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.”
Many payors
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.
Growing enrollment
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.
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Very enlightening and interesting article about Medicaid. There are so many misconceptions about where the money goes and who pays for what.
How many people are on waivers and how many years is the current waitlist for waivers and are there any estimated as to how that will be affected ted? In 2012 we were told it is a 5-7y wait. In 2016 we were told it is a 7-10y wait.
That means if a child is diagnosed with autism at age 3 they don’t get assistance before age 10? That’s crazy!!!
Stay tuned… there’s a story on that in the coming weeks.
Thank you. I hadn’t heard it had changed; we have been Innovations wait listed for 3 years already.
One thing I would love to see investigated is why NC has higher than average autism rates among children and why they, especially, are more costly. our daughter has autism; until recently, she was a member of the NCHIPP program. originally it was touted as a way for those children with SSI declared disabilities (and therefore, eligible for mediciad) as well as other high claims individuals to keep their health insurance through an employer sponsored plan, that medicaid pays for, so that medicaid becomes the last payee. we were enrolled because by comparison, our BCBS plan was phenomenally cheaper than the negotiated medicaid cost, and we felt she was less of a burden on the state and federal system.
when the plan was created, we were allowed to see any Dr BCBS had a contract with. it was beneficial for us, because w could go to specialists that do not partner with medicaid and use benefits our private insurance has that medicaid does not ( and vice versa). under medicaid reform a few years ago in NC, that changed. we were no longer to see any provider that did not accept both ( before we went to specialists that took BCBS and paid the copay out of pocket).
so, we lost of primary benefit of having both;worae, medicaid deemed us ineligible to receive waiver services because the primary plan, paid for BY medicaid, did not have coverage for it and they decided if a primary insurance did not offer coverage and it was not federally mandated, they would not provide it even though she had been eligible with medicaid only.so imagine us now- stuck between a rock and a hard place. we had no choice then, facing a 7 to 10 year wait for waivers, than to drop her from our expensive BCBS plan and force medicaid to cover 100 percent of her costs, just to receive the benefits we should have had with medicaid alone.
I would love to see this addressed somewhere. BCBS, on average, paid upwards of $20,000 annually on my daughter’s care and therapies, saving medicaid that money by simply paying our $300 monthly insurance premium. Now, to get waiver services we need as a family such as respite services, we have to place the burden back on medicaid. I expect to see medicaid costs skyrocket as more and more families with disabled children are forced into the same decisions we were.
it seems medicaid is incapable of working through its issues even when it is in the best financial interest to do so. we found it incredibly difficult to talk to people in the medicaid system regarding claims and appeals, with less transparency than private insurers. This issue is what finally pushed us over the edge.
Regarding to the comment on waivers being 7-10 years between diagnosis and care. It is a bigger issue with healthcare in Great Britain When I researched it the latest figures available were in 2012. At that time the benchmark for cancer patients was 8 years between diagnosis and seeing an oncologist for care. If you made it until then. People need to research how single-payer systems work in the real world before voting on any government healthcare “solutions”.
It seems that the Medicaid expense for “able bodied adults” is a political issue.
Could you provide a percentage breakdown of Medicaid expenses for a) Nursing home in-patient care, b) Children, c) Maternity Care, d) Mentally and/or physically disabled care, e) Elderly care (the “20” % not covered by Medicare), and E) ABLE BODIED ADULT CARE?
My view is that “able bodied adult care” is a small portion of the budget and thus, substantial “across the board” cuts to Medicaid spending will be a problem for many vulnerable people. I do not see how nursing home care expenses could be cut very much at all without the institution of “death panels” or other draconian measures.