Medicaid and Seniors: What's at Stake

Improving the lives of older Americans

Medicaid and Seniors: What’s at Stake

Howard Bedlin
Vice President, Public Policy and Advocacy
howard.bedlin@ncoa.org

Leadership Council of Aging Organizations Senate Briefing
June 10, 2011

1

Medicaid Overview
Medicaid - the health care safety net for low-income
seniors, children, and people with disabilities.
 Medicaid is funded jointly by the federal and state
governments, with the federal share varying from about 50%
to 80%, depending on state per capita income.
 Medicaid covers a broad range of services, with eligibility tied
to income and assets.
 Over 15% of seniors rely on Medicaid for health services –
more than those that fall into the Medicare donut hole.
 While seniors and people with disabilities comprise one-
quarter of Medicaid recipients, they account for two-thirds
of its costs.
2

A non-profit service and advocacy organization © 2009. National Council on Aging

Medicaid and Seniors – Long-Term Care
 Medicaid is the primary payer for long-term care (LTC),
paying 61.5% of total LTC costs.
 LTC comprises about one-third of total Medicaid spending.
 About 2.8 million people received Medicaid home and
community-based services in 2007, and 1.7 million received
Medicaid nursing home care.
 With nursing home costs averaging about $75,000 per year, it
does not take long for middle class seniors to spend-down
their life savings on to Medicaid.
 Roughly 7 in 10 people turning age 65 will need LTC at some
point, and about 10,000 baby boomers are turning 65 every
day.
3


Medicaid and Seniors – Other Coverage
 Medicaid also pays Medicare premiums for almost 5 million
low-income beneficiaries, who otherwise would not be able
to afford Medicare, through two programs:
• The Qualified Medicare Beneficiary (QMB) program, which pays
Medicare’s high premiums, deductibles, and copayments for
beneficiaries with incomes below 100% of poverty (about
$11,000) and very low non-housing assets.
• The Specified Low-Income Medicare Beneficiary (SLMB)
program, which pays premiums for those with incomes from
100% to 120% of poverty and low assets.

 In many states, Medicaid also pays for services that Medicare does
not cover, such as dental care, hearing aids and eyeglasses.

4


Medicaid Consumer Protections for Seniors
Medicaid also includes critical consumer protections. For
example, in order to receive federal Medicaid matching
payments, states must:

 Implement nursing home quality standards.

 Not require recipients to pay unaffordable cost-sharing.

 Protect against spousal impoverishment, so that husbands and
wives of those needing LTC are not forced into poverty.

 Not require children of nursing home residents to pay for
their parents’ care.

5


Medicaid per person spending growth
Over the past decade, costs per beneficiary grew much more
slowly for Medicaid than for employer-sponsored insurance

6


House Medicaid Budget Proposal
 Cuts federal Medicaid spending by $771 billion over 10
years.
• According to the non-partisan Congressional Budget
Office (CBO), this translates into cutting Medicaid
by 35 percent in 2022 and 49 percent in 2030.

 Turns Medicaid into a block grant program.

 Repeals significant ACA Medicaid improvements for
seniors in home care, nursing home quality, chronic care
and prevention. 16 million uninsured younger Americans
who will have health insurance coverage lose it.
7


CBO on House Medicaid Budget Proposal

8


House Medicaid Block Grant Proposal
 A Medicaid block grant would provide a fixed federal
contribution that does not account for changing needs,
including the rapidly growing senior population.

 According to CBO, a block grant would “lead to greater
uncertainty for states as to whether federal contributions
would be sufficient during periods of economic weakness.”

 States would have more flexibility, but already have a great
deal now. Two-thirds of spending on aged and disabled
populations represents optional benefits or optional groups.

 A block grant would place current consumer protections in
jeopardy.

9


Provider Reaction to House Medicaid Proposal
 The AHA is extremely concerned about further reductions to
Medicaid, a program vital to the health of children, the disabled
and the elderly. Across the country, Medicaid has already been
dramatically cut as states struggle to balance their budgets.
Further cuts of $771 billion over the next ten years would threaten
this program, which is a lifeline to so many Americans.
-- American Hospital Association

 Public health insurance programs such as Medicaid are the
foundation of our nation's safety net and provide necessary health
care services to working families, children, the elderly and the
disabled. We simply cannot support efforts to slash funding for
them, which will hamper the provision of health care to people of
all age groups and diverse economic situations and drastically
reduce their ability to be healthy and active participants in our
society.
-- Catholic Health Association of the United States
10


Provider Reaction to House Medicaid Proposal
 The Medicaid spending reduction envisioned in the proposed house Budget
Resolution raises serious concerns because it would result in the loss of
health coverage for millions of low income Americans, reduce critical
benefits for others, and make it more difficult for hospitals, clinicians,
and other health care providers to deliver the care so many need.
-- Federation of American Hospitals

 Allowing state governments to implement Medicaid block grants and
eliminate requirements for specific types of care or eligibility could
jeopardize the care of many frail seniors and individuals with disabilities.
These proposals fail to think of the long-term costs. Cutting Medicaid
services, including long term care, translates into higher hospitalization
rates and other costs on the health care system. Meanwhile, providing
states with a fixed dollar without accounting for the growing number of
seniors that will require long term care services will prove to be non-
sustainable and fail to solve our budget crisis.
-- American Health Care Association and National Center for Assisted
Living

11


Medicaid and Spending Caps
 Spending caps limit total federal spending (including
interest payments) to a percentage of the economy
(GDP).

 Exceeding the limit triggers automatic cuts to federal
spending (sequestration).

 Means all deficit reduction comes from spending, no
revenues. Also, unpaid-for tax cuts that add to deficit
and increase interest costs would lead to larger
spending cuts.

 Has the political advantage of not spelling out what
program spending will be cut.
12


Medicaid and Spending Caps
 A spending cap would result in the same magnitude of
deep Medicaid cuts included in the House budget plan.
It is effectively the “backdoor” way to achieve dramatic
cuts to Medicaid (and Medicare).

 According to the Center on Budget and Policy Priorities,
a proposal to limit total federal spending to no more
than 20.6% of the Gross Domestic Product (GDP), would
result in a $547 billion cut in Medicaid from 2013
through 2021 ($856 billion in Medicare).

 Medicaid cuts of this magnitude would force legislators
to impose a block grant to achieve this level of
reductions.
13


Medicaid Budget History
 A key guiding principle of the Bowles-Simpson fiscal
commission was to “Protect the truly disadvantaged” and
ensure that the nation has a robust, sustainable safety net.
 There is a strong, historic precedent for exempting low-
income assistance programs from across-the-board cuts
triggered automatically under a debt or spending cap, or
similar mechanism.
 Every automatic budget cutting mechanism in the past 25
years has exempted Medicaid from cuts:
• The 1985 and 1987 Gramm-Rudman-Hollings laws
• The 1990 Budget Enforcement Act
• The 1993 deficit reduction package
• The 1997 Balanced Budget Act
• The 2010 pay-as-you-go law
14


Medicaid and Public Opinion

According to a May Kaiser Family Foundation poll:

 Over half of respondents have some personal connection
to Medicaid.
 Only 13% support major cuts in Medicaid spending. 3
in 10 support minor reductions and 53 percent want to
see no reductions in Medicaid spending at all.

A March Washington Post-ABC News poll found that - by a
margin of 76% to 22% - respondents opposed cutting
state funding for the Medicaid health insurance program
to help reduce state budget deficits.
15


Medicaid and Seniors: What's at Stake

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (17)

Similar to Medicaid and Seniors: What's at Stake

Similar to Medicaid and Seniors: What's at Stake (20)

Recently uploaded

Recently uploaded (20)

Medicaid and Seniors: What's at Stake