slides17 - Medicare and Medicaid Take up Crowd-out...

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Unformatted text preview: Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Medicaid and Medicare Angela Fertig Spring 2010 Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Medicare established in 1965 under Lyndon Johnson federal program eligible if 65+ or disabled coverage: Part A: hospital insurance Part B: supplemental medical insurance, monthly premium Part C: Medicare+Choice, managed care plan if have parts A&B Part D: Prescription Benefit Plan, described last time Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Medicare financing: Part A: payroll tax (FICA) of 1.45% of wages paid by employee and employer, 2.90% if self-employed Part B: monthly premium + general tax revenue Medigap plans are optional; seniors purchase them privately to cover expenses not covered by Parts A and B Prospective Payment System (PPS) pay average cost of certain diagnosis, not actual cost, to lower moral hazard, we will discuss more next time Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Medicaid established in 1965 state program partly paid by federal matching dollars (match rate formula changed this year), must follow broad federal guidelines eligible if `categorically needy', specifics depend on state family eligible for AFDC in effect in their state in 1996 (before welfare reform) children under 6 or pregnant women with family income below 133% of FPL children under 19 with family income below 100% of FPL coverage depends on state rules Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Medicaid Financing: pregnant women and children do not cost-share (no copays, etc) no cost-sharing on emergency services or family planning services otherwise can be deductibles, copays, etc. federal govt pays at least half of costs (in GA, fraction is 64.5% because we are a little poorer than average) Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Medicaid CHIP (Children's Health Insurance Program) Formerly SCHIP until this year established in 1997 for 10 years, reauthorized in 2009 extends eligibility to children with incomes above Medicaid limits state run programs with some federal funding (in GA 72.3% of costs covered by feds) 18 states expanded Medicaid, 17 created separate programs (GA's PeachCare), and 16 do both) This program put in place because of Medicaid `gap' Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Medicaid 'gap' from Card & Shore-Sheppard (2001) Figure 1: Fraction of Children with Health Insurance by Family Income in 1989, 1993, and 1999 CPS 1.0 Fraction with Health Insurance 0.9 0.8 0.7 0.6 1989 1993 1999 0.5 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 380 400 420 440 460 480 Family Income (Percent of Poverty Line) Angela Fertig Medicaid and Medicare SCHIP Medicare and Medicaid similar to that of private insurance, and help cushion Take up families against the Crowd-out of employer sponsored erosion Sustainability of Medicare insurance. The percentage of uninsured low-income children has decreased by one-third over the last decade has been a success children remain uninsured and the (Figure 1). But, 9 million recession puts more children at risk. Figure 1 are stat stat mos prog incr Percentage of Children Without Health Insurance, By Poverty Level, 1998-2007 28% Children below 200% of poverty 17% 15% Children above 200% of poverty 8% 7% 6% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Children includes all individuals under age 19. Source: KCMU analysis of National Health Interview Survey data Federal Actions Constraining Enrollment. As SCHIP Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Take up 9 million kids are uninsured, half million hospitalizations could have been avoided by preventative care nearly half of the 9 million uninsured kids are eligible for Medicaid in GA, 2/3rds of the 300,000-400,000 uninsured children are eligible for Medicaid or Peachcare why don't parents enroll them? stigma transaction costs are high (hard to take off work, transportation, language barriers) informational barriers (don't know eligible, immigration fears) have insurance of sorts, can go to hospital and get care in an emergency Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Why the state should want to enroll them? Medicaid eligible uninsured children are enrolled when they present at a hospital emergency care is more expensive than preventative care cheaper to enroll early than after bad health event Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Crowd-out one fear of policymakers of expanding eligibility to Medicaid is that people will drop private insurance to take up public insurance this does not help the people it is intended to help (uninsured) and it is costly graphical depiction of crowd-out x-axis: money y-axis: health insurance budget line for people eligible for Medicaid govt wants to guarantee that everyone has at least B in health insurance, which costs C if you were uninsured, then you move to point M (this is the goal of policymakers) if you had insurance, even a little better than B, you are better off dropping it and getting the public program (crowd out) Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Crowd-out graph Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Sustainability of Medicare Medicare expenditures in 2008: $455 billion, 15% of federal outlays Hospital Insurance Trust Fund: pays for Part A funded mostly by payroll taxes can carry balances over time if income greater than expenditures end of FY 2009, balance = $319 billion balances are loaned to govt to finance other spending and will be paid back with interest Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Consequences of aging population ratio of workers to beneficiaries will fall from about 4 now to 2 by 2080 health care costs are rising life expectancy of a 65 year old will rise from 17 years now to over 20 years by 2050 However, wages should also rise because labor supply is lower Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Solvency of HI Trust Fund When the fund cannot cover all of its expenditures with revenues and the balance Current projection: annual payments out will exceed annual income in 2011 Trust fund balances will be used to cover shortfalls balances will not be enough starting in 2019 won't be `bankrupt', just will need a change projection assumes intermediate economic growth, health care costs growth Angela Fertig Medicaid and Medicare Medicare and Medicaid Take up Crowd-out Sustainability of Medicare Insolvency Projections Angela Fertig Medicaid and Medicare ...
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This note was uploaded on 01/18/2012 for the course HPAM 8600 taught by Professor Ferig during the Spring '11 term at University of Georgia Athens.

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