Public and Private Healthcare- Medicaid

Medicaid is the second arm through which the Federal and State governments provide health care. Medicaid served 45 million low income citizens and nearly 14 million elderly and disabled people- a total of 59 million individuals (2005 numbers). This included nearly 9 million low income Medicare beneficiaries for whom it filled Medicare coverage gaps. In the absence of Medicaid, the covered individuals would join the ranks of the uninsured.

Of the 45 million low-income individuals 29.5 million are children. Total Medicaid expenses in 2008 are expected to be $339 billion and are expected to reach $674 billion by 2017.

The Federal government provides matching funds to State spend on Medicaid and there is no cap on this the matching funds. To be eligible for Medicaid, persons must meet certain financial criteria and also fall into a group that is category eligible. States are required to cover certain mandatory groups in order to be eligible for matching funds. The mandatory groups are:
- Pregnant women and children under the age of 6 in families where the family income is below 133% of Federal Poverty Level (FPL). FPL is $27,570 for a family of 4 in 2009.
- Children between the ages of 6-18 with family incomes below 100% of FPL
- Parents with incomes below states' July 1996 welfare eligibility levels (typically below 50% of FPL),
- Elderly and disabled individuals who receive Supplemental Security Income. SSI is given to people who typically have incomes 74% of FPL for an individual.

Families or individuals without children, no matter how poor are excluded- unless they fall into one of the categories above.

Immigrants are not eligible for Medicaid unless they have lived in the US for at least 5 years and meet the eligibility requirements (above)- except for emergency services. Undocumented immigrants are ineligible for Medicaid no matter how long they have lived in the country.

Federal Poverty levels can be viewed at: http://aspe.hhs.gov/poverty/09poverty.shtml
In general they are as follows (annual income):
- single person: $13,530
- 2 people in family: $18,210
- 3 people in family: $22,890
- 4 people in family: $27,570
etc.

For a detailed description of Medicaid, readers are encouraged to go to: http://www.kff.org/medicaid/upload/7334-03.pdf

Other than the mandatory federal coverage rules, states have a lot of leeway in terms of how they want to run Medicaid programs. For example, states can charge beneficiaries premiums, within certain bounds. Total cost sharing cannot exceed 5% of family income in any case. Cost sharing is prohibited for mandatory children.

Enrollment in HMOs is the primary delivery mechanism for Medicaid with nearly 2/3rds of beneficiaries being enrolled in HMOs. In other cases, Medicaid provides services to beneficiaries through a fee-for-service arrangement with providers. So, though Medicaid is publicly financed, health care is purchased through the private sector.

Medicaid also makes special payments to hospitals that serve a disproportionate share of low income and uninsured patients (6% of Medicaid costs).

Medicaid beneficiaries have a positive feedback on the program. Administrative costs are less than 4% of overall program costs. The elderly and disabled make up 25% of all medicaid enrollees and account for 70% of program spend. Children and adults on average cost the program $1,617 and $ 2,012 respectively (2005 numbers). The elderly and disabled account for much larger per capita costs- $11,839 and $13,524 respectively.

Medicaid's growth has also fared much better than the cost growth rates for private insurance. For example, Medicaid costs have been growing at a rate of 4% between 200 and 2006, while monthly premium increases for employee offered insurance increased at a rate of 10% during the same period.

So, overall, it would be fair to say that this government program is run pretty well- in spite of the general perception that the government cannot do anything well.