What is Medicaid?

Medicaid is the nation’s largest public health insurance program that finances health and long-term care (including nursing home) services for more than 50 million eligible Americans. The program was established by Congress in 1965 and provides access to affordable and comprehensive health care for children and adults in low-income working families. Medicaid also serves the elderly and persons with disabilities who often rely on the program to fill critical gaps in their Medicare coverage.

Although three quarters of Medicaid’s enrollees are families with children, Medicaid pays for services for the elderly and persons with visual impairments and other disabilities—accounting for 70 percent of the program’s expenditures (Kaiser Family Foundation).

Each state partners with the federal government to jointly finance and operate Medicaid, which has become a huge player in the health care industry. According to the Kaiser Family Foundation:

Medicaid accounts for roughly one fifth of the nation’s health care spending and nearly half of all spending on long-term care. As the largest source of federal support to the states, Medicaid is also a major engine in state economies, supporting millions of jobs across the country. Medicaid’s guarantee of open-ended federal financing that matches state spending enables states to respond to losses of private health insurance caused by unemployment and rising health insurance premiums, increases in health care costs, emergencies and disasters, and an aging society.

Michigan’s Medicaid spending as a percentage of total state expenditures is trending up, growing from 8 percent in 1980 to 25.3 percent in 2007.

In 2005, a little more than one million individuals of all ages—nearly one tenth of Michigan’s population—were enrolled in Medicaid, according to the Michigan Department of Community Health (MDCH). Today, Michigan ranks the highest in unemployment in the country, and the loss of jobs often results in the loss of health insurance. “Nearly one in six Michigan citizens is now covered under the Medicaid program” (Udow-Phillips, 2009). With the economic collapse, more new families have enrolled in the Medicaid program, so the costs of Medicaid services continues to increase significantly.

According to the Cover Michigan report (Udow-Phillips, 2009): Michigan ranks in the middle (21st highest) when compared to other states on the number of individuals who are publicly insured. Twenty seven percent of Michigan residents had some form of publicly offered health care coverage in 2007. Approximately one in six was covered by Medicaid. Clare, Ogemaw, Oceana, and Lake counties had the highest percentage of population enrolled in Medicaid; Wayne, Oakland, Macomb, and Kent counties had the highest numbers of Medicaid recipients. Total state expenditures for Medicaid in 2006 were almost $3.6 billion, representing more than 20 percent of total state expenditures and almost 1.6 million (persons living) in Michigan were Medicare beneficiaries in 2008, up from 1.4 million in 2003. At 15.6 percent of the population, Michigan has a higher percentage of Medicare beneficiaries than the U.S. average of 14.9 percent. (Medicare is a federally funded health insurance program created by Congress in 1965. Medicare provides some health care coverage for all citizens aged 65 and older, along with some individuals with certain disabilities or diagnoses. There are 44 million enrollees in the Medicare program and as baby boomers age, the number will grow rapidly.)

What Does Medicaid Cover?

Medicaid covers a wide range of services including hospitalization, physician, midwife, and certified nurse practitioner services; laboratory and x-ray; prescription drugs; dental; nursing home and home health care; family planning; speech therapy; physical therapy; some health status assessment and evaluations; personal care provided by aides and paraprofessionals; medical transportation; and rural health clinics and federally qualified health centers, among others. Budget cuts have affected the level of coverage for some of the services that are ‘optional’ and not required by federal law to be provided by state Medicaid programs.

Because Medicaid beneficiaries have limited financial resources, generally they are not expected to share costs. For children and pregnant women, cost sharing has not been permitted, but legislators reconsider this policy each year.

What Is the School-Based Services (SBS) Program?

In 1993, Michigan’s Medicaid program added the SBS component to reimburse for some health and related services provided by school districts. All 57 of Michigan’s ISDs enrolled as Medicaid providers within the first year. Later, the Michigan School for the Deaf and Blind and the Detroit Public Schools enrolled. Since then, Medicaid has determined that only ISD-level districts are allowed to be enrolled as Medicaid providers for this program. The Medicaid agency requires local school districts and public school academies/charter schools to work through their ISDs to participate in the program.

Through SBS, Medicaid reimburses ISDs for some health care and related services provided for individuals who are enrolled in Medicaid and who are eligible for special education or other programs, like Early On. The services reimbursed are those provided (generally during the school day) by qualified personnel and as set forth in the student’s Individualized Education Program (IEP) or Individualized Family Service Plan (IFSP). Each ISD has established and adjusted many of its day-to-day procedures in order to work with the Medicaid agency on time study procedures, their computerized billing system, and extensive documentation requirements.

How Does Reimbursement Work in General?

Medicaid is administered by each state and is jointly financed from both federal and state sources. The federal share will always be at least 50 percent, and the state contributes the balance. The federal share depends on the economic status of the state and is adjusted annually for each state. As Michigan’s economy has worsened, its federal share has increased each year for the past 12 years (see table below).

The positive effect of this cost sharing, of course, is that states are not burdened with the entire load of health care costs for citizens with low-income in their state. In lean economic times, when employers cut jobs, more families qualify for Medicaid, increasing the total cost of health care to both the state and federal governments. This has been the case in the past few years, particularly in 2008-2009, as nearly every state saw an increase in the number of Medicaid enrollees. The poor economy forced states to pay their share of the increasing costs of Medicaid, which have been growing faster than most states’ income and consuming a larger share of state budgets.

References

Federal Register, Vol. 74, No. 75/Tuesday, April 21, 2009/Notices, ppg 18235-7.

Granholm, Governor-Elect Jennifer. (November 21, 2002). Michigan Medicaid Summit [Online dialogue with the public—reference materials]. Presenters: Tom Clay, Citizens Research Council of Michigan. Vernon Smith, Ph.D., Health Management Associates, & Paul Reinhart, State of Michigan Budget Office. Facilitated by Public Sector Consultants www.pscinc.com.

Institute for Health Policy Solutions. (January 12, 2009). FMAP issues and options from www.ihps.org/pubs/IHPS_FMAP_Enhancement_Issues_011209.pdf.

Kaiser Family Foundation. Medicaid/SCHIP. Various documents retrieved
August 2004 from www.kff.org/medicaid/index.cfm.

Michigan Department of Community Health, Medical Services Administration, Medicaid Program Policy Division. Budget Office reports from www.michigan.gov/mdch.

Udow-Phillips, Marianne. Cover Michigan: The state of health care coverage in Michigan. Ann Arbor, MI; Center for Healthcare Research & Transformation. Retrieved from www.mctun.org.