People and Money, 2004

People U.S. Totals Medicare Medicaid Medicaid and Medicare 294 million 42 million 52 million 87 million* Money $1.54 trillion $297 billion $305 billion $602 billion

*Note: About 7 million individuals are dual eligibles, meaning that they receive both Medicaid and Medicare coverage. To avoid double-counting the dual eligibles, 7 million has been subtracted from the sum of Medicare and Medicaid beneficiaries, yielding a total of 87 million people covered by Medicaid and/or Medicare. Medicaid and the Uninsured
K A I S E R C O M M I S S I O N O N

Percent of State Populations Covered by Medicaid and/or Medicare

15 to <20 percent (8 states) 20 to <25 percent (25 states) > 25 percent (17 states and DC)
Medicaid and the Uninsured
K A I S E R C O M M I S S I O N O N

Medicaid Medicare

Medicaid Medicare

Medicaids Origin
Enacted in 1965 as companion legislation to Medicare (Title XIX) Established an entitlement Provided federal matching grants to states to finance care Focused on the welfare population:
Single parents with dependent children Aged, blind, disabled

Included mandatory services and gave states options for broader coverage
Medicaid and the Uninsured
K A I S E R C O M M I S S I O N O N

Medicaids Evolution
60 50 40 30 20 10 0
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004
Medicaid Enacted (1965) SSI Enacted, Expanding Coverage to the Elderly and Disabled (1972) Home- and Community-Based Services Waiver Enacted (1981) Medicaid Eligibility Expanded to Women and Children (1984-1990) SCHIP Enacted/ Outreach Expanded (1997)

Millions of Medicaid Beneficiaries

Section 1115 Waivers Expand Medicaid Eligibility (1991-1993)

(52 Million Beneficiaries)

Economic Downturn/ Temporary Federal Fiscal Relief Provided (2003)

SOURCE: KCMU analysis of data from the Health Care Financing Administration and Centers for Medicare and Medicaid Services, 2004.

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Medicaid Today
Medicaid provides health and long-term care coverage for over 52 million low-income people:
Comprehensive, low-cost health coverage for 39 million people in low-income families Acute and long-term care coverage for over 13 million elderly and persons with disabilities, including over 6 million Medicare beneficiaries

Guarantees entitlement to individuals and federal financing to states Federal and state expenditures of $300 billion with federal government funding 57% Pays for nearly 1 in 5 health care dollars and 1 in 2 nursing home dollars
Medicaid and the Uninsured
K A I S E R C O M M I S S I O N O N

Whos Covered by Medicaid?

Percent with Medicaid Coverage:
Poor Near-Poor Families All Children Low-Income Children Low-Income Adults Pregnant Women (Births) Aged & Disabled Medicare Beneficiaries People with Severe Disabilities People Living with HIV/AIDS Nursing Home Residents

40% 21% 26% 50% 19% 37% 18% 20% 44% 60%

Note: Poor is defined as living below the federal poverty level - $14,680 for a family of three in 2003. SOURCE: KCMU, KFF, and Urban Institute estimates; Birth data: NGA, MCH Update.
K A I S E R C O M M I S S I O N O N

Medicaid and the Uninsured

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Medicaid Enrollment vs. Spending

Elderly 9% Disabled 16% Adults 27% Children 48% Elderly 26% Disabled 43% Adults 12% Children 19%

Total = 52.4 million

Enrollees

Expenditures on benefits
Total = $252 billion

Note: Total expenditures on benefits excludes DSH payments. SOURCE: Kaiser Commission on Medicaid and the Uninsured estimates based on CMS, CBO, and OMB data, 2004.
K A I S E R C O M M I S S I O N O N

Medicaid and the Uninsured

Medicaid Payments Per Enrollee

$12,300 $12,800

Long-Term Care Acute Care $1,700 $1,900

Children

Adults

Disabled

Elderly

SOURCE: KCMU estimates based on CBO and Urban Institute data, 2004.
K A I S E R C O M M I S S I O N O N

Medicaid and the Uninsured

Medicaid Expenditures by Service, 2003

Home Health and Personal Care 13.0% Mental Health 1.8% DSH Payments 5.4% Inpatient Hospital 13.6% Physician/Lab/ X-ray 3.7% Outpatient/Clinic 6.7%

LongTerm Care 36.0%

ICF/MR 4.4%

Acute Care 58.2%

Nursing Facilities 16.8%

Drugs 10.0%

Other Acute 6.3% Payments to MCOs 15.6% Payments to Medicare 2.3%

Total = $266.1 billion

SOURCE: Urban Institute estimates based on data from CMS (Form 64), prepared for KCMU.

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Average Annual Growth in Medicaid Expenditures, 1991-2003

27.0%

10.0% 3.6%

11.8% 7.8% 7.1%

19911992

'92-'95

'95-'98

'98-2000

'00-'02

'02-'03

SOURCE: Urban Institute, 2005; estimates based on data from HCFA Financial Management Reports, 2004 (HCFA-64/CMS-64).
K A I S E R C O M M I S S I O N O N

Medicaid and the Uninsured

Medicaid Enrollees are Poorer and Sicker Than The Low-Income Privately Insured Population
Percent of Enrolled Adults:
100% 75% 50% 27% 25% 0% 15% 16% 69%

Medicaid

Low-Income and Privately Insured

61% 48%

Poor

Health Conditions that limit work

Fair or Poor Health

SOURCE: Coughlin et. al, 2004 based on a 2002 NSAF analysis for KCMU.
K A I S E R C O M M I S S I O N O N

Medicaid and the Uninsured

Medicaids Impact on Access to Health Care

Percent Reporting

Medicaid
41%

Private

Uninsured

30% 24% 13% 7% 20% 16% 6% 5%

No Pap Test in Past Two Years No Regular Source of Care

Did Not Receive Needed Care

Adults

Women

Children

SOURCES: The 1997 Kaiser/Commonwealth National Survey of Health Insurance; Kaiser Womens Health Survey, 2004; Dubay and Kenney, Health Affairs, 2001.

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Medicaid is Growing Slower than Private Health Spending, 2000-2003

12.6% 9.0% 6.9%

Medicaid Acute Care Spending Per Enrollee

1 2

Health Care Spending Per Person with Private Coverage1

Monthly Premiums For EmployerSponsored Insurance2

Strunk and Ginsburg, 2004. Kaiser/HRET Survey, 2003.

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Medicaid Expenditures for Dual Eligibles, FY2003

5% 14% 15% Other Beneficiaries 60% Duals 40% 66%
Long-Term Care Medicare Premiums Prescribed Drugs Acute Care

Total Medicaid Spending = $262.2 billion

SOURCE: Urban Institute estimates for KCMU based on an analysis of MSIS and Financial Management reports (CMS Form 64).
K A I S E R C O M M I S S I O N O N

Total Spending on Duals = $105.4 billion

Medicaid and the Uninsured

National Spending on Nursing Home and Home Health Care, 2003

Nursing Home Care
Private Insurance 8% Other 6% Private Insurance 21%

Home Health Care

Other 5% Medicaid 25%

Medicaid 46%

Out-ofPocket 28% Medicare 12%

Out-of-Pocket 17%

Medicare 32%

Total = $110.8 billion

SOURCE: CMS, National Health Accounts, 2005.

Total = $40 billion

Medicaid and the Uninsured

K A I S E R C O M M I S S I O N O N

Medicaid Medicare

Medicare Overview
Enacted in 1965 to provide health coverage for seniors Now covers almost 42 million people Benefits:
Inpatient hospital, skilled nursing facility, home health services Physician and other outpatient services Preventive screenings, new Welcome to Medicare physical Outpatient prescription drug benefit (beginning in 2006)

$325 billion for Medicare benefits in 2005

Characteristics of the Medicare Population

Percent of total Medicare population: Low-Income <150% FPL ($14,355 in 2005) 3+ Chronic Conditions Fair/Poor Health Cognitive/Mental Impairment Enrolled in Medicaid (Dual Eligibles) Under-65 Disabled Nursing Home Resident
6% 17% 14% 29% 27% 39% 35%

SOURCE: All data from Medicare Current Beneficiary Survey 2002 Cost and Use File 2002 except income data from March 2004 Current Population Survey.

Medicare Pays for Nearly Half of Beneficiaries Medical and Long-Term Care Services
Medicaid 12% ($1,358) Private Insurance 18% ($2,085) Medicare 45% ($5,370)

Other Sources 6% ($678)

Direct Out-of-Pocket 19% ($2,223)

Total Expenses per Beneficiary, 2002 = $11,714

Note: Pie shows average total spending for both non-institutionalized and institutionalized beneficiaries, including long-term care, skilled nursing facility, and prescription drug spending, but excluding spending on premiums or deductibles for Medicare Parts A, B, and C and private health insurance. SOURCE: Kaiser Family Foundation analysis of the 2002 Medicare Current Beneficiary Survey Cost and Use file.

Medicare Benefit Payments by Type of Service, 2005

Hospital Outpatient Other Part B Benefits

5%

5%
Hospital Inpatient

37%
Physicians and Other Suppliers

25%

Part A Part B Parts A and B

4%
Home Health

5% 15% 3%

Skilled Nursing Facilities

Group Plans (Part C)

Hospice

Total = $325 billion

Note: Does not include administrative expenses such as spending for implementation of the Medicare drug benefit and the Medicare Advantage program. Excludes low-income subsidy payments and items not assigned to particular services. SOURCE: Congressional Budget Office, Medicare Baseline, March 2005.

Sources of Supplemental Coverage Among Medicare Beneficiaries, 2002

No Supplemental Coverage 12% EmployerSponsored Plan 35%

Medigap Policy 21%

Medicare HMO 15%

Medicaid 17%

Total = 41.8 Million Medicare Beneficiaries, 2002

Note: Total number of Medicare beneficiaries is based on weighted number of respondents in the Medicare Current Beneficiary Survey 2002 Cost and Use file. SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2002 Cost and Use File.

Medicare Prescription Drug Benefit Overview

Beneficiaries can:
Enroll in stand-alone private prescription drug plan (PDP) Enroll in Medicare HMO or PPO (Medicare Advantage plan) Not enroll in Medicare drug plan

Premium and cost-sharing assistance available for those with incomes below 150% of poverty and modest assets New Medicare drug plans provide standard prescription drug benefit or actuarial equivalent Enrollment period from November 15, 2005 May 15, 2006

Standard Medicare Part D Drug Benefit, 2006

5% Catastrophic Coverage Medicare Pays 95%
Beneficiary Out-of-Pocket Spending

No Coverage

$2850 Gap: Beneficiary Pays 100%

$5,100 in Total Drug Costs

Partial Coverage Up to Limit

25%

Medicare Pays 75%

$2,250 in Total Drug Costs

$250 Deductible + ~$450 Average Annual Premium

SOURCE: Kaiser Family Foundation analysis of Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Projected Reduction in Out-of-Pocket Drug Spending Under the Medicare Drug Benefit, 2006
Medicare Drug Plan Enrollees Who Receive Low-Income Subsidies All Other Medicare Drug Plan Enrollees

Average Change: - 37%

- 28%

- 83%
SOURCE: Actuarial Research Corporation analysis for the Kaiser Family Foundation, November 2004.

Net Federal Cost of the Medicare Prescription Drug Benefit (HHS 2005 Projections)
(in billions)
2006-2013: $518 billion 2006-2015: $724 billion
$79.6 $88.5 $98.4 $109.2

$52.5 $37.4

$57.1

$62.0

$67.0

$72.1

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

SOURCE: Administrations FY2006 Budget.

Medicare+Choice/Medicare Advantage Plans, 1990-2005

Number of Plans:

346 307 241 183 154 309 266 179 197 155 151 154

96

93

96

110

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Note: All data are from December of the given year, except 2005 data are from June. Number of plans include Medicare HMOs, PPOs (non-demonstration), and PSO plans; excludes PFFS, demonstrations, and cost contracts. SOURCE: CMS, Medicare Managed Care Contract (MMCC) Plans Monthly Summary Report.

Share of Medicare Beneficiaries Enrolled in Medicare Advantage Plans

35% 30% 25% 20% 15% 10% 5% 0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2009 2010 2013
Note: All actual data are from December of the given year. SOURCE: Actual: CMS, Medicare Managed Care Contract (MMCC) Plans Monthly Summary Report. Projections: Presidents FY 2006 Budget, Office of Management and Budget, February 7, 2005; CBO from CBO Medicare Baseline, March 2005.

Actual

Projected

HHS 30%

CBO 16%

Sources of Medicare Revenue, FY2006

Payroll Taxes

40% 75%

General Revenue Beneficiary Premiums Payments from States

86%

78%

41%

Taxation of Social Security Benefits Interest and Other

8%

1% 5%

24% 2%

10% 11% 1%

11% 4%

2% 2%

Part A Part B Part D Total $204.7 billion $173.4 billion $61.4 billion $439.5 billion
SOURCE: 2005 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

A Small Share of Medicare Beneficiaries (12%) Account for a Large Share (69%) of Medicare Spending
12% 12%
$15,000 or More

12%

29%

69%

69%

$5,000-$14,999 $1,000-$4,999 $0-999

47%

17% 11% 2%

Total Beneficiaries = 35.8 Million

Total Medicare Spending = $218.4 Billion

Note: Excludes beneficiaries enrolled in Medicare HMO plans. SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2002 Cost and Use File.

The Medicare Population Is Growing, But There Will Be Fewer Workers to Support Beneficiaries in the Future
Number of beneficiaries (millions)
78

Number of workers per beneficiary

4.0 3.9 3.7 2.9

61 46 34 19 20 40

2.4

1966 1970 1990 2000 2010 2020 2030

2000 2003 2010 2020 2030

SOURCE: 2001 and 2005 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.