Medicaid And The Problems
The Program Faces
Research Paper

Introduction Medicaid is the largest health insurer in the nation, providing care to more than 50 million Americans with an annual cost around $250 billion. With Medicaid being the largest insurer in the United States, they face many problems and concerns, including limited access, low quality of care, financing and reimbursement concerns, and increased costs. Medicaid Reform is in the near future and with Medicaid’s spiraling costs, mandated managed care ought to be.
The Medicaid program, created by the Social Security Amendments Act of 1965, is a partnership between the federal and state governments to provide healthcare to low income and vulnerable populations. The Federal Centers for Medicare and Medicaid Services (CMS) monitors the Medicaid program and establishes broad guidelines for program eligibility, services covered, the delivery of services, and the quality. Each state administers their own program with specific eligibility standards including the type, amount, duration, the scope of services covered, and the payment levels for services provided, (Perlino, 2010). Medicaid operates as an entitlement program making the federal government, under federal law and the budget process, obligated to pay their share of each state’s Medicaid program. The federal government matches the states spending services, varying from 50 to 77 percent depending on the state. Currently the federal government finances around 57 percent of Medicaid spending, (Perlino, 2010). There is no cap on federal funding used for Medicaid coverage, and the cost of the program depends on the services offered, the needs of the eligible individuals, and the state's program rules. States have the final say of what services their Medicaid program provides, but in order for states to receive their federal matching funds they must provide certain services to those who meet eligibility requirements. Some of the required services include inpatient and outpatient hospital services, prenatal care, vaccines for children, physician services, family planning services, laboratory and x-ray services, pediatric services, nursing facilities for anyone over the age of 21, early and periodic screening, diagnostic and treatment services for children, and ambulatory services. States may also provide optional services above the mandated services. Optional services include diagnostic services, clinic services, intermediate care facilities, prescribed drugs, optometrist services, nursing facilities for those under 21 years of age, transportation services, rehab and physical therapy services, and home care to those with chronic implications. In order for someone to qualify for Medicaid, they must meet certain requirements in which vary from state to state. Just like the services provided by the Medicaid program, there are federal requirements states must follow in order to receive their funding. The federal government requires states to provide Medicaid coverage to certain individuals who receive federally assisted income payments, and those groups similar who do not receive cash payments, (Crosta). Other groups considered needy by the federal government and eligible for Medicaid are those who meet the requirements for The Aid to Families with Dependent Children Program, children age 6 and under, with a family income at or below 133% of the federal poverty level (FPL), pregnant women with family income below 133% FPL, those who receive Supplemental Security Income, children placed in adoption or foster care assistance, special protected groups, children under age 19 whose families incomes are at or below FPL, and certain Medicare beneficiaries. If individuals fall into any one of the above categories, states are required to provide them with coverage, any others must fall into any income and resource criteria set by the state themselves.

Problems and Concerns with Medicaid

The Medicaid program, developed with good intentions, was to help the poor and disadvantaged receive access to medical care. The program was initiated with two objectives: insuring covered people receive adequate medical care and to reduce financial burden of medical expenditures for those who have several limited financial resources. Along with the good intentions and Medicaid reaching out to meet its objectives, they face many problems in which need to be addressed. The first concern Medicaid needs to address is limited access to healthcare. Medicaid beneficiaries have limited access to healthcare as relatively few physicians accept the insurance. Some physicians open their practice to Medicaid patients, but with an increase in those covered by the program they just cannot afford to stay open to them and have to stop accepting the insurance for many reasons. Many providers stop taking Medicaid or do not take the insurance at all due to the low reimbursement rate. Medicaid only pays a fraction of what the private insurances pay. Many providers say it usually is not even enough to cover the overhead to care for the patient. According to Dr. David Nash, nationally, acute care hospitals are paying on average, 88 cents for every dollar spent on caring for the Medicaid patient, (Nash, 2009). Private practices just cannot afford the gap between the reimbursement rates and the costs. Providers also feel Medicaid beneficiaries are harder to care for and have greater liability. Since Medicaid beneficiaries have less access to preventative care and specialists, they seek medical care later, and doctors see them when their conditions are worse. Seeking healthcare later, when illnesses have advanced, leads to increased unfavorable outcomes and increased fear by the providers for lawsuits. Providers feel Medicaid beneficiaries deserve the same quality of care no matter what insurance they carry, but many practices cannot afford the costs and risks with taking Medicaid. The second concern with Medicaid is the quality of care Medicaid beneficiaries receive. Patients tend to be treated by lower quality physicians, and are treated in facilities that are so overcrowded, due to limited access to medical care. A majority of the facilities who accept Medicaid are staffed by lower quality physicians, as the higher quality physicians are those working at higher profitable facilities who do not accept Medicaid. With only so many facilities providing medical care for Medicaid beneficiaries, the patients find themselves going to overcrowded facilities, and are usually receiving substandard healthcare due to how quick providers must see them in order to provide care to all those who are waiting. With increasing Medicaid enrollment and increased healthcare costs, funding for the Medicaid program is a large concern. States are worried about how they are going to fund their portion of Medicaid costs when their portion continues to increase while the federal portion continues to decline. In West Virginia, the federal match rate went from 82 percent to 72 percent costing the state around $300 million more that they must provide for the Medicaid program, (McKown, 2012). On average, states are spending around 16.8 percent of their general revenue on Medicaid costs. Many are struggling with the costs now, and costs are expected to continually rise. With states struggling to fund Medicaid, the increased costs are a concern. Two large reasons for increased costs within Medicaid are increased enrollment and increased utilization. When the economic conditions turned, and many people lost their jobs, they turned to Medicaid coverage for healthcare. With increased enrollment in the Medicaid program, many more are seeking medical care and without responsibilities for payment, patients seem to utilize facilities for simple illnesses such as a viral cold. Not only are they utilizing facilities for simple illnesses, they are running to the emergency room for illnesses in which should be seen by their primary care physicians. According to Dr. Ning Tang, an assistant clinical professor of medicine at the University of California, stated in 2007 those with Medicaid visited the emergency room at a rate five times more than those who had private insurance. She also stated most of these visits were for conditions that could have been managed in a primary care facility, (Reinberg, 2010). Limited access to primary care providers may be a key problem for emergency room visits, along with the increased enrollment. With the Medicaid system facing many problems, changes must be made.

Medicaid In The Near Future

With many of the concerns and problems Medicaid is facing, I believe mandated managed care for all Medicaid beneficiaries is in the near future. With managed care programs such as the Primary Care Case Management (PCCM) Program, states contract with primary care providers to manage the care of Medicaid beneficiaries. The primary care providers are responsible for providing any referrals for specialty care. Managed care programs will help cut costs of healthcare by not allowing patients to go directly to specialty care, and providing more preventative care. According to the Kaiser Family Foundation, two-thirds of Medicaid enrollees are receiving their benefits through managed care. A majority of those enrolled in managed care are children and non-disabled adults. The disabled and aged Medicaid beneficiaries were far less likely to be on managed care programs, ("Kaiser commission," 2012). I believe with mandated managed care, emergency rooms will see a decrease in the number of Medicaid patients they see, and costs of Medicaid will see a small drop. In order for mandated programs to work, more physicians must accept Medicaid patients, and this may only happen if they see a rise in reimbursements. Currently the hype with Medicaid is the Medicaid Reform. Under the Affordable Care Act of 2010, promises were made to reduce the number of uninsured, in which will greatly expand Medicaid. The act increased Medicaid reimbursement rates for doctors and it expanded the services that states are required to cover. The 2010 Health Act extends eligibility to all people under age 65 with income 133 percent below the poverty level in all states, expanding Medicaid eligibility by about 16 million people and the federal costs due to the expansion will be about $100 billion annually by 2020, (Edwards, 2010). With the expansion of Medicaid, Medicaid’s costs will increase, and it doesn’t fix any of the problems Medicaid already currently faces. Reform needs to be reversed in direction, and Medicaid needs to be restructured to control costs.

Conclusion

Medicaid had good intentions to help the poor and disadvantaged to receive healthcare, but Medicaid has created several other problems in doing so. Medicaid met its two objectives: insured their Medicaid beneficiaries received adequate care, and reduced the financial burden of medical expenditures for those who have several limited financial resources, but they also created financial burdens on the states. With the expansion of Medicaid, increased costs, and declining federal portions, states will soon not be able to afford the program and federal debt will continue to spiral out of control. Medicaid needs to be restructured to provide incentives for states to change their Medicaid programs to provide more innovate and cost effective healthcare solutions. I feel a starting step to changing the program is to mandate managed care for all Medicaid beneficiaries, to keep those currently on Medicaid out of emergency rooms, keep them from directly seeing specialists and find ways to decrease their utilization of services.

References
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