Medicare, Medicaid and National Health Insurance

1. Medicare, Medicaid and National Health Insurance

2. Medicare • Title 18 of the Social Security Act • Provides coverage of Social Security beneficiaries over the age of 65 (37.243 million in 2008) • Passed in 1965, implemented in 1966, long term disabled beneficiaries(7.717million younger than 65 in 2008) and ESRD added in 1972 (100,000 under 65) • Free choice of any participating provider under Original Medicare

3. Benefits covered under Medicare • Part A—covers hospital care, skilled nursing care, hospice and some home health. No premiums. • Financed from the Hospital Trust Fund—financed by 2.9% of wages with no cap—as opposed to the OAISDI portion of the tax-and by copays and interest on trust fund • Hospital Care-deductible $1,068 deductible on first 60 days per stay plus $267 daily coinsurance for next 30 days and $534 for up to an additional 60 over a lifetime;

4. Benefits Under Medicare (cont) • Part A (cont) Skilled nursing facility services per spell of illness following a 3+ day hospital stay. First 20 days covered 21-100 days $133.50 per day coinsurance • Home health care up to 100 visits after a 3+ day hospital stay • Hospice care with MD certification • Inpat. Psych care up to 190 days in lifetime • Blood (after beneficiary pays for first 3 pints)

5. Benefits Under Medicare cont. • Part B-Physicians services including office visits and one time physical examination for new beneficiaries ($133.50 deductible per year and 20% coinsurance of approved rates) • Durable Medical Equipment • Outpatient Hospital Services • Home health care not preceded by hospital stay or over 100 visits;

6. Benefits Under Medicare cont.Part B benefits cont. • Outpatient mental health services (50% coinsurance) • Clinical lab and diagnostic tests • Outpatient occupational, physical and speech therapy • Some preventive services (ie. Mammograms, diabetes screening) • Blood • Limited number of pharmaceuticals and biologicals administered in MD offices or hospital outpatient settings

7. Financing of Part B • Funded by Premiums of Enrollees and General Revenue—Premiums generally deducted from monthly SS check • Beneficiary premiums ($96,40 per month in 2009) cover about 25 % of total annual costs for Part B and federal general revenues cover the remaining 75% • Note the premiums were means tested for the first time in 2007 and individuals with incomes above $85,000 will pay a greater premium.

8. 2009 Premiums Part B*

9. Viability of the Trust Fund • The Trustees of the Federal Hospital Insurance Trust Fund estimate that there will be more expenditures than revenue in 2012 and it will no longer be able to pay full amount after 2017. • In 2008 total Medicare expenditures $462 billion and income was $481 billion • Medicare shortfall much more significant than SS projected deficits. Although Part B covered by ever increasing GR the fact that less than 50% of projected costs is covered by dedicated revenues has triggered a warning for the 4th consecutive year. Medicare Funding Warning

10. Part C of Medicare • Part C is Medicare Advantage which provides a choice between Medicare Managed Care Plans, Medicare Preferred Provider Organization Plans and Medicare Private Fee for Service Plans it is an alternative to Öriginal or Legacy Medicare • In 2007 about 8.7 million beneficiaries were enrolled in private health plans • Medicare pays a fixed amount each month and plans must at minimum cover all Part A and Part B services at no greater cost to beneficiaries. Additional fees for add on benefits are possible

11. Part D of Medicare • Administered through a separate account within the SMI Trust Fund. As with Part B, Part D is financed with beneficiary premiums (25.5%) and general revenues • Enrollment period 11/15-5/15 after 1% a month forever (unless have credible alternative w/comparable or better benefits) • Doughnut hole: above $2,250 (not including premiums) must spend $3,600 out of pocket

12. How Administered • CMS implements broad policy • Social Security Administration determines eligibility (Part B is not limited to those eligible for Part A for the elderly—others can choose to buy in); • Part A is administered by intermediaries at the state level (usually but not always Blue Cross) implementing federal policy; • Hospital, Physician and SNF reimbursement methods set nationally DRGS, RBRVS and decisions on cost effectiveness of Rx in the offing. RX prices subject to competitive but not government price determination (part D)

13. How Administered (cont) • Part B administered through carriers who pay physicians and others following federal standards; • Appeals of coverage and payment possible through administrative process through CMS to Baltimore.

14. Proposals to Reform Medicare • Breux-Thomas in 1999 proposed going to premium support system with age of eligibility increasing to 67 and adding Rx for low to moderate income participants—the bi partisan Medicare commission failed to endorse by one vote. • Making it more means tested? Rationale limited since higher income contributing far more than others both in HI and also part B premiums

15. Medicaid • Passed in 1965 Implemented 1966 Title 19 of Social Security Act • Administered by a Single State Agency in Each State According to an Approved State Plan • A state federal program with the state developing a program within federal guidelines and covering a mandatory population and providing mandatory benefits. The state then can choose which optional benefits it wishes to provide and which optional populations, if any, that it wishes to cover

16. Mandatory Populations • Low income families with children (children under 6 below 133% poverty)7-18 under 100% poverty. State has a lot of flexibility under Section 1931 • SSI recipients • Pregnant women under 133% of poverty • Recipients of adoption assistance and foster care under Title IV-E • Low income Medicare beneficiaries and certain protected groups who may keep Medicaid while transitioning off cash assistance

17. 2009 Federal Poverty Guidelines

18. Optional populations • Lot of flexibility under Secn 1931 • Spend down population “medicially needy • Certain low income aged, blind or disabled adults who are below poverty but above mandatory coverage (some states supplement SSI) • Institutionalized adults with income below certain limits • Persons who are eligible for institutionalization who are under home or community based waivers • Low income breast and cervical cancer patients screened under a CDC program or who were eligible to be so screened

19. Mandatory Benefits • Inpatient and outpatient hospital services • Prenatal Care • Physician services • SNF for over 21 • Family planning services, EPSDT, Vaccines for children, Rural Health and FQHC services, Lab and X-Ray, pediatric and family nurse practitioner services • Children’s benefits are much more comprehensive

20. Optional Services • There are 34 identified optional services including diagnostic services, ICFMR, prescribed drugs, Optometrist services and eyeglasses, transportation services, rehabilitation and physical therapy services, and home and community based care

21. Medicaid Requirements • The program must be state wide and services must be adequate in amount, duration and scope • Freedom of choice of provider • Waivers may be requested from CMS for adding services and beneficiaries not in the mandatory or optional categories and to waive one or more of the above requirements

22. Common Waivers • 1915b permits waiver of freedom of choice so can have managed care • 1915 c home and community based initiatives for persons who would otherwise be in an institution • 1931 option • HIFA and 1115 waivers • Family planning waivers

23. Medicaid Financing • Federal State matching program with the federal government providing from 50-77% of the cost depending on state per capita income • FMAP=1- .45x state per cap income squared divided by national per cap income squared does not go below .5 • In a number of states localities pick up some of the state match

24. Medicaid Coverage in 2008 • All persons covered are low income total FY 2007 $330 billion • Children (22.6 million) • Adults (20.9 million) • Families, Children and Pregnant Women 28.4 million* [2007 spending $101 billion] • Aged and Disabled 11.4 million*[$202 billion] • *based on 45 states accounting for 90% of enrollment.

25. Other Issues • Disproportionate Share funding • Upper Payment Limit • The Role of Managed Care • Various schemes to draw down federal funds

26. Proposals to Reform Medicaid • National Governor’s Association • Low income relatively healthy family related Medicaid tranformed into more mainstream SCHIP type program coord with state and federal tax credits • Individuals with disabilities more consumer choice and benefit packages • New national dialogue needed on issues relating to aging population states can’t carry the costs of dual eligibles

27. NGA Proposals Continued • Increase state flexibility in Rx pricing—can effect what pay Medicaid and also reduce “claw back“ • Tighten asset transfer possibilities in contemplation of long term care • Incentivize reverse mortgages • More cost sharing in Medicaid • Benefit package flexibility for different beneficiaries • Comprehensive waiver reform so can go through state plan amendment w/out need for 1915b waiver and renewal process

28. NGA Long Term Care Proposals • Tax credits and deductions for LTC insurance • Long Term Care partnerships between states and insurers • Improve Access to Home and Community Based Care especially in light of Olmstead • Improving Chronic Care Management

29. State Childrens Health Insurance • Part of Balanced Budget Act 1997 • Reauthorized January 2009 through FY 2013 • Unlike Medicaid and Medicare which are open ended funding arrangements CHIP was appropriated $32.8 billion • States able to expand coverage to legal immigrant children and have incentives to raise the level of coverage. Most above 200% of poverty level

30. CHIP Eligibility • Children must be younger than 19 • Not eligible for that state’s Medicaid program or state employee coverage • Be a legal US resident • Not have private insurance • Rebases states eligibility for funds based on past spending. Does have significant incentives for States to increase coverage. Above 300% of poverty get Medicaid match

31. SCHIP Financing • SCHIP FMAP is calculated by taking .7Medicaid FMAP + 30% ie. Texas FMAP Medicaid = ~.6 therefore Tx SCHIP FMAP= .6x.7 +.3=.72 These figures are approximate and FMAP increased due to the stimulus package. • Premiums, Coinsurance and Deductibles are permitted and usually increase with income

32. SCHIP Benefits • Must be at least as comprehensive as either that State’s Medicaid plan, the BC/BS option offered to federal employees, the HMO plan with the largest commercial non Medicaid enrollment, or another plan approved by the Secretary.

33. Medicaid Eligibility in Texas 2008 • Family of 3 Medically needy $275 month • LTC up to 300% of Federal Ben Rate $1,911 month • Pregnant women and infants 185% poverty level (returned to this level 2005) $20,035 • Children 1-5 133% • Children 6-18 100% • SSI Aged and Disabled $637 = FBR • TANF $188 asset limit of $1,000 • Spend down to Medically needy eliminated in 2003 except for children and pregnant women

34. SCHIP Eligibility in Texas • Children in Families below 200% of Poverty who are not eligible for Medicaid and who are legal residents and whose parents are not state employees • I am still trying to figure out what happened in Texas and nationally here next week we will look at it.