Medicaid Now Covers a Record Number of Americans

By guest blogger Robert Field:

More Americans are on Medicaid than ever before.  The program, which provides health insurance for the poor, now serves 48.5 million people, which is almost 16% of the population.  Between December 2008 and December 2009, enrollment rose by 3.69 million, the largest one-year jump since the program's early implementation. (Complete data are available from the Kaiser Family Foundation.)

This increase is hardly surprising, since the year in question corresponds to the deepest part of the current recession, when unemployment rose to about 10%.  Fewer people employed means fewer covered by employer-sponsored insurance.  The biggest surges were in some of the hardest hit states, including Nevada and Arizona.  In addition, Medicaid, like many programs, sees regular expansion from general population growth.

Since Medicaid is partially funded by the states, the recent uptick in its rolls puts tremendous pressure on state budgets.  This comes at the same time as the recession has slashed tax revenues.  The result has been a fiscal nightmare.

Federal stimulus money totaling about $100 billion has helped to tide states over, but this funding expires next year.  States have also implemented a number of approaches to cutting spending.  The most commonly used is cuts in payments to providers.  So far, 39 states have done this.  They have also cut or restricted access to a range of services, such as dentistry, imaging and medical equipment.

Many physicians shun Medicaid because its reimbursement rates are already very low.  Recent financial pressures on states will likely discourage even more from participating.  As the program comes to serve ever-growing numbers of patients, this limit on access will present an increasing problem.

Wider use of Medicaid highlights the crucial role that this program plays in our health care system.  It is commonly viewed as a safety net primarily for those mired in poverty.  It certainly plays this role, but its function is much broader.  Medicaid is the safety net for millions more who are not among the long-term poor but who find their financial circumstances unexpectedly changed.  Many of them will leave Medicaid when they find new employment, but in the meantime, it can be a lifeline if illness strikes.

Medicaid is also a safety net for many providers, particularly inner-city hospitals.  Large numbers of their patients would lack insurance altogether if not for Medicaid, greatly increasing the financial burden of uncompensated care.  In fact, these hospitals serve as an important source for signing up new Medicaid beneficiaries, as they often encourage uninsured patients to enroll.

Medicaid will become even more central to the health care system in 2014, when eligibility is greatly expanded by the new health reform law.  Residents of all states with incomes up to 133% of the poverty level will qualify for coverage, and eligibility will extend for the first time to adults without dependent children.  This expansion will cover about half of the 30 million or so who will be newly insured under the law.

Medicaid receives far less public attention than Medicare, the government insurance program for the elderly, and this tends to obscure its crucial role.  As a result, the implications of Medicaid's fiscal challenges are not as widely discussed as many other health care concerns.  It is time for Medicaid to receive more widespread notice.  It is a mainstay of the safety net for patients and providers alike, and it is one of the keys to the functioning of the overall health care system.

Find earlier items by Robert Field here, including this examination of the health reform in Massachusetts and this analysis of the legal challenges to the Affordable Care Act (Obamacare).

To check out more Check Up items go to www.philly.com/checkup.