May 22, 2013 Leave a comment
This is the second post in a series on North Carolina’s nascent Medicaid reform, Partnership for a Healthy North Carolina. The first post is here which you should read first. I am skeptical of the plan, but am granting the benefit of the doubt and trying to work through some key issues and asking questions about it in the hopes of helping to move Medicaid reform ahead.
The most important thing to understand about Medicaid is that it is not one monolithic program. Instead, it is an insurance program for persons across the life course, with very different needs, but who share the common circumstance of finding their income to be below a given line and/or having health circumstances that make them eligible. The table below illustrates the primary “types” of persons covered by Medicaid in North Carolina (all data comes from the Kaiser Family Foundation web pages on Medicaid; an incredible resource).
- 27% of the beneficiaries are aged (65 or older, and also covered by Medicare; so-called dual eligibles) or disabled persons. Together they account for 63% of the Medicaid expenditures in North Carolina, while children and adults represent nearly 3 in 4 beneficiaries, but account for 37% of the program expenditures.
- The per capita costs differ a great deal: the 309,000 Disabled beneficiaries shown above had per capita costs ($16,050), 5 times greater than did the 960,000 children ($2,796).
- Bottom line: children and adults are numerous in Medicaid; the dual eligibles and disabled are expensive.
Why are the per capita costs so much higher for the elderly dual eligible and disabled Medicaid beneficiaries? The vast majority of the care received by children and adults is acute care services (physician, prescriptions, labs & xray, hospital, etc) while for the dual eligibles and disabled, the costs include long term care services in addition to acute care services. The table below provides a broad overview of the distribution of long term care spending in North Carolina’s Medicaid program in FY 2010.
Long term care includes home and community based services as well as institutional care. Nursing facilities above are nursing homes, ICF-ID is institutional/facility care for the intellectually disabled, many of whom will be Medicaid beneficiaries for decades, and home health and personal care covers a broad range of services including traditional home health for things like wound care, targeted case management to address complex problems, hospice care for those near the end of life, and custodial home health for the disabled elderly (visits to help address of Activities of Daily Living, designed to keep them out of nursing homes).
Children and adult Medicaid beneficiaries are often eligible for a period of time and then move out of coverage, perhaps if they get a job that provides insurance, for example. On the other hand, dual eligible and disabled beneficiaries are much more likely to be persistently eligible for Medicaid, until death.
A reminder that the goal of the Partnership for a Healthy North Carolina is to have 3 or 4 private entities compete to provide this full Medicaid benefit package in all 100 North Carolina counties. To make a significant dent in the cost profile of our Medicaid program, that means you have to address costs of the dual eligibles and the disabled, which further means taking on long term care which includes a vast array of services for people with persistent and profound health and social problems that are not likely to improve. Further, many of these beneficiaries are unable to make decisions for themselves for reasons of intellectual disability or having dementia, for example. This makes the notion of consumer choice driving the system indirect at best for some of the most expensive beneficiaries.
I believe that finding private entities who are willing to bid to guarantee this full benefit package on an at risk basis in a manner that will reduce the rate of Medicaid spending growth, or actually reduce expenditures will be very hard. There is a very strong likelihood, in my opinion, that North Carolina may throw an insurance competition party in Medicaid, and no one will come. Convince me otherwise!
More details in the next post.