A Forum on Medicaid and State Budgets: A Summary

By Mattoon, Richard H. | Chicago Fed Letter, May 2007 | Go to article overview

A Forum on Medicaid and State Budgets: A Summary


Mattoon, Richard H., Chicago Fed Letter


When it comes to state budgets, the Medicaid program is almost always the proverbial 800-pound gorilla in the room. On March 15, 2007, the Federal Reserve Bank of Chicago and the Civic Federation co-sponsored a forum to discuss the growing cost of Medicaid and how states are responding.

For almost every state in the U.S., the Medicaid program, which provides health care coverage to 41 million families and 14 million elderly and disabled people, is the largest single budget item. It is often seen as the source of considerable budgetary stress. This forum on Medicaid and state budgets brought together top researchers and government leaders to discuss funding and policy issues as well as best practices.

The first speaker, Robin Rudowitz, principal policy analyst, Kaiser Family Foundation, focused on the evolution of the Medicaid program and the impact of the most recent legislative changes. Each year, the foundation surveys all 50 states to track how they are managing their Medicaid programs and how these programs impact their budgets. Rudowitz noted that Medicaid costs are driven chiefly by elderly and disabled enrollees, who account for 25% of the total enrollees but 70% of the total expenditures. In fact, just 4% of the Medicaid population consumes 48% of all expenditures. Medicaid is the largest single source of federal funds to the states, representing 44% of the total.1 The states' own-source revenue to pay for Medicaid equaled 18% of their general fund spending in 2005.

In 2006, Medicaid spending growth was below state revenue growth for the first year in a decade (see figure 1). Rudowitz suggested three reasons for this: the low rate of growth in enrollment; the enactment of Medicare's Part D prescription drug program, which moved dual eligibles off of Medicaid and onto Medicare for drug coverage; and state cost containment strategies. Although total Medicaid spending growth was held to 2.8% in 2006, the state portion increased by 6.8%.

Rudowitz concluded that Medicaid costs will continue to be driven by increasing health care costs, as well as an increasing pool of the uninsured as employer health care coverage declines. Demographic changes also imply a rising number of aged and disabled people. Another trend fueling Medicaid growth is that states are looking to develop universal health care plans and are using Medicaid as a platform for expanded coverage. Finally, federal policy will play a role, particularly through the new requirements for citizenship documentation to qualify for Medicaid and the current debate in Congress to reauthorize the State Children's Health Insurance Program (SCHIP).

Time for a new approach?

Robert Kaestner, professor of economics, University of Illinois at Chicago, talked about the need for Medicaid and public health insurance to be redesigned. Kaestner noted that public spending is often allocated to provide health insurance coverage rather than to directly improve public health outcomes. This is in spite of the fact that most studies suggest a weak link between health insurance coverage and healthier people. Kaestner also noted that the fiscal burden of providing this coverage will continue to grow fast. In Illinois, Medicaid already accounts for 25% of all income and sales tax revenue and 20% of all state revenue.

A primary goal for any redesign would be to lower the rates of medical utilization by enrollees. In his own research on utilization of medical services based on insurance status, Kaestner has found that publicly insured individuals tend to use more health care than individuals with similar characteristics who are either privately insured or uninsured (figure 2). Given this, he noted that reform has focused on supply side rationing. One method is simply to offer low reimbursement rates for Medicaid providers, although this likely leads to a lower standard of care. A more positive approach is the increased use of mandatory managed care with full risk reimbursement and narrow provider networks. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

A Forum on Medicaid and State Budgets: A Summary
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.