The Historic Promise and Uncertain Future of Medicaid

On January 24, 2018, Chad E. Shearer, vice president for policy and director of UHF's Medicaid Institute, spoke to medical students and faculty at Weill Cornell Medicine's David Rogers Health Policy Colloquium about the past and future of the Medicaid program. His remarks are summarized below.

In the mid-1960s, during President Johnson's Great Society push, there was a fundamental recognition that the neediest members of society—the elderly, the poor, the disabled—did not have regular access to health care other than public hospitals, because they did not have health insurance. Congress responded by enacting the Social Security Act Amendments of 1965, which created Medicare, the federal health insurance program for people 65 and older, and Medicaid, a joint federal/state program, to cover those near or below the federal poverty level.

A half-century later, who are the faces of Medicaid today? Not, perhaps, who you think. It is the parent, aunt, or uncle in long-term care. It is the pregnant mom in between jobs or unable to work due to pregnancy complications. It is a child walking down the street, and it is the large numbers of children and adults who have disabilities or other special needs. Medicaid pays for 50 percent of all births in the United States, and is the largest payer at most public hospitals. It also pays for more than half of all long-term care for the elderly, which is not covered by Medicare.

Viewing Medicaid in its entirety, it is the single largest health insurer in the United States. In 2016 the program covered 70.8 million people nationwide, and another seven million when you include the children in the Children's Health Insurance Program (CHIP), created in 1997. That's 23.9 percent of the total U.S. population. New York, one of the first states to implement Medicaid, enrolls 6.1 million people, or 30 percent of all New Yorkers. The nation spends $545 billion on Medicaid (not including CHIP), and New York spends $62 billion, almost 20 percent of the State's budget.

The federal government only funds about 73 percent of the cost of Medicaid, with individual states picking up the rest of the cost for their enrollees. In return, the states are given great flexibility in setting standards for enrollment and services covered. New York was aggressive from the beginning in using the program to reach as many residents as possible—by 1969 3.7 million New Yorkers were enrolled in Medicaid. Over the years the State expanded the program to include people at higher income levels and new categories such as childless adults. Consequently, when the 2010 Affordable Care Act (ACA) allowed states to expand Medicaid to people earning at or below 133 percent of the federal poverty level, New York's enrollment did not rise significantly.

The 30 other states that chose to expand Medicaid did see a big increase, however, one reason the overall uninsured rate in states that expanded dropped to an average of 6.5 percent, compared with 11.7 percent for non-expansion states (New York's uninsured rate was 4.7 percent last year, down from 9.6 percent pre-ACA). In many non-expansion states, particularly in the South, low-income adults are still almost wholly ineligible for Medicaid.

Medicaid is not just important to its enrollees. It is a vital payer of medical services, particularly for public hospitals. And it is a massive budget item, for both the federal and state governments. In the past, to rein in costs states either reduced enrollment or reduced reimbursements to hospitals and doctors, or both. But several states, including New York, have tried to be more innovative, and address the ways care is delivered and patients are served, rather than just looking for places to cut.

States are trying out a number of delivery and payment models, among them managed care, accountable care organizations, patient-centered medical homes, value-based payments, and various types of flat payments per enrollee, or capitation. These efforts are aimed at improving care coordination, particularly for those beneficiaries with mental health needs and multiple chronic illnesses—populations that account for a large portion of Medicaid spending. There is also a growing awareness among Medicaid administrators that the program must figure out how to address the social determinants of health, such as poverty, homelessness, violence, and all the other toxic stressors that can adversely affect health.

But the future of the Medicaid program is near impossible to predict. The Republican majority in the current Congress wants to give block grants to states, along with greater flexibility to set standards, and that would almost certainly mean reduced enrollment and payments in some states. Kentucky has already requested and received a waiver allowing it to require that recipients work if they can, even though nearly 8 in 10 Medicaid adult enrollees already live in working families, and 60 percent work full- or part-time. Those who don't work cite school, caregiving, disability, or retirement as their reasons.

The moral of this 53-year-old story? Medicaid is complicated, huge, and faces lots of operational and existential challenges for which there are no easy, or even self-evident, answers. But it is also a vital safety net for tens of millions of people in America, people we all know, which is why it's important that we keep working to get it right.