Medicaid Spending Trends: A 50-State Study
Kavita Choudhry, MPP
Governmental Research Association
Annual Policy Conference
August 5, 2014
www.pewtrusts.org/healthcarespending
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Project Overview
•
Medicaid
& CHIP
State
retiree
health
benefits
State
employee
health
benefits
Mental
health
State
Health
Care
Spending
Substance
abuse
Prison
health
care
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Objectives:
– Cohesive picture of state
health care spending
– Help policymakers gain a
better understanding of
cost drivers in specific
health care areas
– Highlight practices that
may contain costs while
maintaining or improving
health outcomes
Companion Report:
Tracking Key Health Indicators
Demographics
& Uninsured
• Uninsured rates
• Poverty rate
• % of residents over 65
Health Status
• Overall health status
• Rate of serious mental illness
• Rate of substance abuse
Vital Statistics
• Life expectancy
• Infant mortality
• Low birth-weight babies
Prevalence
Prevention &
Treatment
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• Asthma
• Smoking

• Childhood immunizations
• Hemoglobin A1c
• Nursing home pressure sores



Diabetes
Obesity rates
Mammography
Appropriate surgical care
About Medicaid
• Our country’s largest health insurance program
• 66 million low-income Americans covered in 2010
• Total program cost (2012): $429 billion
• Provides health insurance coverage for low income individuals
• Children and parents
• Elderly and individuals with disabilities
• Jointly funded but state-run:
• Federal dollars cover between 50% and 74% of expenditures
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Annual Medicaid Spending Growth,
2000 to 2012
• Nationally, Medicaid
spending grew 63%
from 2000 to 2012—a
compound annual
growth rate of 4.1%.
8.6%
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• This growth is on par
with US overall health
care spending which
rose by 58%.
Percent of Residents Enrolled, 2010
• 21% of Americans had
Medicaid coverage for at
least a portion of 2010.
• Medicaid enrollment is a
key determinant of program
spending.
• Factors such as poverty
rates, state decisions to
expand eligibility, and the
reach of private insurance
coverage drive differences
in Medicaid enrollment.
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Trends in Health Insurance
Coverage, 2000 to 2012
• Medicaid enrollment
grew 50%, from 44 million
to 66 million over the last
decade
Employersponsored
• Uninsured grew 23%,
from 36 million to 50
million over the same
period
Medicaid
Medicare
Uninsured
Direct Purchase
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Spending Per Person: Medicaid vs
US overall health care, 2000 to 2010
Overall health care
Medicaid
• Spending per enrollee for
Medicaid remained
relatively stable, rising
only 5% from 2000 to
2010.
• Overall health care
spending per person grew
39% over the same
period.
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Not all Medicaid Enrollees Cost the
Same, 2010
• Elderly and disabled individuals
make up 24% of Medicaid
enrollment and accrue 64% of
Medicaid payments for
services.
24%
64%
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Elderly or Disabled Enrollees as a
Percent of Medicaid Enrollment, 2010
38%
• The composition of
Medicaid enrollees varies
dramatically by state and
impacts per enrollee
spending.
16%
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• In 9 states, at least 30% of
Medicaid enrollees are
elderly or disabled.
State-funded Medicaid Spending as a
Percent of Own Source Revenue, 2012
5%
26%
5%
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• The states’ share of
Medicaid expenditures was
$181 billion in 2012, or
16% of states’ own-source
revenues.
• Variation across states is
driven by factors affecting
both Medicaid spending
and own-source revenues.
The Share of State-Generated
Revenues Spent on Medicaid
Increased
• State spending on
Medicaid increased
from 12 percent of
states’ own-source
revenues to 16
percent between
2000 and 2012.
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Kavita Choudhry
kchoudhry@pewtrusts.org
202-540-6521
www.pewtrusts.org/healthcarespending
Prison Health Care Spending
State Employee Health Plan Spending
Maria Schiff
August 5, 2014
mschiff@pewtrusts.org
202-540-6822
www.pewtrusts.org/healthcarespending
Prison Health Care Spending
Medicaid
& CHIP
State
retiree
health
benefits
State
employee
health
benefits
Mental
health
State
Health
Care
Spending
Substance
abuse
Prison
health
care
A legal standard for care
Topline Findings
States’ correctional health care spending nationwide totaled $7.7
billion in 2011, down from a peak of $8.2 billion in fiscal 2009.*
Spending increased in majority of states from fiscal 2007 to 2011.
However, spending also peaked in most states prior to 2011.
A similar trend occurred on a per-inmate basis.
The share of prisoners 55 and older rose in all but two (HI & MS) of 42
states.
*spending reported in 2011 dollars.
Total Prison Health Care Spending
Grew 13% from 2007 to 2011
Spending peaked in
a majority of states
before 2011.
Per inmate spending on prison health
care grew 10% over the last 5 years
• From 2007-2011 per-inmate
health care spending rose in 39
states
• Average per-inmate spending was
$6,047 in 2011.
• For comparison, Medicaid national
average was $6,254 in 2010.
Key Cost Drivers
Size of prison population
Health status of inmates
Age of inmates
Prison Populations Skyrocketed
677 Percent from 1971 to 2011
Notes: Annual figures prior to 1977 reflect the total number of sentenced prisoners in custody. Beginning in 1977, all figures reflect the
jurisdictional population as reported in the Bureau of Justice Statistics’ “Prisoners” series.
Sources: Sourcebook of Criminal Justice Statistics, University at Albany; US Department of Justice, Bureau of Justice Statistics
Recent downturn in prison
population
Primary driver in spending downturn
Pew survey showed:
 Average daily prison population peaked in 2009 and then
began to fall
 National downturn in prison population heavily influenced by
California’s large downturn
Health status of inmates
Higher incidence of chronic and infectious diseases, such as
AIDS and hepatitis C, and mental illness.
In 2010, roughly 65 percent had an alcohol or drug use
disorder
 Seven times more likely than individuals in the community to
have such a condition.
1/3 suffered from mental illness
1/4 had a co-occurring mental illness and substance use
disorder
National rate of hepatitis C among inmates was 17.4 % in
2006. Rate in general population is 1%.
Older inmates
More susceptible to chronic medical and mental conditions
 Dementia, impaired mobility, and loss of hearing and vision
Experience the effects of age sooner
 Substance use disorder, inadequate preventive and primary
care prior to incarceration, and stress
 Cost at least 2-3 times as much as younger to treat inmates
 Necessitate increased staffing levels, more officer training, and
special housing
The Number of Prisoners Age 55+
Increased by 204%, 1999-2012
The Share of Older Inmates in
State Prison Populations
Hawaii and
Mississippi did not
experience
increase in older
prisoners during
study period
States with older inmates tended to
have higher per-inmate spending
Promising cost containment
strategies
Strategic use of telehealth.
Effective management of outsourcing agreements.
Enrolling eligible prisoners in Medicaid.
Using medical or geriatric parole policies.
Enrolling eligible
prisoners in Medicaid
Qualifying services limited to inpatient care delivered
outside of prison.
Medicaid does not cover health care delivered
inside prisons.
States can obtain federal Medicaid reimbursement
for inpatient health care provided outside of prison.
States expanding Medicaid eligibility under the ACA likely to benefit most.
State Employee Health Plan
Spending
Medicaid
& CHIP
State
retiree
health
benefits
State
employee
health
benefits
Mental
health
State
Health
Care
Spending
Substance
abuse
Prison
health
care
State Employee Health Plan
Spending
• Report to be released Tuesday, August 12th
• Second largest state health care spending after state
contribution to Medicaid
• 100% financed by state dollars
• Spending is determined by (among other things):
– Plan design
– Take up rate
– Provider price and practice patterns
– Composition of state workforce
State Health Care Spending
Project
State and Local Enrollees
Private Sector Enrollees
57% female
51% female
25% age 55-64
17% age 55-64
Diabetes: 65.9 patients per 1,000
members
Diabetes: 44.4 patients per 1,000
members
Hypertension: 144.3 patients per
1,000 members
Hypertension: 90.5 patients per 1,000
members
Overweight: 10.2 patients per 1,000
members
Overweight: 7.9 patients per 1,000
members
Source: Truven Health Analytics
Source: Truven Health Analytics
State Health Care Spending
Project
Advantages:
– States have a preponderance of employees in one city and are often that
city’s (and the state’s) largest employer. Can set performance standards,
exert influence to reform care delivery and payment methodology
– Possibility for locally based initiatives such as reference pricing, on site
primary care clinics, etc.
– Longer employee tenure (and state responsibility for retirement health care)
means investing in health improvement, disease management, smoking
cessation may bring more of a return than in private sector
Topline Findings
•
States spent $31 billion to insure 2.7 million employees in 49 states in
2013.
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Average PEPM (2013): $963
 State: 84%
 Employee: 16% + $70 per month in cost-sharing
•
Most popular plan PEPM average (2013): $971
Source: Milliman Atlas of Public Employer Health Plans
Average Premiums PEPM by
State - Range: $461 - $1,465
Darker shades of green represent states with higher average premiums PEPM.
Continued
•
Average actuarial value (2013): 92% (platinum level)
•
19 states offered at least one plan with a deductible of at least $1,500 in
2013.
– Only 4 percent of employees nationwide are enrolled in one
•
Adjusting plans for richness narrows the PEPM range, but much variation
remains.
•
Other factors: provider prices and practice patterns, service utilization, age
and health status, and breadth of network
Average Actuarial Value by
State – Range:83% - 98%
Darker shades of green represent states with higher average actuarial values.
Average % of Premiums Paid by
Employee – Single Coverage
Range: 0% - 42%
Darker shades of green represent states with higher average PEPMs.
Check Out Our Reports
www.pewtrusts.org/healthcarespending
Spending Reports & Data Visualizations
• State Spending on Medicaid
• Prison Health Care Spending
• State Employee Health Plan Spending (August 12th)
• Tracking Key Health Indicators
Related Issue Briefs
• Combating Medicaid Fraud and Abuse
• Managing Prison Health Care Spending
• The Cadillac Tax (Late August)
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Maria Schiff
mschiff@pewtrusts.org
202-540-6822
www.pewtrusts.org/healthcarespending