Don’t Forget this Chart When Reading About Ambitious State Medicaid Expansion and Reform Plans

As states move to expand Medicaid across the country, there is plenty of discussion about new and innovative ways to run state Medicaid programs.  There is merit  (and perhaps cost savings) in trying out new ways to coordinate and deliver care in our health system.  In fact, more federal funding was announced last week to enable states to learn from each other and try out approaches like the state of Washington’s successful effort to tackle substance abuse problems, reduce emergency department visits and improve care.  And, partly because of efforts like these, per-capita spending in Medicaid overall is actually down 1.9 percent according to the latest data.

Many states, like Arkansas, already use or are expanding the role of private health insurers in delivering care to Medicaid patients. Some, like Iowa, are trying out programs to encourage healthy behaviors. And a few, like Utah and Pennsylvania, are putting forward plans to expand with multiple new approaches.

The attention paid to state plans to expand (and the pressure on states that haven’t expanded) is rightfully focused on the one low-income group left out of Medicaid coverage in non-expanding states: low-income people, in some states including parents and most in working families, between the ages of 19-64. However there is a more behind the scenes effort in some states to apply some of this energy to improve care while addressing cost issues to two groups that are currently not getting so much attention in the Medicaid debates:  People who are elderly or people of any age who have a serious disability.  Why is this important?  Here’s the chart in the report on variation in per-enrollee Medicaid spending published by the Government Accountability Office that shows the relative amount of money we spend on different groups in the Medicaid program:

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This chart has relevance on several levels.  First, it is again an illustration as to why it is important not just to extend and improve care for children, adults and working families in Medicaid, but also for our elders and people with serious disabilities. Medicaid is the ultimate place people go when they simply can’t get health care in the regular private insurance market.  For families and children in poverty, it is the most efficient and effective way to deliver care and we can make it even better.  For low-income elderly people and people with disabilities, it is often the only place they can go for care as the private health insurance market is largely not interested in serving the needs of these groups.  And with all the attention being paid to how we extend coverage to adults between the ages of 19-64 a quick look at the chart shows that, given the greater proportion of funding needed for serving elderly and disabled Americans, we should be looking at better ways to care for everyone if we want to continue our success at controlling Medicaid costs while improving care.

The second thing I was struck by in the GAO’s chart was the enormous variation in how much states pay for care for people with disabilities and the elderly and how that variation is much bigger than the variation in what we pay for care for non-disabled adults and children.  Obviously, variation in spending is due to all sorts of factors and can have all sorts of causes as suggested by the states with the biggest differences highlighted by the GAO: “[E]stimated per-enrollee spending for disabled enrollees ranged from about $9,000 in Alabama to over $32,000 in New York; and per-enrollee spending for aged enrollees ranged from about $10,000 to about $30,000 for these two states.” However, even with multiple causes, this much variation in spending cries out for reform to improve care and efficiency.  And crucially, while there is variation in how much states spend on other groups in Medicaid, it is generally much less.

My overall point is this. As we move forward with Medicaid expansion and proposals to substantially change the Medicaid program, we need to remember the understandably large share of funding and the much less understandable huge variation in that funding we use to take care of some of the most vulnerable groups of people on Medicaid.  Private insurance models, encouragement of healthy behaviors and so on may currently be getting lots of attention.  But Medicaid is a health program that serves non-elderly adults, families and children and people who are elderly and with disabilities.  It is the ultimate health care safety net for our society – no matter at what stage of life – and we owe it to everyone Medicaid serves to treat any changes with care and caution.  Medicaid should not change simply for change’s sake. It should change because we have thought about how we can better serve everyone from children to the oldest adults and the solutions we propose are ones that improve care and modernize the system for everyone.

Adam Searing is an Associate Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.

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