By Rose Hoban
As Congress begins their debate on the repeal and replace of the Pres. Barack Obama’s signature bill, the Affordable Care Act, a big part of the conversation will be about the future of Medicaid.
Medicaid in North Carolina last year comprised $3.6 billion, a full 16.1 percent out of the final $22.3 billion state budget.
According to Steve Owen, who works for the legislative Fiscal Research Division and once worked at the Department of Health and Human Services, there are about 15 categories of people who qualify for Medicaid. One of those categories is quite large in terms of spending: children.
According to Owen, North Carolina Medicaid covers:
- Infants up to one year of age in families earning less than 196 percent of the federal poverty level, which comes to about $40,023 for a family of three.
- Children 1-18 years old in families earning less than 143 percent of the federal poverty level, which comes to about $29,200 for a family of three.
- 19 and 20-year-old foster and adoptive kids who remain on the program until they are 21.
Even though about 1.1 million kids are covered by Medicaid, they’re relatively cheap to cover, costing the state about $250 per month each. The amount North Carolina spends annually on the so-called “aged, blind and disabled” dwarfs what the state spends on kids, even though there are many fewer beneficiaries.
“If you look at spending on the other hand, the aged, blind and disabled represents 63 percent of the spending,” Owen told the Joint House and Senate Appropriations Committee on Health and Human Services this week. “We spend about $1,400 a month on the aged, blind and disabled individual.”
It’s not just North Carolina that pays a lot for Medicaid, the federal government kicks in more than $2 for every dollar spent by the state. To be more exact, the feds pay for 66.88 percent of every dollar billed by medical providers. All those dollars give federal officials a level of control over how states spend their money on Medicaid, any changes to a state’s plan requires approval from the Centers for Medicare and Medicaid Services.
“Of the $14 billion Medicaid budget, the state is supplying about 25 percent,” said Owen to lawmakers. “Every Monday, we process claims up through the received claims from Friday of the preceding week. Every Monday, we know what we need in federal funds, we pull that money down and then pay the providers on Tuesday.”
He explained that funds to pay for Medicaid come from other sources than the federal government, including assessments the state charges to providers for the privilege of billing to Medicaid (noted as “Fees, License & Fines,” right).
Drug rebates and cost settlements
All told, members of the Office of State Budget and Management estimate the Medicaid program would require about $14.2 billion for the coming fiscal year, down about a half percent from the current year’s budget.
One of the most striking budget items in Medicaid are the costs of prescription drugs. Over the course of the year, Medicaid will pay out about $2.05 billion for pharmaceuticals, but the state participates in drug rebate programs, which send about $1.2 billion of that money flowing back into state coffers. In the end, prescription drugs will cost North Carolina Medicaid about $806 million.
One of the largest chunks of the Medicaid budget is for inpatient hospital costs, which at first only appear to cost North Carolina about $906 million.
“You can pay the hospital up front for a claim, and then there’s a process where we look at hospital costs and we reimburse them a certain amount based on their costs,” said Bonnie Queen from the Office of State Budget and Management.
Those payments bump up what hospitals receive to about a total of about $2.7 billion over the course of the year.
Enrollment has grown quickly in the past year or two, driven largely by growth in the “family planning” population.
“Between 2009-2014 [the family planning population] grew an aggregate of about 19 percent,” Owen said. “In 2015 alone, it grew 48 percent, in 2016, 69 percent, this year it’s running at a rate of 46 percent.”
This rapid growth isn’t driving spending, though. That’s because the 164,969 people enrolled in the family planning program (as of February. 2017) are extremely cheap, about $7 per month. Of that $7, the federal government pays 90 percent of the tab, meaning that family planning beneficiaries cost North Carolina a little over $8 per year.
“They’re driving enrollment,” said Queen. “But they’re not driving cost at all.”
Queen’s co-worker Pam Kilpatrick said it’s difficult to give one per person cost for people on Medicaid, because recipients in different eligibility categories can have widely divergent monthly costs for care. She laid out how many people are in all the enrollment categories in one chart (below). The blue bars represent the number of people in each category, while the red dot represents the cost per person per month (PMPM).
Moving from left to right, the first three categories of aged, blind and disabled have fewer beneficiaries in each group, yet they’re each expensive populations (represented by the red dots).
The next three groups, AFDC Under 21 (low-income children), MIC (maternal, infant, child) and Other Child (mostly foster children), have many people in the groups, but each child has a relatively low cost.
North Carolina covers the costs for breast and cervical cancer treatment for a limited number of women who lack health insurance each year. Queen said the program has only 414 women in it, but their costs are quite high.
“It’s cancer,” she said simply.
The final bar category of illegal aliens are those people who end up in emergency departments, usually after an accident or other injury. At the end of February, there were 85 people in that category, but, again, Queen said their costs are high.
“They’re only eligible for emergency services, and ER visits, they’re expensive,” she said.