Understanding the Value of Medicaid
by Christine Haran
Fifteen years ago, Laura Helms of south-central Illinois nearly lost her home following a costly hospital stay for bronchitis. While she supported herself though her own cleaning business and part-time hotel receptionist jobs, Laura was uninsured. She couldn’t afford private coverage and did not qualify for Medicaid, which was only available to low-income children and their parents or severely disabled adults. As a result, she struggled to pay off her hospital debt for years and had to skip doctor’s visits to monitor her high blood pressure.
When Illinois expanded eligibility for Medicaid in 2014, Laura’s situation improved dramatically. In fact, for millions of low-wage American workers like Laura who had no way of obtaining insurance prior to the Affordable Care Act, the law’s Medicaid expansion — which makes coverage available to all adults earning up to about $16,000 a year — has finally made financial security and access to care possible. As of May 2016, the national uninsured rate had dropped to 13 percent from a high of 20 percent in 2013.
The expansion, taken up by 31 states so far, is the latest step in the evolution of Medicaid, launched in 1965 as an extension of the welfare program. In the 1980s, Congress expanded the program to pregnant mothers and children with family incomes that exceeded welfare eligibilities levels. And in 1997, the creation of the Children’s Health Insurance Program enabled more low-income children to enroll, leading to dramatic drops in children’s uninsured rates.
Today, Medicaid provides coverage to nearly 73 million people — kids, low-income working adults, seniors, and people with disabilities — making it the nation’s largest insurer.
How Does Medicaid Stack Up?
A rapidly growing body of evidence finds that Medicaid — which bans premiums, offers broad benefits, and includes a limit on out-of-pocket costs — is good insurance. A recent Commonwealth Fund survey suggests that people with Medicaid coverage have better access to health care services, including proven preventive care, and fewer medically related financial problems compared with those with no coverage.
The same study found that Medicaid enrollees have nearly as good access to care as those with private coverage. Medicaid also provides greater protection from the costs of illness than does private insurance.
And evidence is emerging that newly obtained Medicaid coverage is helping people get healthy. A recent Commonwealth Fund-supported survey of low-income adults found that, after two years of coverage, people in Kentucky and Arkansas, which expanded Medicaid eligibility, were more likely to report they were in excellent health than those in Texas, which did not. Residents of the expansion states also reported they relied less on the emergency room, got more care for their chronic conditions, and received better-quality care.
Who Benefits from Medicaid?
Medicaid is jointly funded by the federal government and individual state governments, but the full cost of covering new enrollees is funded by the federal government though 2020, when that share drops to 90 percent. The billions of dollars being channeled to states that have expanded Medicaid is helping to bolster their economies. And states that have not expanded are losing taxpayer dollars. One analysis found that Florida’s decision not to participate will cost its taxpayers $5 billion by 2022. The net cost to taxpayers in Texas will be $9.2 billion.
One way Medicaid expansion boosts state economies is by improving the bottom line for the hospitals and clinics that serve mostly low-income communities. Today, many safety-net health providers are seeing more insured patients, which means they provide less care that goes unpaid. This new revenue is supporting new clinics, equipment, and staff — which may helping them to better manage patients’ conditions and head off the complications that drive up costs.
Medicaid also serves the broader health system by evaluating new approaches to paying for and delivering care. State programs have been at the forefront of the national effort to test “medical homes,” which offer patients help from a team of medical professionals and well-coordinated care. Medicaid and safety-net providers have also led the way in use of health information technology. The Commonwealth Fund’s two national surveys of community health centers show that their adoption of electronic health records outpaced office-based physicians (93 percent compared with 78 percent of office-based physicians).
What’s Next?
Twenty-four million Americans remain uninsured, according to a recent Commonwealth Fund study. One of the best paths to covering more of the uninsured, who are largely young, Latino, low-income, and/or employees of small companies, is for the remaining 19 states to expand Medicaid eligibility.
The study also shows that many people who are eligible for Medicaid mistakenly assume they can’t afford health insurance. It’s clear we need to do more to reach the uninsured — and help those who qualify to enroll in Medicaid so that they can experience the peace of mind, financial stability, and potentially better health that can come with affordable access to health care.
With research assistance from Susan Sered.
