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Welcome to week seven. Your readings for this week's Chapter four of the textbook to me are the most dense and difficult reading so please slog through it don't memorize it because it'll probably all change in a week anyway but the overall picture that I would ask you to keep it bind both for reimbursement for hospitals and reimbursement for physicians is that we started with the fee for service model and in both cases funded to be inadequate have gone to some kind of collective payment model D R G's in the case of hospitals and capitation. In the in the case of the physicians and found that to be better but. Still not. Where we wanted to be the iterations that we're looking at next in terms of global payment and accountable care organizations no longer keep the hospital physician tracks separate but combined them. That originally back in the mid seventy's was the idea of the health maintenance organization however since then that idea has devolved to where the. Health Maintenance Organizations now creates a. Per capita amount to give to patients or to allow for patients pays doctors and hospitals on something other than a capitated basis so the risk for the capitation stays with the H.M.O. It doesn't necessarily go downstream further in all cases doesn't necessarily go downstream to the doctors and hospitals there are some notable exceptions like the Kaiser plan where doctors hospitals and the insurance company are still all bundled together as one unit but in most cases have backed away from that concept and go into a. A virtual organization if you will where doctors and hospitals are free to participate with more than one H.M.O. So the unsoundness become diffused and distributed. So two points to look for to look for one is an evolution away from fee for service toward some kind of collective payment system that leaves the provider risk. To future directions I think are going to no longer keep doctors and hospitals separate but begin to pool them in the same account so if you can be you can be if in the current system efficient as a doctor by taking the costly things and putting in the hospital or efficient as a hospital as a hospital by not keeping people any longer than you need to on a strict medical biological need basis and moving them out many of you I know were commenting on. The presentation that was done in the hospital section that talked about readmissions as being a major problem thirty percent of the Medicare population is re admitted to the hospital within thirty days. One other thing I said there were three points is one other point that I would like to bring up here and that is a rather unique Michigan experiment. For the Medicaid program in Michigan we have told Medicaid it for most this is how much we're going to pay per capita so you're bidding you know how much you're you're going to get. Per capita and there's different cells for different risk arrangements. But the number of patients you can bid for as an H.M.O. in the Medicaid program in Michigan is determined by your quality scores the higher your quality scores the greater persist the greater number of patients that you can bid on so to my knowledge this is the first time that we have created a cyst. Them where you are rewarded for quality not for necessarily for cutting costs or. Crimean out providers but for you the quality scores that are reflected in your original and interesting model that I hope we hang on to and will we'll see again in the future. In terms of some vocabulary terms for this week. Guaranteed issue and many of these terms you're going to find in the accountable or in the Affordable Care Act because there is a lot of insurance regulation that that's done there and that's really the reason I'm presenting what many of these terms of this time term one guaranteed issue that means that A it turns company is required to offer you a policy in the past insurance companies had the ability to say no you've got too many health conditions you've got a preexisting condition we don't want to offer you a policy one of the changes in the. Fordable Care Act is guaranteed issue you have to you are guaranteed as an individual that an insurance company will offer you a policy number two Dr Bull a very common term but. One of one of two ways co-pays deductibles that we managed to shift cost on to the patient and we also managed to shift some risk on to the patient cost obviously in terms of you have your co-pay is your deductible is a thousand bucks before your insurance starts paying you get as a consumer get very fussy about whether you want to spend that thousand bucks or you want to keep that thousand bucks in the bank that thousand bucks is yours it doesn't belong to the insurance company it's real money it's out of your pocket recently in the newspaper there's a fight now with two in the insurance companies. Many employers are buying. High dollar policies and then telling their employees All right you've got a two thousand dollar deductible but wink wink we're going to put two thousand dollars in account that you can take out for health care needs when you need it. And insurance companies have found that. When the employers do that the employee behavior doesn't change they still use the same amount of health care that they used if they were fully insured However if the employer doesn't put that two thousand dollars in bank and that two thousand dollars is coming out of the consumer's pocket consumer demand for health care decreases vised munches eight percent. The next two. For care Billy terms are community rating and experience rating and these are different ways that insurance companies figure out how much they're going to charge you for community rating they would take whatever community that you want to define let us say mid Michigan seven counties in the mid Michigan area and do a general overall cost analysis and charge everyone in that area the appropriate amount to recover what they expect for medical payouts plus the administer so eighty cents for medical payouts fifteen cents for administration another five for either profit or reinsurance or whatever but under an experienced rating system the insurance company could go company by company and he and rate each company's experience so if I was a company here on the Michigan State University campus and I had twenty five healthy young grads graduate students working for me my rates particularly if they're all male and therefore weren't going to be childbearing my rates would look really good you find the other hand. I work for the Lansing area services on Aging and I had twenty five employees and they were all over fifty my insurance rates would be substantially higher despite the fact that my AM AS YOU operation and my Lansing operation might only be a few hundred yards apart. That would be experience rating their rating on the experience of my twenty five students versus somebody else's twenty five senior citizens. Capitation this should be a common commonly understood term by now particularly since we've already talked about H M O's health maintenance organizations. Kept ation is was originally conceived as a way to pay providers rather than pay you one fee for service we're going to give you an amount of money per month we're going to give you thirty seven dollars and fifty cents a month and you are responsible for that patient. Now this of course friends incentives around substantially under fee for service the more services I provide the more money I make under captivation the fewer services I provide the more money I make so. Again the Willie Sutton rule and you have to be very careful to make sure that we're putting incentives into properly in scent utilization and not over in send inappropriate behavior to for economic gains. The next term is rescission again and insurance term Rescission is a polite. Technical term meaning we're throwing you out of our insurance company you're too expensive you spent too much money on health care we don't want you on our insurance plan goodbye we're no longer going to insure you one of the benefits of the. The if Affordable Care Act is that rescissions are no longer permitted companies are one have to do a guaranteed issue and two can't throw you out just because they don't like the amount of health care that you're consuming. And find a last term for this week. Health savings accounts which are also in some frames called consumer directed health plans depending on whether you're in favor of them or if you don't like them depending on which term you use. And it works like this. I'm an employer I've got ten employees I can't afford the insurance coverage anymore so I am going to. Buy a policy for my employees that kicks in after the first five thousand dollars so you've got a deductible you as my employer have a deductible of five thousand dollars after that you've got good coverage up until the first five thousand dollars it comes out of your pocket but my employer. Having having some social conscience. Says but in addition to that policy we're going to put some money in a bank maybe twenty five hundred dollars in a bank and I can put it as an employer I can put it in his pretax funds. And you can use that money but you could only use that money for health care so if you have. A dental need you can take the money out of that account if you have health care need if you are you know have to take you kid to the doctor or whatever the money can come out of that account for twenty five hundred bucks and the real question becomes if there's money left at the end of the year what happens to it in some cases the employers as one taking it back because you didn't need it in some cases you employers as well I will split it with you and in some cases they say you know you made the conscious decision. And the money can stay in your account you can still only use it for health care but the money can stay in your account and this is an attractive option from my standpoint in terms of getting people to buy long term care insurance if every year of their working life they had money put into an account that they didn't need for their health care services that year could be applied down the road for long term care services which is going to address or or begin to address a major issue that we face now and will face even with greater impact in the future as the baby boomers age out and start heading into long term care facilities. So that's the vocabulary list for this week my final. Task for this week is to introduce our guest speaker and we're very fortunate to have Dr Vern Smith with us Vernon did his doctoral program in economics here at Michigan State University and was actually an instructor here at M H You originally even went from that to become the first budget officer for a brand new state program called Medicaid so that would have been one nine hundred sixty six or sixty seven and since that time since virtually. Medicaid was born on day one in the state of Michigan burn Smith has been you know in and around and part of the Medicaid program. Verd went from working in the Medicaid program to working in the Budget Office also on the on the Medicaid program to eventually becoming the Medicaid director the director for the Medicaid program here in Michigan about see it was the Engler administration so about fifteen to seventeen years ago now Vern left state government left his position as director of the Medicaid program. And went into a price. A consulting firm Lansing based called Health Management Associates and since that time Verne Smith the is now recognized has become recognized as the national expert on Medicaid and Medicare we are very fortunate to have earned with this. Verdict ask how long the. Heat the film was in the camera and I think we told him it was ninety minutes so he thought he was supposed to talk for ninety minutes so we have taken the liberty of Brayton breaking versions presentation up into two pieces you'll hear probably two thirds of it this week and then we'll come back to it next we can hear the follow up but this is a unique view on Medicaid and Medicare that there are probably only half a dozen people in the country that could duplicate So without further ado Dr difference Beth Well thank you thank you Denis I'm Vern Smyth and I'm very pleased to be here today to talk about Medicaid Medicare. Medicaid in particular and as someone who has had a chance to work with Medicaid. Throughout my career I'm really pleased to have a chance to talk about it as you will see as we go through this discussion Medicaid is such an important program and it's become part of the fabric of our health care system and it's really important to understand it now because its role is only going to be expanding as we go into the future we've got kind of an ambitious agenda to take care of today and I'm going to try to cover things in this order just so you have an idea about how things are going you can talk a lot very briefly about a background about Medicaid and a little bit about Medicare if you will see as we go through most of the focus of what I talk about is going to be on Medicaid. But we'll touch on Medicare as we go through as well or better and then I want to talk. About the forces that are in the health care system right now that really are driving change and which have driven change in Medicaid along with the rest of the health care system of really brought us to where we are today in terms of health reform. Cost what's happened with the uninsured quality to the uninsured persons who are uninsured. Quality and the impact on staying federal budgets that sort of thing and then we'll talk a little bit about health reform itself because Medicaid is an important part of the health reform a question and how Medicaid is affected by health reform and then a little bit about the future so that's what we're going to try to do but first we'll go back to talk about the history and if you talk about Medicaid Medicare and how we got to where we are today will really go back I guess about one hundred years you could go all the way back to Teddy Roosevelt I guess if you want to kind of stretch in terms of the roots of Medicaid and go back to Teddy Roosevelt in his presidential campaign he was a strong supporter of health. Coverage for everyone in the country. Proposed a particular kind of national health what we might now call a national health plan it was not adopted it was also considered by F.D.R. President Roosevelt at the time of the New Deal and when Social Security was enacted nine hundred thirty five but in his case. He decided that the chances of the rest of his social agenda might be jeopardized if included the health care side so he pulled that out proposed it a few times later right up until the time of his death. During World War two And when Pres when Harry Truman. Became president he really picked up the ball proposed national health insurance a national health plan on several occasions again never with success but proposed a program to make sure that everyone had access to health care did not happen. Then President Kennedy proposed it again. In a very serious way and there seemed to be small minimal building on that when he took office in one nine hundred sixty three of course. Then he was killed and President Johnson picked up the ball on it and was able to. Work with Congress with strong presidential leadership to bring about what we now know as Medicaid and Medicare now there is a great article which is on your reading West. That refers to the compromise in the afterthought referring to Medicare which is where the focus was and Medicaid which really came along later in the story here is kind of like this. There was a lot of attention focused on the elderly Now keep in mind or if you were to think back we've we talk about the uninsured now but in the early one nine hundred sixty S. persons who are over sixty five at a very high rate of persons who had no health coverage and there was a very high rate of persons who were in poverty after they retired in fact the poverty level among the elderly was about sixty percent and the insurance rate was over a third so you can see how this fact in itself would have helped generate some political momentum to try to address this issue because Social Security was doing something to address the economic issues of the elderly but health care costs. Were really forcing people to stay in power. But even though they might have had some income from Social Security or some other retirement so the political forces all came together there it was the debate itself is a fascinating story which we don't have time to go into here today but those of you who are interested in the politics and the political science of the adopting of adopting a major piece of legislation like this would be very interested to see that how there was a proposal and then counterproposals and the Republicans were opposed mostly but thought that if something like this was going to happen that there needed to be taxes to support it which led to a compromise where Medicare has Part eight that covers hospitalization which is financed out of taxes and then Part B. which is financed partly. By individual contributions so individuals help pay for part B. and then later came in just a few years ago Part C. which is actually the medic the managed care side of Medicare and then Part D. which is prescription drug coverage which came about in two thousand and six percent of legislation in two thousand and three so these things all came together Medicaid wasn't part of the main discussion which was very intense with the American Medical Association opposing it intensely through this period time the American Hospital sation Association actually supporting it so that it even the medical community itself wasn't unified on this but finally came to this compromise mean while Medicaid. Didn't it didn't exist and all that really existed for the poor in terms of health care were a few programs that word ministered by the states and some states had taken advantage of some legislation that Wilbur Mills a congressman from Arkansas and the senator from Oklahoma. Senator Curry had combined forces to create a bill called a cur Mills plan which provided some funding for indigent at the state's option if they chose to do it but even at its top. All the states never adopted that. And it was never very large program there was a big disappointment to Wilbur Mills who is chairman of the Ways and Means Committee in the house was in the most powerful position in the negotiation on this so kind of at the last minute he had an idea for this new program that would cover the port. And it just kind of happened with out as the scrutiny or the intense discussion as happened on the Medicare sign but Wilbur Mills wanted a program that would work and and not like the so-called Kerr Mills plan which had been acted in one nine hundred sixty and states didn't adopt and so he wanted a plan that would provide grants and aid to states that would make it physically attractive to the southern states in particular to participate so they devised a funding formula so that if states would participate in this new program called Medicaid that the federal government would help pay their costs and the amount that the federal government paid would be more in states with low personal incomes like Arkansas or Alabama or Mississippi and so on that weren't participating in the criminals plan before and sell. It came up with this scheme which in retrospect is genius. Heap and so that the states with the low incomes were able to have their costs of care maybe seventy five or seventy eight or even eighty percent of those cost paid for by the federal government if the state opted into the plan and the wealthiest state would get at least fifty percent so there's this very. Complex formula which I will not bore you with in terms of how this federal matching rate which has come to be known as F. map the federal medical assistance percentage which what has been in the public policy discussion intensely over the last couple years because the fiscal stimulus in February two thousand and nine use the F. map the federal Medicaid matching rate as the mechanism to channel eighty seven billion dollars to states over the last couple of years through Medicaid but in the beginning in one nine hundred sixty five when this was adopted this was a new concept to have this kind of a formula and that's what it was and then after was adopted and signed into law in Independence Missouri in the Truman Presidential Library and Harry Truman and his wife best were there. And as soon as President Johnson signed the bill he turned and presented Medicare card number one to Harry Truman and Medicare card number two to Bess and with that Medicare was launched. And then it was up to the states to look at this and say well are we going to participate or not well the financial terms were sufficiently attractive that states right after another like dominoes decided to opt into Medicaid. And they didn't all opt in the last state to opt in was Arizona and that wasn't until one thousand nine hundred eighty two so. You know when you look at it I mean all the states except Arizona were in I think by nine hundred seventy. But and then a long period of time before Arizona opted opted in as a matter of principle because they didn't want to take the federal funds and they finance this. Out of their own state and local funding up until that point. TIME But. When you look back in this program which in the perspective of someone like myself who actually was there and remembers nine hundred sixty five this is a very young program Medicare and Medicaid a very young programs in the perspective of public policy just forty five years old right now and they have come a long involved in ways that could never have been imagined in one nine hundred sixty five now as you may or may not have picked up from the introduction I had the privilege of beginning my career in one nine hundred sixty seven as Michigan's first budget analyst for Medicaid so my entire career has been focused on this program and have seen it evolve over that period of time what we're going to talk about now is really about. Medicaid and with occasional references to Medicare because a two programs are very much related so I'd like to start here a couple years ago I was in a phone conversation with a friend John I go hard who is the. Editor founding editor of the health policy journal Health Affairs. And he was writing an article actually at the time for the New England Journal in we were talking about Medicaid and he said to me. You know Medicaid is always been underappreciated. For the role that it plays in the lives of so many Americans and I I said John you are so right. People don't look at Medicaid the way they look at Medicare it's not a national program in the sense of a single program that is financed out of the federal treasury and kind of administered centrally and has relatively uniform policies that apply nationwide unlike that Medicaid is. A state program operated by the states under the rules of the federal program but what's in those rules that really define what is it that a state can spend money on in health care inst and get federal matching funds that's the whole formula for Medicaid and so the states designed their own program in such a way that they can capture federal matching funds for what they spend but because of the way it is every single state has a Medicaid program which is different from every other single state there are no two Medicaid programs alike they differ in terms of eligibility who can qualify based on their income or their assets. What benefits they provide how much they pay providers. And how they pay providers. For example prospectively not how well whether they use managed care is of delivery system or not. In just about every way you can imagine the programs are different from state to state now that's one of the things that is changing over time and change with health reform will talk about that little bit more as we get along but just look at what this program Medicaid has become. I don't think you have to be an old timer like me to appreciate. How significant Medicaid has become. I mean look at this we are country that has just over three hundred million people it was a big deal a couple years ago when we passed three hundred million I think we're three zero seven through eight something like that now but out of just over three hundred million people this year two thousand and ten over seventy million people in this country will have Medicaid as their health coverage for some or all of the year now at any point time it's about fifty eight million but because. The nature of the program. There are folks coming on and off all the time because Medicaid is designed to be it's a means tested program and so when people are poor or when the economic and when the economy turns down unemployment goes up people lose jobs and in the process lose health insurance and more people go on Medicaid so. So you have people who circumstances are changing all the time and you have people who are born and have Medicaid help pay for that their coverage so. There's a lot of that kind of turning over that happens when the program but seventy one million out of just over three hundred million people this year will have Medicaid as their health coverage. Now. Medicaid from the beginning was a program of categories. We talk about Medicaid as means tested meaning that it's it's for people of that have resources that are at or below a certain level but the way Medicaid was designed it didn't matter how poor you were if you didn't fit into one of the categories as you went through these screens the first screen you had to be was. But you had you had to be a child a dependent child or an adult taking care of the child or you could be someone who was determined disabled. Or you could be over age sixty five been on Medicare but if you're low income and on Medicare then you could be on Medicaid also and Medicaid would pay for the premium part of the premium and the co-insurance and the deductibles and for the benefits that Medicare doesn't pay for which some of which are significant so when you look at them at the at the. People that are served by Medicaid half of them are children and then you've got to deal to take care of them about ten million. Persons with Disabilities and then you know. I have six or seven people on Medicare and on Medicare right now there are about forty five forty six million people so out of that number. About fifteen sixteen percent or also on Medicaid so these are the main niches that Medicaid pays for and when you look at how the program has grown so I mentioned my history with Medicaid This is the graph of my career and when you look at this you see that beginning almost immediately after it was adopted in one thousand nine hundred five beginning in January first one thousand nine hundred sixty eight speakin in Rolling people into Medicaid and since then the program grew took about ten years for to kind of reach. Impetus you know kind of to fully implemented across the states and get people rolled and then there was a plateau in there and then the Congress began doing things that helped expand the program so far it went from zero to about twenty two twenty three million in about ten years time then we went through about ten years where it stayed twenty two twenty three million and then in the one nine hundred eighty S. Congress began saying you know we need to have a program that covers children. At least up to the poverty level and then begin a process. Where every child born on or after September thirtieth one nine hundred eighty three up to the poverty level was eligible at that time that only covered kids up to have sex. And then the next year of course it covered kids Update seven the next year up to. Eight and nine and in this way in a very under the radar way Medicaid expanded so those that. After in the. Forgotten the exact year but in the late one nine hundred ninety S.. Every child in America who was poor. Was eligible for Medicare. So. Now we have that uniform standard every child up to the poverty level every child up to age six is covered up one hundred thirty three percent of poverty now every woman who is pregnant up to one hundred thirty three percent is is covered but as you can see because of these eligibility expansions the program has expanded as we've gone through time and now then we're up to seventy one million and in this particular graph you'll notice it extends over the next decade and you'll see two bars there going from the current year twenty ten on up to twenty twenty and the the one which is flat is the current C.B.L. projection for Medicaid Roman over the next decade if nothing had happened but of course something did happen that was health reform and so we're going to the expectation is that after there we're going to see a growth over the next decade of about a third more than the number of people that we have on right now and that may seem like a large rate of growth but look at their growth in the previous decades last decade Medicaid Roma grew by fifty eight percent a decade but before that by eighty percent so you can see we still have a pattern of growth in the number of people in the program over the next decade because of health reform. Now I need to say a couple other things about the history here one is that we talk about Medicaid as if it's a program and when people think of Medicaid they often think of Medicaid as the program that provides health coverage for families you know low income families moms maybe single families and kids or two parent families where they're both not working or something along that line and in fact Medicaid has come to be a financing program that it's really a collection of programs the finance and support the health care safety net many ways I call Medicaid the financial glue that holds this whole system together but. Well we have the health insurance program it's the assistance for low income persons on Medicare we talked about that long term care about a third of Medicaid spending is for persons who are long term care either in nursing homes or they're being cared for in their in their homes with special assistance which Medicaid pays for and you know when you think of long term care really there is no other program in this country that supports persons in long term care so that's a very important for the program and then you have Medicaid as the a support for safety net providers in particular hospitals that serve a disproportionate share of persons who are uninsured and you know without Medicaid there's all this uncompensated care the hospitals would bear but Medicaid and Medicare also have programs of disproportionate share payments to hospitals known as Dish payments it's very significant maybe sixteen billion dollars this year in Medicaid along. And then there's also care for other parts of the safety net community health centers. Receive a significant share of their funds from Medicaid and then when you look at the public health system in the mental health system a huge share of the budgets for those programs now come through Medicaid in fact over half of mental health spending by state local governments is financed by Medicaid now so any time you have health care services delivered. To persons who are of a modest or low income means then you are quite like in schools and other places you're going to find Medicaid they're helping to finance them now. I mentioned Medicaid is a financial glue the the financial glue this year two thousand and ten totals four hundred twelve billion dollars estimated to be that by the time the year is done. This is the C B O forecast for the year so when you look at four hundred twelve billion dollars. Even in the context of a very large federal budget this is a pretty significant item it's one sixth of all health care spending in this country. By itself now it's approaching two and a half percent of the nation's gross domestic product. It's a very large number and depending on the particular provided group it's a larger or smaller share I mentioned long term care it's forty and fifty percent of the revenues it's maybe fifty to sixty percent of the patients in long term care for example but throughout the rest of the health care system it's roughly one sixth of it on the prescription drugs until Medicare Part D. Medicaid was a largest single payer of prescription drugs in this nation. With about a twenty percent share of the interim market paid for by Medicare Part D. took a little more than half of that. And now the Medicare pays for it but the states went off the hook when you kind of look you know. Behind the Veil on this the Congress in order to help finance Medicare party said states you've been paying this all along we're not going to give you a windfall you have to keep paying what you're paying before. In the face down a bit but basically it's seventy five percent of what states were paying before for this group they still have to pay it something called the claw back and it's. An interesting little thing States still haven't gotten over having to pay for this it to be a source of financing for the Medicare program. Now when you look at all this money and all the people sometimes people say you know Medicaid you know the payment rates are low getting the Medicaid card is like getting a hunting license that gives you the the license to go try to find a health care provider but good luck. Well. The fact of the matter is the person's on having Medicaid coverage actually does make a difference and we know from a lot of research the being uninsured. Dramatically influences the likelihood that you're going to go get health care when you need it even if you have symptoms that clearly would dictate that you go seek medical care like. Unexplained bleeding nor fainting or shortness of breath going up just a few. Steps. Even with those kinds of symptoms people without health coverage are reluctant to seek health care in fact they're about half as likely a third to a half as likely to seek care as persons with health coverage and that's what you see when you look at the impact of Medicaid you see that if you have Medicaid coverage your experience in the health care system is much more like private health insurance than it is persons without any coverage at all in fact and you look at the data and you'll see it in this graph of persons with. Compared to person with no coverage at all someone on with Medicaid coverage is eight times less likely to have no usual source of care five times less likely to a postponed care because of cost six times less likely to have needed care but didn't get it because of cost. Four times less likely not to have seen a doctor in the last two years and four times less likely to have an unmet dental need because of cost so it really does make a difference. Now if you're an economist like I happen to be you look at all of this money you say this really happened this has to have an impact in the economy and it does it has a huge impact and all of this spending I mean we've seen a lot of discussion about that in terms of the stimulus spending that's gone through Medicaid but when you look at all of this if you want to check Families USA has a great. Resource which many states and policymakers legislators and so on look at to see what would be the impact if you were to have a one hundred million dollar. Cut in Medicaid spending what. We can get under way and then we'll just go and because it's digital. I suppose. You know if I decide at some point to say stop. Then you can figure out how to blend that all together and you put a slide down whenever I did that in the morning yes. OK. So we are he's just. This week. This. Is this. So you can OK this. OK. OK. Well thank you thank you Denis I'm Vern Smyth and I'm very pleased to be here today to talk about Medicaid Medicare. Medicaid in particular and as someone who has had a chance to work with Medicaid. Throughout my career I'm really pleased to have a chance to talk about it as you will see as we go through this discussion Medicaid is such an important program and it's become part of the fabric of our health care system and it's really important to understand it now because its role is only going to be expanding as we go into the future we've got kind of an ambitious agenda to take care of today and I'm going to try to cover things in this order just so they have an idea about how things are going into. Very briefly about a background about Medicaid and a little bit about Medicare as you'll see as we go through most of the focus of what I talk about is going to be on Medicaid. But we'll touch on Medicare as we go through as well Bill Bennett and then I want to talk about the forces that are in the health care system right now that really are driving change and which have driven change in Medicaid along with the rest of the health care system of really brought us to where we are today in terms of health reform. Cost what's happened with the uninsured quality to the uninsured persons who are uninsured. Quality and the impact on state and federal budgets that sort of thing and then we'll talk a little bit about health reform itself because Medicaid is an important part of the health reform a question and how Medicaid is affected by health reform and then a little bit about the future so that's what we're going to try to do but first we'll go back to talk about the history and if you talk about Medicaid Medicare and how we got to where we are today will really go back I guess about one hundred years you could go all the way back to Teddy Roosevelt I guess if you want to kind of stretch in terms of the roots of Medicaid and go back to Teddy Roosevelt in his presidential campaign he was a strong supporter of health. Coverage for everyone in the country. Proposed a particular kind of national health what we might now call a national health plan it was not adopted it was also considered by F.D.R. President Roosevelt at the time of the New Deal and when Social Security was enacted nine hundred thirty five but in his case. He decided that the chances. Of the rest of his social agenda might be jeopardized if included the health care side so he pulled that out proposed it a few times later right up until the time of his death. During World War two And when Pres when Harry Truman became president he really picked up the ball proposed national health insurance a national health plan on several occasions again never with success but proposed a program to make sure that everyone had access to health care did not happen. Then President Kennedy proposed it again. In a very serious way and there seemed to be small minimum building on that when he took office in one nine hundred sixty three of course. Then he was killed and President Johnson picked up the ball on it and was able to. Work with Congress with strong presidential leadership to bring about what we now know as Medicaid and Medicare now there is a great article which is on your reading list. That refers to the compromise in the afterthought referring to Medicare which is where the focus was and Medicaid which really came along later in this story here is kind of like this. There was a lot of attention focused on the elderly Now keep in mind or if you were to think back we've we talk about the insured now but in the early one nine hundred sixty S. persons who are over sixty five and a very high rate of persons who had no health coverage and there was a very high rate of persons who were in poverty after they retired in fact the poverty level among the elderly was about sixty percent and the insurance rate was over a third so you can see how this fact. It in itself would have helped generate some political momentum to try to address this issue because Social Security was doing something to address the economic issues of the elderly but health care costs. Were really forcing people to stay in poverty even though they might have had some income from Social Security or some other retirement so the political forces all came together there it was the debate itself is a fascinating story which we don't have time to go into here today but those of you who are interested in the politics and the political science of the adopting of adopting a major piece of legislation like this would be very interested to see that how there was a proposal and then counterproposals and the Republicans were opposed mostly but thought that if something like this was going to happen that there needed to be taxes to support it which led to a compromise where Medicare has Part eight that covers hospitalization which is financed out of taxes and then Part B. which is financed partly. By individual contributions so individuals help pay for part B. and then later came in just a few years ago Part C. which is actually the medic the managed care side of Medicare and then Part D. which is prescription drug coverage which came about in two thousand and six percent of legislation in two thousand and three so these things all came together Medicaid wasn't part of the main discussion which was very intense with the American Medical Association opposing it intensely through this period time the American Hospital sation Association actually supporting it so that it even the medical community itself wasn't unified on this but finally came to this compromise mean while Medicaid. Didn't it didn't. And all that really existed for the poor in terms of health care were a few programs that were administered by the states and some states had taken advantage of some legislation that Wilbur Mills a congressman from Arkansas and the center from Oklahoma senator Curry had combined forces to create a bill called occur Mills plan which provided some funding for indigent at the state's option if they chose to do it but even at its top. All the states never adopted that. And it was never a very large program that was a big disappointment to Wilbur Mills who is chairman of the Ways and Means Committee in the house was in the most powerful position in the negotiation on this so kind of at the last minute he had an idea for this new program that would cover the port. And it just kind of. Happened with out as the scrutiny or the intense discussion as happened on the Medicare sign but Wilbur Mills wanted a program that would work and not like the so-called Kerr Mills plan which had been enacted in one nine hundred sixty and states didn't adopt and so he wanted a plan that would provide grants and aid to states that would make it physically attractive to the southern states in particular to participate so they devised a funding formula so that if states would participate in this new program called Medicaid that the federal government would help pay their costs and the amount that the federal government paid would be more in states with low personal incomes like Arkansas or Alabama or Mississippi and so on that weren't participating in the criminals plan before and sell. It came up with this scheme which in retrospect is genius. Heap and so that the states with the low income. Homes were able to have their costs of care maybe seventy five or seventy eight or even eighty percent of those cost paid for by the federal government if the state opted into the plan and the wealthiest state would get at least fifty percent so there's this very complex formula which I will not bore you with terms of how this federal matching rate which is come to be known as F. map the federal medical assistance percentage which what has been in the public policy discussion intensely over the last couple years because the fiscal stimulus in February two thousand and nine use the F. map the federal Medicaid matching rate as the NEC Unism to channel eighty seven billion dollars to states over the last couple of years through Medicaid but in the beginning in one nine hundred sixty five when this was adopted this was a new concept to have this kind of a formula and that's what it was and then after was adopted and signed into law in Independence Missouri in the Truman Presidential Library and Harry Truman and his wife best were there. And as soon as President Johnson signed the bill he turned and presented Medicare card number one to Harry Truman and Medicare card number two to Bess and with that Medicare was launched. And then it was up to the states to look at this and say well are we going to participate or not well the financial terms were sufficiently attractive that states right after another like dominoes decided to opt into Medicaid. And they didn't all opt in the last state to opt in was ers Zona and that wasn't until one thousand nine hundred eighty two so. You know when you look at it it is. I mean all the states except Arizona were in I think by nine hundred seventy. But and then a long period of time before Arizona opted opted in as a matter of principle because they didn't want to take the federal funds and they finance this. Out of their own state and local funding up until that point time but. When you look back in this program which in the perspective of someone like myself who actually was there and remembers nine hundred sixty five this is a very young program Medicare Medicaid a very young programs in the perspective of public policy just forty five years old right now and they have come along in evolved in ways that could never have been imagined in one nine hundred sixty five now as you may or may not have picked up from the introduction I had the privilege of beginning my career in one thousand nine hundred fifty seven as Michigan's first budget analyst for Medicaid so my entire career has been focused on this program and have seen it evolve over that period of time what we're going to talk about now is really about. Medicaid and with occasional references to Medicare because a two programs are very much related so I'd like to start here a couple years ago I was in a phone conversation with a friend John I go hard who is the. Editor founding editor of the health policy journal Health Affairs. And he was writing an article actually at the time for the New England Journal in we were talking about Medicaid and he said to me. You know Medicaid is always been underappreciated. For the role that it plays in the lives of so many Americans and I I said John you are so right. People don't look at Medicaid the way they look at Medicare it's not a national program in the sense of a single program that is financed out of the federal treasury and kind of administered centrally and has relatively uniform policies that apply nationwide unlike that Medicaid is a state program operated by the states under the rules of the federal program but what's in those rules that really define what is it that a state can spend money on in health care inst and get federal matching funds that's the whole formula for Medicaid and so the states designed their own program in such a way that they can capture federal matching funds for what they spend but because of the way it is every single state has a Medicaid program which is different from every other single state there are no two Medicaid programs alike they differ in terms of eligibility who can qualify based on their income or their assets. What benefits they provide how much they pay providers. And how they pay providers. For example prospectively not how well whether they use managed care is of delivery system or not. In just about every way you can imagine the programs are different from state to state now that's one of the things that is changing over time and change with health reform will talk about that little bit more as we get along but just look at what this program Medicaid has become. I don't think you have to be an old timer like me to appreciate. How significant Medicaid has become. I mean look at this we are country now that has just over three hundred million people it was a big deal a couple years ago when we passed three hundred million I think we're three zero seven through eight something like that now but out of just over three hundred million people. This year two thousand and ten over seventy million people in this country will have Medicaid as their health coverage for some or all of the year now at any point time it's about fifty eight million but because of the nature of the program. There are folks coming on and off all the time because Medicaid is designed to be it's a means tested program and so when people are poor or when the economic or when the economy turns down unemployment goes up people lose jobs and in the process lose health insurance and more people go on Medicaid so. So you have people who circumstances are changing all the time and you have people who are born and have Medicaid help pay for that their coverage so. There's a lot of that kind of turning over that happens when the program but seventy one million out of just over three hundred million people this year will have Medicaid as their health coverage. Now. Medicaid from the beginning was a program of categories. We talk about Medicaid as means tested meaning that it's it's for people of that have resources that are at or below a certain level but the way Medicaid was designed it didn't matter how poor you were if you didn't fit into one of the categories as you went through these screens the first screen you had to be was. But you had you had to be a child a dependent child or an adult taking care of the child or you could be someone who was determined disabled. Or you could be over age sixty five and on Medicare but if you're low income and on Medicare then you could be on Medicaid also and Medicaid would pay for the premium part of the premium and the co-insurance and the deductibles. And for the benefits that Medicare doesn't pay for which some of which are significant so when you look at then at the at the. People that are served by Medicaid half of them are children and then you've got to deal to take care of them about ten million. Persons with Disabilities and then you now have six or seven people on Medicare and on Medicare right now there are about forty five forty six million people so out of that number. About fifteen sixteen percent or also on Medicaid so these are the main niches that Medicaid pays for and when you look at how the program has grown so I mentioned my history with Medicaid This is the graph of my career and when you look at this you see that beginning almost immediately after it was adopted in one nine hundred sixty five beginning in January first one thousand nine hundred sixty eight speakin in Rolling people into Medicaid and since then the program grew took about ten years for to kind of reach. Imput you know kind of to fully implemented across the states and get people rolled and then there was a plateau in there and then the Congress began doing things that helped expand the program so far it went from zero to about twenty two twenty three million in about ten years time then we went through about ten years where it stayed twenty to twenty three million and then in the one nine hundred eighty S. kind of respect in saying you know we need to have a program that covers children. At least up to the poverty level and then begin a process. Where every child born on or after September thirtieth one nine hundred eighty three up to the poverty level was eligible at that time that only covered kids up to have sex. And then the next year of course it covered kids Update seven the next year up to. Eight and nine and in this way in a very. A Under the Radar way Medicaid expanded so that. After in the. Forgotten the exact year but in the late one nine hundred ninety S.. Every child in America who was poor was eligible for Medicaid. So. Now we have that uniform standard every child up to the poverty level every child up to age six is covered up one hundred thirty three percent of poverty now every woman who is pregnant up to one hundred thirty three percent is is covered but as you can see because of these eligibility expansions the program has expanded as we've gone through time and now then we're up to seventy one million and in this particular graph you'll notice it extends over the next decade and you'll see two. Bars there going from the current year twenty ten on up to twenty. Up to twenty one thousand nine hundred twenty and the the one which is flat is the current C.B.L. projection for Medicaid Roman over the next decade if nothing had happened but of course something did happen that was health reform and so we're going to the expectation is that after there we're going to see a growth over the next decade of about a third more than the number of people that we have on right now and that may seem like a large rate of growth but look at their growth in the previous decades last decade Medicaid Roma grew by fifty eight percent a decade but before that by eighty percent so you can see we still have a pattern of growth in the number of people in the program over the next decade because of health reform. Now I need to say a couple other things about the history here one is that we talk about Medicaid as if it's a program and when people think of Medicaid they often think of Medicaid and as the program that provides health coverage for families you know low income for. Anneliese moms maybe single families kids or two parent families where they're both not working or something along that line and in fact Medicaid has come to be a financing program that it's really a collection of programs the finance and support the health care safety net in many ways I call Medicaid the financial glue that holds this whole system together but what we have the health insurance program it's the assistance for low income persons on Medicare we talked about that long term care about a third of Medicaid spending is for persons who are long term care either in nursing homes or they're being cared for in their in their homes with special assistance which Medicaid pays for and you know when you think of long term care really there is no other program in this country that supports persons in long term care so that's a very important for the program and then you have Medicaid as the support for safety net providers in particular hospitals that serve a disproportionate share of persons who are uninsured and you know without Medicaid there's all this uncompensated care the hospitals would bear but Medicaid and Medicare also have programs of disproportionate share payments to hospitals known as Dish payments it's very significant maybe sixteen billion dollars this year in Medicaid alone. And then there's also care for other parts of the safety net community health centers. Receive a significant share of their funds from Medicaid and then when you look at the public health system in the mental health system a huge share of the budgets for those programs now come through Medicaid in fact over half of mental health spending by state local governments is financed by Medicaid now so anytime you have health care services delivered. To persons who are up. Of a modest or low income means then you are quite like in schools and other places you're going to find Medicaid they're helping to finance that now. I mentioned Medicaid is a financial glue that financial glue this year two thousand and ten totals four hundred twelve billion dollars estimated to be that by the time the years done. This is the C.B.L. forecast for the year so when you look at four hundred twelve billion dollars. Even in the context of a very large federal budget this is a pretty significant item it's one sixth of all health care spending in this country. By itself now it's approaching two and a half percent of the nation's gross domestic product. It's a very large number and depending on the particular provider group it's a larger or smaller share I mentioned long term care it's forty fifty percent of the revenues it's maybe fifty to sixty percent of the patients in long term care for example but throughout the rest of the health care system it's roughly one sixth of it on the prescription drugs until Medicare Part D. Medicaid was the largest single payer of prescription drugs in this nation. With about a twenty percent share of the interim market paid for by Medicare Part D. took a little more than half of that. And now the Medicare pays for it but the states went off the hook when you kind of look you know. Behind the Veil on this the Congress in order to help finance Medicare party said states you've been paying this all along we're not going to give you a windfall you have to keep paying what you're paying before. In the face down a bit but basically it's seventy five percent of what states were paying before for this group they still have to pay it something called the claw back and it's. An interesting. Single Thing States still haven't gotten over having to pay for this it to be a source of financing for the Medicare program. Now when you look at all this money and all the people sometimes people say yeah Medicaid you know the payment rates are low getting the Medicaid card is like getting a hunting license that gives you the the license to go try to find a health care provider but good luck. Well the fact of the matter is that persons on having Medicaid coverage actually does make a difference and we know from a lot of research that being uninsured. Dramatically influences the likelihood that you're going to go get health care when you need even if you have symptoms that clearly would dictate that you go seek medical care like. Unexplained bleeding nor anything or shortness of breath going up just a few. Steps. Even with those kinds of symptoms people without health coverage are reluctant to seek health care in fact they're about half as likely a third to a half as likely to seek care as persons with health coverage and that's what you see when you look at the impact of Medicaid you see that if you have Medicaid coverage your experience in the health care system is much more like private health insurance than it is persons without any coverage at all in fact you look at the data and you'll see it in this graph of a persons with. A compared to a person with no coverage at all someone with Medicaid coverage is eight times less likely to have no usual source of care five times less likely to a postpone care because of cost six times less likely to have needed care. What. We can get under way and then we'll just go in because it's. Digital. I suppose. You know if I decide at some point to say stop. Then you can figure out how to blend out altogether and you put a slide down whatever I did that and I want to write yes. OK. So we are he's just. This week. This. Is this series so you can OK. OK. OK. Well thank you thank you Dennis I'm Vern Smyth and I'm very pleased to be here today to talk about Medicaid Medicare. Medicaid in particular and as someone who has had a chance to work with Medicaid. Throughout my career I'm really pleased to have a chance to talk about it as you will see as we go through this discussion Medicaid is such an important program and it's become part of the fabric of our health care system and it's really important to understand it now because its role is only going to be expanding as we go into the future we've got kind of an ambitious agenda to take care of today and I'm going to try to cover things in this order just so you have an idea about how things are going you can talk a lot very briefly about a background about Medicaid and a little bit about Medicare if you'll see as we go through most of the focus of what I talk about is going to be on Medicaid. But we'll touch on Medicare as we go through as well Bill Bennett and then I want to talk about. The forces that are in the health care system right now that really are driving change and which have driven change in Medicaid along with the rest of the health care system of really brought us to where we are today in terms of health reform. Cost what's happening with the uninsured quality to the uninsured persons who are uninsured. Quality and the impact on state and federal budgets that sort of thing and then we'll talk a little bit about health reform itself because Medicaid is an important part of the health reform a question and how Medicaid is affected by health reform and then a little bit about the future so that's what we're going to try to do but first we'll go back to talk about the history and if you talk about Medicaid Medicare and how we got to where we are today will really go back I guess about one hundred years you could go all the way back to Teddy Roosevelt I guess if you want to kind of stretch in terms of the roots of Medicaid and go back to Teddy Roosevelt in his presidential campaign he was a strong supporter of health. Coverage for everyone in the country. Proposed a particular kind of national health what we might now called a national health plan it was not adopted it was also considered by F.D.R. President Roosevelt at the time of the New Deal and when Social Security was enacted nine hundred thirty five but in his case. He decided that the chances of the rest of his social agenda might be jeopardized if included the health care side so he pulled that out proposed it a few times later right up until the time of his death. During World War two And when Pres when Harry Truman became present. And he really picked up the ball proposed national health insurance a national health plan on several occasions again never with success but proposed a program to make sure that everyone had access to health care did not happen. Then President Kennedy proposed it again. In a very serious way and there seemed to be small minimal building on that when he took office in one nine hundred sixty three of course. Then he was killed and President Johnson picked up the ball on it and was able to. Work with Congress with strong presidential leadership to bring about what we now know as Medicaid and Medicare now there is a great article which is on your reading list. That refers to the compromise in the afterthought referring to Medicare which is where the focus was and Medicaid which really came along later in the story here is kind of like this. There was a lot of attention focused on the elderly Now keep in mind or if you were to think back we've we talk about the insured now but in the early one nine hundred sixty S. persons who are over sixty five at a very high rate of persons who had no health coverage and there was a very high rate of persons who were in poverty after they retired in fact the poverty level among the elderly was about sixty percent and the insurance rate was over a third so you can see how this fact in itself would have helped generate some political momentum to try to address this issue because Social Security was doing something to address the economic issues of the elderly but health care costs. Were really forcing people to stay in poverty even though the. Might have had some income from Social Security or some other retirement so the political forces all came together there were it was the debate itself is a fascinating story which we don't have time to go into here today but those of you who are interested in the politics and the political science of the adopting of adopting a major piece of legislation like this would be very interested to see that how there was a proposal and then counterproposals and the Republicans were opposed mostly but thought that if something like this was going to happen that there needed to be taxes to support it which led to a compromise where Medicare has Part eight that covers hospitalization which is financed out of taxes and then Part B. which is financed partly. By individual contributions so individuals help pay for part B. and then later came in just a few years ago Part C. which is actually the medic the managed care side of Medicare and then Part D. which is prescription drug coverage which came about in two thousand and six percent of legislation in two thousand and three so these things all came together Medicaid wasn't part of the main discussion which was very intense with the American Medical Association opposing it intensely through this period time the American hospitalization Association actually supporting it so that even the medical community itself wasn't unified on this but finally came to this compromise mean while Medicaid. Didn't it didn't exist and all that really existed for the poor. In terms of health care were a few programs that word ministered by the states and some states had taken advantage of some legislation that Wilbur Mills a congressman from Arkansas and the senator from Oklahoma senator. Her had combined forces to create a bill called a cur Mills plan which provided some funding for indigent at the state's option if they chose to do it but even at its top. All the states never adopted that. And it was never a very large program that was a big disappointment to Wilbur Mills who is chairman of the Ways and Means Committee in the house was in the most powerful position in the negotiation on this so kind of at the last minute he had an idea for this new program that would cover the port. And it just kind of happened with out as the scrutiny or the intense discussion as happened on the Medicare sign but Wilbur Mills wanted a program that would work and not like the so-called Kerr Mills plan which had been enacted in one nine hundred sixty and states didn't adopt and so he wanted a plan that would provide grants and aid to states that would make it physically attractive to the southern states in particular to participate so they devised a funding formula so that if states would participate in this new program called Medicaid that the federal government would help pay their costs and the amount that the federal government paid would be more in states with low personal incomes like Arkansas or Alabama or Mississippi and so on that weren't participating in the criminals plan before and so. You came up with this scheme which in retrospect is genius. Heap and so that the states with the low incomes were able to have their costs of care maybe seventy five or seventy eight or even eighty percent of those cost paid for by the federal government if the state opted into the plan and the wealthiest state would get at least fifty percent so there's this very complex for. Which I will not bore you with terms of how this federal matching rate which has come to be known as F A map the federal medical assistance percentage which what has been in the public policy discussion intensely over the last couple years because the first fiscal stimulus in February two thousand and nine use the F. map the federal Medicaid matching rate as the mechanism to channel eighty seven billion dollars to states over the last couple of years through Medicaid but in the beginning in one nine hundred sixty five when this was adopted this was a new concept to have this kind of a formula and that's what it was and then after was adopted and signed into law in Independence Missouri in the Truman Presidential Library and Harry Truman and his wife best were there. And as soon as President Johnson signed the bill he turned and presented Medicare card number one to Harry Truman and Medicare card number two to Bess and with that Medicare was launched. And then it was up to the states to look at this and say well are we going to participate or not well the financial terms were sufficiently attractive that states right after another like dominoes decided to opt into Medicaid. And they didn't all opt in the last state to opt in was Earth Zona and that wasn't until one thousand nine hundred eighty two so. You know when you look at it I mean all the states except Arizona were in I think by nine hundred seventy. But and then a long period of time before Arizona up to opt in as a matter of principle because they didn't want to take the federal funds and they finance this. Out of their own state and local funding up until that point time. But. When you look back in this program which in the perspective of someone like myself who actually was there and remembers nine hundred sixty five this is very young program Medicare and Medicaid a very young programs in the perspective of public policy just forty five years old right now and they have come along in evolved in ways that could never have been imagined in one nine hundred sixty five now as you may or may not have picked up from the introduction I had the privilege of beginning my career in one thousand nine hundred sixty seven as Michigan's first budget analyst for Medicaid so my entire career has been of focused on this program and have seen it evolve over that period of time what we're going to talk about now is really about. Medicaid and with occasional references to Medicare because of two programs a very much related so I'd like to start here a couple years ago I was in a phone conversation with a friend John I go hard who's the. Editor founding editor of the health policy journal Health Affairs. And he was writing an article actually at the time for the New England Journal in we were talking about Medicaid and he said to me. You know Medicaid is always been under appreciated. For the role that it plays in the lives of so many Americans and I I said John you are so right. People don't look at Medicaid the way they look at Medicare it's not a national program in the sense of a single program that is financed out of the federal treasury and kind of administered centrally and has relatively uniform policies that apply nationwide unlike that Medicaid is a state. Program operated by the states under the rules of the federal program but what's in those rules that really define what is it that a state can spend money on in healthcare inst and get federal matching funds that's the whole formula for Medicaid and so the states designed their own program in such a way that they can capture federal matching funds for what they spend but because of the way it is every single state has a Medicaid program which is different from every other single state there are no two Medicaid programs alike they differ in terms of eligibility who can qualify based on their income or their assets. What benefits they provide how much they pay providers. And how they pay providers. For example prospectively not how well whether they use managed care as a delivery system or not. In just about every way you can imagine the programs are different from state to state now that's one of the things that is changing over time and change with health reform we'll talk about that little bit more as we get along but just look at what this program Medicaid has become. I don't think you have to be an old timer like me to appreciate. How significant Medicaid has become. I mean look at this we are country that has just over three hundred million people it was a big deal a couple years ago when we passed three hundred million I think with three zero seven through eight something like that now but out of just over three hundred million people this year two thousand and ten over seventy million people in this country will have Medicaid as their health coverage for some or all of the year now at any point time it's about fifty eight million but because of the nature. As a program. There are folks coming on and off all the time because Medicaid is designed to be it's a means tested program and so when people are poor or when the economic when the economy turns down unemployment goes up people lose jobs and in the process lose health insurance and more people go on Medicaid so. So you have people who circumstances are changing all the time and you have people who are born and have Medicaid help pay for that their coverage so. There's a lot of that kind of turning over that happens when the program but seventy one million out of just over three hundred million people this year will have Medicaid as their health coverage. Now. Medicaid from the beginning was a program of categories. We talk about Medicaid is means tested meaning it's it's for people of that have resources that are at or below a certain level but the way Medicaid was designed it didn't matter how poor you were if you didn't fit into one of the categories as you went through these screens the first screen you had to be was. But you had you had to be a child a dependent child or an adult taking care of the child or you could be someone who was determined disabled. Or you could be over age sixty five been on Medicare but if you're low income and on Medicare then you could be on Medicaid also and Medicaid would pay for the premium Part B. premium and the co-insurance the deductibles and for the benefits that Medicare doesn't pay for which some of which are significant so when you look at then at the at the. People that are served by Medicaid half of them are children and then you've got to deal to take care of them about ten million. Persons with Disabilities and then you now have sixty. Seven people on Medicare and on Medicare right now there are about forty five forty six million people so out of that number. About fifteen sixteen percent or also on Medicaid so these are the main niches that Medicaid pays for and when you look at how the program has grown so I mentioned my history with Medicaid This is the graph of my career and when you look at this you see that beginning almost immediately after it was adopted in one nine hundred sixty five beginning in January first one thousand nine hundred six Tate's begin enroll in people into Medicaid and since then the program grew took about ten years for to kind of reach. Implicit you know kind of to fully implement across the states and get people rolled and then there was a plateau in there and then the Congress began doing things that helped expand the program so far it went from zero down to about twenty two twenty three million in about ten years time then we went through about ten years where it stayed twenty to twenty three million and then in the one nine hundred eighty S. kind of respect in saying you know we need to have a program that covers children. At least up to the poverty level and there begin a process. Where every child born on or after September thirtieth one nine hundred eighty three up to the poverty level was eligible at that time that only covered kids up to have sex. And then the next year of course it covered kids Update seven the next year up to. Eight and nine and in this way in a very under the radar way Medicaid expanded so that. After in the. Begun the exact year but in the late one nine hundred ninety S.. Every child in America who was poor was. Eligible for Medicaid. So. Now we have that uniform standard every child up to the poverty level every child up to age six is covered up one hundred thirty three percent of poverty now every woman who is pregnant up to one hundred thirty three percent is is covered but as you can see because of these eligibility expansions the program has expanded as we've gone through time and now then we're up to seventy one million and in this particular graph you'll notice it extends over the next decade and you'll see two. Bars there going from the current year twenty ten on up to twenty. Up to twenty one thousand nine hundred twenty and the the one which is flat is the current C.B.L. projection for Medicaid Roman over the next decade if nothing had happened but of course something did happen that was health reform and so we're going to the expectation is that after there we're going to see a growth over the next decade of about a third more than the number of people that we have on right now and that may seem like a large rate of growth but look at their growth in the previous decades last decade Medicaid Roma grew by fifty eight percent a decade but before that by eighty percent so you can see we still have a pattern of growth in the number of people in the program over the next decade because of health reform. Now I need to say a couple other things about the history here one is that we talk about Medicaid as if it's a program and when people think of Medicaid they often think of Medicaid as the program that provides health coverage for families you know low income families moms maybe single families and kids or two parent families where they're both not working or something along that line and in fact Medicaid has come to be a financing program that it's really a collection of programs the finance and support the health care so. In that many ways I call Medicaid the financial glue that holds this whole system together but what we have the health insurance program it's the assistance for low income persons on Medicare we talked about that long term care about a third of Medicaid spending is for persons who are long term care either in nursing homes or they're being cared for in the in their homes with special assistance which Medicaid pays for and you know when you think of long term care really there is no other program in this country that supports persons in long term care so that's a very important for the program and then you have Medicaid as the a support for safety net providers in particular hospitals that serve a disproportionate share of persons who are uninsured and you know without Medicaid there's all this uncompensated care the hospitals would bear but Medicaid and Medicare also have programs of disproportionate share payments to hospitals known as Dish payments it's very significant maybe sixteen billion dollars this year in Medicaid alone. And then there's also care for other parts of the safety net community health centers. Receive a significant share of their funds from Medicaid and then when you look at the public health system in the mental health system a huge share of the budgets for those programs now come through Medicaid in fact over half of mental health spending by state local governments is financed by Medicaid now so any time you have health care services delivered. To persons who are of a modest or low income means then you are quite like in schools and other places you're going to find Medicaid they're helping to finance them now. I mentioned Medicaid is a financial glue that that financial glue this year. Uneaten totals four hundred twelve billion dollars estimated to be that by the time the year is done. This is the C.B.L. forecast for the year so when you look at four hundred twelve billion dollars. Even in the context of a very large federal budget this is a pretty significant item it's one sixth of all health care spending in this country. By itself now it's approaching two and a half percent of the nation's gross domestic product. It's a very large number and depending on the particular provider group it's a larger or smaller share I mentioned long term care it's forty and fifty percent of the revenues it's maybe fifty to sixty percent of the patients in long term care for example but throughout the rest of the health care system it's roughly one sixth of it on the prescription drugs until Medicare Part D. Medicaid was a largest single payer of prescription drugs in this nation. With about a twenty percent share of the interim market paid for by Medicare Part D. took a little more than half of that. And now the Medicare pays for it but the states went off the hook when you kind of look you know. Behind the Veil on this the Congress in order to help finance Medicare party said states you've been paying this all along we're not going to give you a windfall you have to keep paying what you're paying before. In the face down a bit but basically it's seventy five percent of what states were paying before for this group they still have to pay it something called the claw back and it's. An interesting little thing States still haven't gotten over having to pay for this it to be a source of financing for the Medicare program. Now when you look at all this money and all the people sometimes people say you know Medicaid you know the payment rates are low getting the Medicaid card is like getting a hunting license that gives you. The the license to go try to find a health care provider but good luck Well the fact of the matter is the person's on having Medicaid coverage actually does make a difference and we know from a lot of research the being uninsured. What. We can get under way and then we'll just go and because it's digital. I suppose. You know if I decide at some point to say stop. Then you can figure out how to blend out all together and you put a slide down whatever I did that no one even wrote Yes. OK so or so we increased our just. This week. This. Is this. So you can OK. OK. OK. Well thank you thank you Dennis I'm Vern Smyth and I'm very pleased to be here today to talk about Medicaid Medicare. Medicaid in particular and as someone who has had a chance to work with Medicaid. Throughout my career I'm really pleased to have a chance to talk about it as you will see as we go through this discussion Medicaid is such an important program and it's become part of the fabric of our health care system and it's really important to understand it now because its role is only going to be expanding as we go into the future we've got kind of an ambitious agenda to take care of today and I'm going to try to cover. Things in this order just so you have an idea about how things are going you can talk a lot very briefly about a background about Medicaid and a little bit about Medicare if you will see as we go through most of the focus of what I talk about is going to be on Medicaid. But we'll touch on Medicare as we go through as well or better and then I want to talk about the forces that are in the health care system right now that really are driving change and which have driven change in Medicaid along with the rest of the health care system of really brought us to where we are today in terms of health reform. Cost what's happened with the insurance quality to the uninsured persons who are uninsured. Quality and the impact on staying federal budgets that sort of thing and then we'll talk a little bit about health reform itself because Medicaid is an important part of the health reform a question and how Medicaid is affected by health reform and then a little bit about the future so that's what we're going to try to do but first we'll go back to talk about the history and if you talk about Medicaid Medicare and how we got to where we are today will really go back I guess about one hundred years you could go all the way back to Teddy Roosevelt I guess if you want to kind of stretch in terms of the roots of Medicaid and go back to Teddy Roosevelt in his presidential campaign he was a strong supporter of health. Coverage for everyone in the country. Proposed a particular kind of national health what we might now call. National health plan it was not adopted it was also considered by F.D.R. President Roosevelt at the time of the New Deal and when Social Security was enacted in one nine hundred thirty five. But in his case. He decided that the chances of the rest of his social agenda might be jeopardized if included the health care side so he pulled that out proposed it a few times later right up until the time of his death. During World War two And when Pres when Harry Truman became president he really picked up the ball proposed national health insurance a national health plan on several occasions again never with success but proposed a program to make sure that everyone had access to health care did not happen. Then President Kennedy proposed it again. In a very serious way and there seemed to be small minimal building on that when he took office in one nine hundred sixty three of course. Then he was killed and President Johnson picked up the ball on it and was able to. Work with Congress with strong presidential leadership to bring about what we now know as Medicaid and Medicare now there is a great article which is on your reading West. That refers to the compromise in the afterthought referring to Medicare which is where the focus was and Medicaid which really came along later in the story here is kind of like this. There was a lot of attention focused on the elderly Now keep in mind or if you were to think back we've we talk about the insured now but in the early one nine hundred sixty S. persons who are over sixty five at a very high rate of persons who had no health coverage and there was a very high rate of persons who were in poverty after they retired in fact the poverty level among the elderly was about sixty percent and the insurance rate was. Is Over a third so you can see how this fact in itself would have helped generate some political momentum to try to address this issue because Social Security was doing something to address the economic issues of the elderly but health care costs. Were really forcing people to stay in poverty even though they might have had some income from Social Security or some other retirement so the political forces all came together there it was the debate itself is a fascinating story which we don't have time to go into here today but those of you who are interested in the politics and the political science of the adopting of adopting a major piece of legislation like this would be very interested to see that how there was a proposal and then counterproposals and the Republicans were opposed mostly but thought that if something like this was going to happen that there needed to be taxes to support it which led to a compromise where Medicare has Part eight that covers hospitalization which is financed out of taxes and then Part B. which is financed partly. By individual contributions so individuals help pay for part B. and then later came in just a few years ago Part C. which is actually the medic the managed care side of Medicare and then Part D. which is prescription drug coverage which came about in two thousand and six percent of legislation in two thousand and three so these things all came together Medicaid wasn't part of the main discussion which was very intense with the American Medical Association opposing it intensely through this period time the American Hospital sation Association actually supporting it so there is even the medical community itself wasn't unified on this but finally came to this come from. Meanwhile Medicaid. Didn't it didn't exist and all that really existed for the poor. In terms of health care were a few programs the word ministered by the states and some states had taken advantage of some legislation that Wilbur Mills a congressman from Arkansas and the center from Oklahoma senator Curry had combined forces to create a bill called occur mils plan which provided some funding for indigent at the state's option if they chose to do it but even at its top. All the states never adopted that. And it was never a very large program that was a big disappointment to Wilbur Mills who is chairman of the Ways and Means Committee in the house was in the most powerful position in the negotiation on this so kind of at the last minute he had an idea for this new program that would cover the port. And it just kind of happened with out as the scrutiny or the intense discussion as happened on the Medicare sign but Wilbur Mills wanted a program that would work and not like the so-called Kerr Mills plan which had been acted in one nine hundred sixty and states didn't adopt and so he wanted a plan that would provide grants and aid to states that would make it physically attractive to the southern states in particular to participate so they devised a funding formula so that if states would participate in this new program called Medicaid that the federal government would help pay their costs and the amount that the federal government paid would be more in states with low personal incomes like Arkansas or Alabama or Mississippi and so on that weren't participating in the criminals plan before and sell. It came up with this scheme which in retrospect is genius. Heap and so that the states with the low incomes were able to have their costs of care maybe seventy five or seventy eight or even eighty percent of those cost paid for by the federal government if the state opted into the plan and the wealthiest state would get at least fifty percent so there's this very complex formula which I will not bore you with terms of how this federal matching rate which is come to be known as F. map the federal medical assistance percentage which what has been in the public policy discussion intensely over the last couple years because the fiscal stimulus in February two thousand and nine use the F. map the federal Medicaid matching rate as the mechanism to channel eighty seven billion dollars to states over the last couple of years through Medicaid but in the beginning in one nine hundred sixty five when this was adopted this was a new concept to have this kind of a formula and that's what it was and then after was adopted and signed into law in Independence Missouri in the Truman Presidential Library and Harry Truman and his wife best were there. And as soon as President Johnson signed the bill he turned and presented Medicare card number one to Harry Truman and Medicare card number two to Bess and with that Medicare was launched. And then it was up to the states to look at this and say well are we going to participate or not well the financial terms were sufficiently attractive that states right after another like dominoes decided to opt into Medicaid. And they didn't all opt in the last state to opt in was Arizona and that wasn't until ninety. Eighty two so. You know when you look at it I mean all the states except Arizona were in I think by nine hundred seventy. But and then a long period of time before Arizona opted opted in as a matter of principle because they didn't want to take the federal funds and they finance this. Out of their own state and local funding up until that point time but. When you look back in this program which in the perspective of someone like myself who actually was there and remembers nine hundred sixty five this is a very young program Medicare Medicaid a very young programs in the perspective of public policy just forty five years old right now and they have come a long and involved in ways that could never have been imagined in one nine hundred sixty five now as you may or may not have picked up from the introduction I had the privilege of beginning my career in one nine hundred sixty seven as Michigan's first budget analyst for Medicaid so my entire career has been focused on this program and have seen it evolve over that period of time what we're going to talk about now is really about. Medicaid and with occasional references to Medicare because of two programs a very much related so I'd like to start here a couple years ago I was in a phone conversation with a friend John I go hard who is the. Editor founding editor of the health policy journal Health Affairs. And he was writing an article actually at the time for the New England Journal in we were talking about Medicaid and he said to me. You know Medicaid is always been underappreciated. For the role that it plays in the lives of so many Americans. And I I said John you are so right. People don't look at Medicaid the way they look at Medicare it's not a national program in the sense of a single program that is financed out of the federal treasury and kind of administered centrally and has relatively uniform policies that apply nationwide unlike that Medicaid is a state program operated by the states under the rules of the federal program but what's in those rules that really define what is it that a state can spend money on in health care inst and get federal matching funds that's the whole formula for Medicaid and so the states designed their own program in such a way that they can capture federal matching funds for what they spend but because of the way it is every single state has a Medicaid program which is different from every other single state there are no two Medicaid programs alike they differ in terms of eligibility who can qualify based on their income or their assets. What benefits they provide how much they pay providers. And how they pay providers. For example prospectively not how well whether they use managed care is of delivery system or not. In just about every way you can imagine the programs are different from state to state now that's one of the things that is changing over time and change with health reform will talk about that little bit more as we get along but just look at what this program Medicaid has become. I don't think you have to be an old timer like me to appreciate. How significant Medicaid has become. I mean look at this we are country that has just over three hundred million people it was a big deal a couple years ago when we passed three hundred million I think we're three zero seven through eight. Something like that now but out of just over three hundred million people this year two thousand and ten over seventy million people in this country will have Medicaid as their health coverage for some or all of the year now at any point time it's about fifty eight million but because of the nature of the program. There are folks coming on and off all the time because Medicaid is designed to be it's a means tested program and so when people are poor or when the economic and when the economy turns down unemployment goes up people lose jobs and in the process lose health insurance and more people go on Medicaid so. So you have people who circumstances are changing all the time and you have people who are born and have Medicaid help pay for that their coverage so. There's a lot of that kind of turning over that happens when the program but seventy one million out of just over three hundred million people this year will have Medicaid as their health coverage. Now. Medicaid from the beginning was a program of categories. We talk about Medicaid as means tested meaning that it's it's for people of that have resources that are at or below a certain level but the way Medicaid was designed it didn't matter how poor you were if you didn't fit into one of the categories as you went through these screens the first green you had to be was. But you had you had to be a child a dependent child or an adult taking care of the child or.

HM841 week7Part1

From pblhlth Program in Public Health September 24th, 2015  

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