended coverage to include pregnant women/infants<1 up to 185% of FPL “Medically Needy”

Enrollment In 2000, there were 44.3 million people enrolled in Medicaid 51% were <19 years 37% were % were 65+ (Numbers do not add to 100% due to rounding)

Illinois Medicaid Illinois and Federal Gov’t share financial burden about 50/50 In any given month during Fiscal Year 1998, there were approx 1.4 million residents (1 out of every 8) in Illinois were covered by Medicaid 650,000 of these were children under 19 60,000 were residents of long-term care facilities

Long-Term Care Now that Medicare covers Rx drugs, the one major omission is coverage of long-term care (nursing homes) U.S. spends over $130 billion per year on LTC. Average annual cost of a nursing home is over $50,000 per year Costs growing much faster than inflation Fewer than 10% of 65+ population have private insurance

Medicaid and LTC Most nursing home stays are either paid out of pocket or by Medicaid Medicaid imposes strict income and asset tests – it is like having a deductible equal to nearly all of your assets Current state level experiments to boost private insurance

Why Not Private Insurance? Research shows that Medicaid’s rules effectively impose a very large implicit tax on purchase of private insurance Why? Makes you less likely to qualify for government assistance If you still qualify, private policy pays first Large share of benefits paid by private insurance are duplicative of what Medicaid would have otherwise provided