Transcript TITLE32pt/39pt - Gatton College of Business and Economics

Medicaid: An Overview and Assessment
of Spending and Outcomes
John Garen
Gatton Endowed Professor of Economics,
University of Kentucky
Adjunct Scholar, Bluegrass Institute
Mercatus Center Affiliate
Points of Discussion
1.
2.
3.
4.
Fiscal pressures have made sustaining Medicaid
problematic.
The Medicaid program has many perverse incentives and
rules that:
- discourage good healthcare decision making and
budgeting
- frustrate the focus of the program on the target group
Projections for Kentucky for Medicaid add to the urgency.
Fundamental reform that calls for:
- a competitive healthcare sector
- health insurance vouchers for the poor
- block grants to states
The Past and Future of Kentucky
Medicaid Spending
Figure 1: Medicaid Spending: Total, Federal, and State, 2010 Dollars
450
Expenditures (Billions of Real 2010 Dollars)
400
350
300
250
Total
States
200
Federal
150
100
50
0
1960
1970
1980
1990
2000
2010
2020
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Expenditures (Percent of GDP)
Figure 2: Total Medicaid Spending as a Percent of GDP
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Enrollment (Millions of Recipients)
55
50
15
45
14
40
13
35
12
30
11
10
25
9
20
8
15
7
Enrollment (Percentage of US Population)
Figure 3: Enrollment in Medicaid, Total and Percent of U.S. Population
17
16
Recipients
Percentage
Figure 4: Total Medicaid Spending in Kentucky, Federal and State,
2010 Dollars
Expenditures (Billions of 2010 Dollars)
5.5
5.0
4.5
4.0
3.5
3.0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Figure 5: Kentucky Enrollment in Medicaid, Total and Percent of Population
1,000
26
Enrollment (Thousands of Recipients)
22
800
20
700
18
600
16
500
400
1998
14
2000
2002
2004
2006
2008
12
2010
Enrollment (Percentage of KY Population)
24
900
Recipients
Percentage
Figure 6: Kentucky General Fund Medicaid Expenditures, 2010 Dollars
1300
Expenditures (Millions of Real Dollars)
1200
1100
1000
900
800
700
600
1998
2000
2002
2004
2006
2008
2010
Figure 7: Medicaid State Expenditures, as a Percent of Total General Fund
Expenditures
Expenditures (Percentage of State Spending)
13
12
11
10
9
8
7
What Caused This Expansive Growth... and What
Did It Accomplish?
• Late 1980s and 1990s expansions of eligibility to
above poverty line pregnant women and
children.
• Extensive “crowd out.” For every 10 additional
participants in Medicaid, 5 to 6 would have had
private insurance.
• Minimal effects on prenatal care, hospitalizations,
use of preventative care for children, incidence of
low birth weight, and infant mortality.
Other Problems
• Low reimbursement rates which discourage
physicians to accept patients.
• Minimal co-payments encourages patient
healthcare services use.
• Federal matching grants is an incentive for
states to grow Medicaid, perhaps through
budget gamesmanship.
• Eligibility can reach well into the middle class.
It Gets Worse: Past and Projected Medicaid Spending in
Kentucky, Total and State Share (2010 Dollars)
10
2.5
8
2.0
7
6
5
1.5
4
3
1.0
2
1
0
0.5
State Expenditures (Billions of Dollars)
Total Expenditures (Billions of Dollars)
9
Total
New Total
State
New State
The Importance of Fundamental Reform
• Fundamental reform is called for due to:
- continuing budgetary crisis
- lack of targeting and efficacy
- perverse incentives
• Fundamental reform consists of:
- examine state policies and seek to remove
impediments to competition in healthcare and health
insurance
- health insurance vouchers based on income and
health status
- block grants to states
Fundamental Reform – cont’d.
• Competitive markets can provide low cost coverage for
most, reducing the need for public assistance. Impediments
include: over-regulation of health insurance and
healthcare providers; tax treatment of individual policies.
• Health insurance vouchers to those remaining in true need.
-E.g., “Cash and Counseling” for the disabled in some states
- integrate the poor into the healthcare mainstream;
enrollees become customers and shoppers; choice among
plans and providers.
Fundamental Reform – cont’d.
• Block grants to states.
- creates incentives for careful state budgeting
- allows states to design features that best suit them
Conclusion
• Other, more modest reforms have been proposed (e.g.,
managed care, cost sharing, HSAs) that can be helpful.
• Fundamental reform is preferred.
- It is difficult for healthcare planners to anticipate the
ways in which cost savings, improved care, and better
delivery methods and product might occur.
- Let patients become consumers and shoppers, thereby
rewarding good service.
- Allow insurers and providers to compete by better
serving patients.