Medicaid v. Medicare payment rates

Austin Frakt has a nice post noting that the ability of states to reduce Medicaid spending via private insurance/managed care is driven by how generous (and thus more expensive) a State’s Medicaid program payment rates are in the first place. The lower the payment rates to begin with, the less room there is for reduction in cost. Basic math and logic (corner solution), but a good point to keep in mind.

I want to highlight another point he made about the relative payment rate of Medicaid as compared to Medicare for health care services. Generally, in teaching undergrads, you provide a rank ordering of payers: private insurance is the best, then Medicare, with Medicaid being the lowest. This is true on average, but of course, each State has a specific Medicaid program. The variation in the chart of Medicaid-to-Medicare index that Austin linked from this paper really caught my eye:

ScreenHunter_01 Mar. 04 12.55

  • There is tremendous variation in the relative generosity of Medicaid by state (the index includes primary care, OB, hospital inpatient, surgery, radiology, psychotherapy and lab tests)
  • There is nothing that says a State cannot make Medicaid the better or even best payer in the States. See Alaska and Wyoming (red states at that!)
  • North Carolina looks to have a Medicaid-to-Medicare ratio of between 90-95%
  • This chart arrays states alphabetically so they aren’t stacked up on one another for ease of visual consumption; the only thing going on is the Medicaid-to-Medicare payment ratio

Update: Obviously it could be the Medicare rates as well, but Anchorage, AK at least has a high Medicare wage index (that is built into Medicare payments) of 1.21; similar to Long Island, NY.

update: fixed the title; did say Medicaid v. Medicaid

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

2 Responses to Medicaid v. Medicare payment rates

  1. Pingback: Medicare, Medicaid Allowed as Defendants in Suit « Medicare Help

  2. Pingback: Research Roundup: Hospitals Will Benefit From Medicaid Expansion; Medicare’s Rising Costs « Medicare Help

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