The Health 202: Jayapal to roll out sweeping Medicare-for-All bill by month’s end

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2019/02/14/the-health-202-jayapal-to-roll-out-sweeping-medicare-for-all-bill-by-month-s-end/5c6496121b326b71858c6b85/?noredirect=on&utm_term=.3b80663a6c98

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Rep. Pramila Jayapal (D-Wash.) is seeking buy-in from more fellow Democrats for a sweeping Medicare-for-all bill she is poised to release near the end of the month.

It’s a proposal that has become a rallying cry for progressives and 2020 presidential candidates, but it is also exposing deep rifts in the Democratic Party over exactly how to achieve universal health coverage in the United States.

The Medicare for All Act of 2019, which Jayapal had planned to roll out this week but delayed because she was seeking more co-sponsors, would create a government-run single-payer health system even more generous than the current Medicare program. Her office hasn’t publicly released the details of the upcoming measure, but Democratic members told me it would cover long-term care and mental health services, two areas where Medicare coverage is sparse.

The bill also proposes to add dental, vision, prescription drugs, women’s reproductive health services, maternity and newborn care coverage to plans that would be available to people of all ages and would require no out-of-pocket costs for any services, according to a letter Jayapal sent to colleagues on Tuesday asking them to consider co-sponsoring the effort.

“Medicare for All is the solution our country needs,” the letter said. “Patients, nurses, doctors, working families, people with disabilities and others have been telling us this for years, and it’s time that Congress listens.”

The 150-page bill had 93 co-sponsors as of Tuesday, although Jayapal spokesman Vedant Patel said more Democrats have signed on since then. That’s still fewer than the 124 Democrats who co-sponsored a much less detailed Medicare-for-all proposal from then-Rep. John Conyers (D-Mich.) last year. A strategist who has been working with Democrats on health-care ideas told me there have been some frustrations that more members haven’t yet signed on to Jayapal’s bill, despite the fact that there are 40 more Democrats in the House this year.

But Jayapal said she’s confident she’ll have 100 co-sponsors by the time of the bill’s planned Feb. 26 release, explaining she’s not surprised members would take more time to consider it given its length.

“It’s a 150-page bill … it’s not an eight-page resolution,” Jayapal told me yesterday. “Now we’re actually putting detail into it, and so we feel confident we will continue to add cosponsors even after introduction.”

Patel also noted it’s still early in the year, saying he “disagrees” with the notion that it’s taking a long time to bring Democrats on board.

“It’s the second week of February and we are at more than 95 co-sponsors,” he said. “Coalition building is a process, but we are on track to introduce this historic legislation with resounding support at the end of the month.”

Yet differences are emerging among Capitol Hill Democrats over how to expand coverage, part of a larger debate roiling the party as 2020 candidates, many of them senators, and a new class of freshmen House Democrats move the party left not only on health care but also on the environment.

The cracks were especially apparent yesterday, as a separate group of lawmakers gathered to re-introduce their own proposal to allow people to buy in to Medicare starting at age 50. That measure, offered by Sen. Debbie Stabenow (D-Mich.) and Rep. Brian Higgins (D-N.Y.), would take a more incremental approach to expanding health coverage — one that could play better with voters who would stand to lose private coverage under a single-payer program.

Their bill, dubbed the “Medicare at 50 Act,” would allow people to buy Medicare plans instead of purchasing private coverage on the Obamacare marketplaces if they are uninsured or prefer it to coverage offered in their workplace.

And today, Sen. Brian Schatz (D-Hawaii) and Rep. Ben Ray Luján (D-N.M.) are reintroducing their State Public Option Act, which allows people to buy a Medicaid plan regardless of their income. That measure has broad backing from not just lawmakers (20 senators co-sponsored it last year) but also well-known health policy wonks including former Centers for Medicare and Medicaid Services Administrator Andy Slavitt.

Higgins is one of several Democrats on the House Budget Committee who have proposed a total of three separate and contrasting bills to expand Medicare to more people. The others are Reps. Rosa DeLauro (D-Conn.) and Jan Schakowsky (D-Ill.), who have a bill to expand Medicare to all ages while still preserving employer-sponsored coverage, and Jayapal.

Once Jayapal rolls out her legislation, the Congressional Budget Office is expected to release an analysis of how much it would cost by the end of March or the beginning of April, Budget Committee Chairman John Yarmuth (D-Ky.) told me. At that point, the committee will hold a hearing with the CBO to go over the cost and its potential impact on the federal budget.

That’s where Jayapal could run into roadblocks.Given the extensive benefits she’s proposing, her bill would probably come at a steep cost to taxpayers — and paying for things is almost always Congress’s trickiest task. Of course, supporters of the legislation stress its benefits would fill in much-needed gaps in coverage under the current Medicare program.

“The biggest change I give her so much credit for is it has long-term care,” said Rep. Ro Khanna (D-Calif.), who is a co-sponsor of Jayapal’s Medicare-for-all bill. “This is huge.”

And then there’s also the question of how voters might react if told they would lose their current coverage. Sen. Kamala Harris (D-Calif.), who has gone the furthest of all the 2020 candidates in pushing for an overhaul of the U.S. health-care system, attracted widespread attention recently when she suggested she’d be fine with entirely eliminating private coverage in favor of government-run plans.

“We’re very aware that there is anxiety about — however imperfect — a system you know and doctors you know, and that is going to be all part of the hearing process, public input into: How do we build a system in this country that really cares about all Americans?” said Rep. Katherine Clark (D-Mass.), another co-sponsor of the Jayapal bill.

 

 

 

US Health Care Spending: Who Pays?

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Over the past 56 years, there have been major shifts in how we pay for hospital care, physician services, long-term care, prescription drugs, and other health care services and products in the US. In 1960, Medicare and Medicaid did not yet exist. Only half of hospital care was covered by insurance, with the rest paid out of pocket and by a patchwork of sources, both private and public.

In 1960, almost all (96%) spending on prescription drugs came out of the consumer’s pocket, but a dramatic rise in private insurance, coupled with the implementation of Medicare drug coverage in 2006, dropped the out-of-pocket spending share to 14% in 2016.

This interactive graphic uses data from the Centers for Medicare & Medicaid Services (CMS) to show national spending trends from 1960 to 2016 for health care by payer. (Figures presented refer to personal health care, which, as defined by CMS, includes goods and services such as hospital care and eyeglasses but excludes administration, public health activity, and investment.)

The data visualization below is a companion to Health Care Costs 101, part of CHCF’s California Health Care Almanac.

 

 

 

 

Misconceptions About Health Costs When You’re Older

https://theincidentaleconomist.com/wordpress/misconceptions-about-health-costs-when-youre-older/

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Some significant expenses decline as we age: Most mortgages are eventually paid off, and ideally children grow up and become self-supporting.

But health care is one area in which costs are almost certain to rise. After all, one of the original justifications for Medicare — which kicks in at age 65 — is that older people have much higher health care needs and expenses.

But there are a few common misunderstandings about health costswhen people are older, including the idea that money can easily be saved by reducing wasteful end-of-life spending.

Half our lifetime spending on health care is in retirement, even though that represents only about 20 percent of a typical life span. Total health care spending for Americans 65 and older is about $15,000 per year, on average, nearly three times that of working-age Americans.

Don’t expect Medicare to provide complete protection from these expenses.

Traditional Medicare has substantial gaps, leaving Americans on the hook for a lot more than they might expect. It has no cap on how much you can pay out of pocket, for example. Such coverage gaps can be filled — at least in part — by other types of insurance. But some alternatives, such as Medicare Advantage, aren’t accepted by as many doctors or hospitals as accept traditional Medicare.

On average, retirees directly pay for about one-fifth of their total health care spending. Some spend much more.

One huge expense no Medicare plans cover is long-term care in a nursing home.

Over half of retirement-age adults will eventually need long-term care, which can cost as much as $90,000 per year at a nursing home. Although most who enter a nursing home don’t stay long, 5 percent of the population stays for more than four years. You can buy separate coverage outside the Medicare program for this, but the premiums can be high, especially if you wait until near retirement to buy.

Although Medicare is thought of as the source of health care coverage for retirees, Medicaid plays a crucial role.

Medicaid, the joint federal-state heath financing program for low-income people, has long been the nation’s main financial backstop for long-term care. Over 60 percent of nursing home residents have Medicaid coverage, and over half of the nation’s long-term care is funded by the program.

That isn’t because most people who require long-term care have low incomes. It’s because long-term care is so expensive that those needing it can frequently deplete their financial resources and then must turn to Medicaid.

recent working paper from the National Bureau of Economic found that, on average, Medicaid covers 20 percent of retiree health spending. The figure is larger for lower-income retirees, who are more likely to qualify for Medicaid for more of their retirement years.

A widely held view is that much spending is wasted on “heroic” measures taken at the end of life. Are all the resources devoted to Medicare and Medicaid really necessary?

First, let’s get one misunderstanding out of the way. The proportion of health spending at the end of life in the United States is lower than in many other wealthy countries.

Still, it’s a tempting area to look for savings. Only 5 percent of Medicare beneficiaries die each year, but 25 percent of all Medicare spending is on individuals within one year of death. However, the big challenge in reducing end-of-life spending, highlighted by a recent study in Science, is that it is hard to know which patients are in their final year.

The study used all the data available from Medicare records to make predictions: For each beneficiary, it assigned a probability of death within a year. Of those with the very highest probability of dying — the top 1 percent — fewer than half actually died.

“This shows that it’s just very hard to know in advance who will die soon with much certainty,” said Amy Finkelstein, an M.I.T. economist and an author of the study. “That makes it infeasible to make a big dent in health care spending by cutting spending on patients who are almost certain to die soon.”

That does not mean that all the care provided to dying patients — or to any patient — is valuable. Another study finds that high end-of-life spending in a region is closely related to the proportion of doctors in that region who use treatments not supported by evidence — in other words, waste.

“People at high risk of dying certainly require more health care,” said Jonathan Skinner, an author of the study and a professor of economics at Dartmouth. “But why should some regions be hospitalizing otherwise similar high-risk patients at much higher rates than other regions?”

In 2014, for example, chronically ill Medicare beneficiaries in Manhattan spent 73 percent more days in the hospital in their last two years of life than comparable beneficiaries in Rochester.

“There absolutely is waste in the system,” said Ashish Jha, director of the Harvard Global Health Institute. But, he argues, waste is present throughout the life span, not just at the end of life: “We have confused that spending as end-of-life spending is somehow wasteful. But that’s not right because we are terrible at predicting who is going to die.”

Of course, beyond any statistical analysis, there are actual people involved, and wrenching individual decisions that need to be made.

“We should do all we can to push waste out of the system,” Dr. Jha said. “But spending more money on people who are suffering from an illness is appropriate, even if they die.”

 

 

Healthcare M&A drops in volume, value for Q3, PwC says

https://www.healthcaredive.com/news/healthcare-ma-drops-in-volume-value-for-q3-pwc-says/540679/

Dive Brief:

  • Healthcare deal activity in the third quarter of this year continued the streak of at least 200 deals each quarter since the end of 2015 and at least 250 quarterly deals since Q3 of last year, PwC said in a new report.
  • However, the quarter saw the fewest number of deals in a quarter since Q1 2017. There were also declines in value compared to both the previous year and quarter.
  • Long-term care remained the most active sub-sector with 102 deals. Payers have increasingly seen potential in long-term care companies.

Dive Insight:

Healthcare M&A activity saw a dip in Q3, but that doesn’t mean it’s the start of a downward trend.

Thad Kresho, U.S. health services deals leader at PwC, told Healthcare Dive on Thursday that interest remains high among “historical acquirers.” Those purchasers are looking to “further their connection points with their constituents,” Kresho said.

“Further buoyancy is fueled by increasing private equity interest (with their available capital) as well as non-traditional entrants, such as retail and tech-enabled companies. Interest of these participants range across many sub-sectors,” he added.

There were 261 healthcare deals in Q3 of 2018, slightly lower than the average of the past seven quarters (264). Deal volume increased 0.4% compared to a year ago, but dropped almost 11% compared to Q2 2018.

The total deal value plummeted to $15.9 billion, which is a drop of nearly 36% compared to the previous quarter and 10.1% year over year. It’s also a far cry from Q4 2017 ($100 billion) and Q1 2018 ($72.6 billion). Of course, one or two megadeals, such as the proposed CVS-Aetna and Cigna-Express Scripts deals, can be the difference between an OK quarter and a blockbuster, so quarterly value isn’t always the best gauge.

Kresho said volumes remain strong across multiple sub-sectors. PwC expects that to continue through the rest of this year and into the next.

“The industry’s major ongoing themes of regulatory uncertainty, income pressure, technological innovation and consumer-centricity continue to drive interest in deals,” PwC said.

The largest deal of the quarter was the RCCH HealthCare Partners purchase of LifePoint Health. The $5.6 billion transaction continued the hospital sub-sector’s average of one megadeal per quarter, which stretches back to 2015.

Another billion-dollar transaction in the hospital sector was HCA Healthcare’s purchase of Mission Health for $1.5 billion. Hospital deal volume overall dipped about 12%, but its value increased by 4,711% thanks in large part to the billion-dollar deals.

A different recent quarterly report by Kaufman Hall also found that M&A activity is down for hospitals and noted 18 deals in the quarter. The total was a 38% decrease from a year ago. Transactions for the first nine months of the year were also down, though value was up, according to that analysis.

Meanwhile, in the PwC report, another notable transaction over $1 billion was UnitedHealth Group’s purchase of 80% of Genoa Healthcare. The deal will help OptumRx’s behavioral offerings.

The sub-sector that saw the most deals was long-term care with a volume increase of about 33%, but value fell by 35%.

On the other end, PwC saw the largest value declines in physical medical groups and managed care. Physician medical groups volume dropped 30% and value fell by 97%. The sub-sector saw its fewest deals since Q4 2016. PwC doesn’t think the slow quarter is the start of a downward trend in that sub-sector, though. It’s likely an outlier.

Managed care volume, meanwhile, dropped 25% and value plummeted 95%. The slowdown in managed care purchases come as health insurers explore vertical integration rather than merging with other payers. Regulators have been leery of horizontal mergers over the past couple of years, but there are fewer roadblocks for vertical deals.

The managed care M&A activity will likely be in growth areas, such as Medicaid and Medicare Advantage. Otherwise, expect insurers to continue to look beyond their sub-sector and seek out opportunities in areas like pharmacy benefit management and long-term care companies.

 

 

REITs Adopt Novel Approaches to Stay Relevant in Skilled Nursing

https://skillednursingnews.com/2018/06/reits-adopt-novel-approaches-stay-relevant-skilled-nursing/

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The shifting skilled nursing landscape has forced the major real estate investment trusts (REITs) to change their game plans — and led some industry-watchers to question whether their time is coming to a close.

But there’s still a role REITs can play in the long-term care space, an industry that might actually be more attractive than the far larger and flashier world of private-pay senior living.

“The spread between the debt and cap rates on nursing homes lend themselves to a triple-net lease scenario, and I think that’s why it’s here to stay,” Jeremy Stroiman, CEO of the Chicago-based Evans Senior Investments, told Skilled Nursing News*.

Committed bedfellows

This year has so far seen one of the most significant commitments by a REIT to the skilled nursing space: Welltower, Inc.’s (NYSE: WELL) move to buy the SNF-heavy Quality Care Properties (NYSE: QCP) in a joint venture with non-profit hospital operator ProMedica.

The move raised eyebrows, as the REIT would be taking on a portfolio dominated by troubled operator HCR ManorCare — which filed for bankruptcy protection in March after nearly a year of missed rent payments and other turmoil with former landlord QCP. Under the terms of the Welltower deal, ProMedica also agreed to purchase ManorCare’s operations.

At the time, Welltower CEO Tom DeRosa blamed private equity for the industry’s woes; ManorCare had been owned since 2007 by the Carlyle Group, a Washington, D.C.-based alternative asset management firm.

“Anybody who knows the ManorCare real estate knows it’s really good-quality real estate in really good markets,” DeRosa told SNN in April. “It was just capital-starved, because the skilled nursing industry had been taken private by private equity firms, and what does a private equity firm do? They over-lever businesses in order to [take] cash out of them. The REITs got left holding the bag here when reimbursements changed.”

The counterpoint, of course, is that publicly traded REITs also played some role in the difficulties facing individual skilled nursing operators: In a world of changing reimbursements, staffing pressures, and regulatory scrutiny, the skilled nursing model has become increasingly difficult to reconcile with annual rent escalators and quarterly scrutiny from shareholders.

That’s why Stroiman sees an opportunity for smaller, private REITs that have a more intimate knowledge of the particular challenges and benefits of investing in the skilled nursing space — without the immediate pressure of needing to deliver returns to investors clamoring for information every three months.

For instance, private REITs would be more receptive to an operator that promised an 18-month turnaround period in exchange for lower up-front rents, Stroiman said.

“The operator says: I have $600,000 of upside within 18 months. I’ll pay you an additional rate [after 18 months], but out of the gates, will you give me a break so I can find the upside?’” he said. “And the privately-owned REITs say: ‘That’s a no-brainer.’”

That spirit of experimentation can also extend to different kinds of partnerships between REITs and facilities, according to Cambridge Realty Capital Companies chairman and CEO Jeffrey Davis.

In his senior housing and health care finance practice, Davis has increasingly seen operators buy back a portion of their real estate from REITs, which still maintain a presence going forward. One recent 10-facility deal saw an operator secure a $26 million acquisition loan to regain a stake in their facilities from a major national REIT, Davis said.

“All of a sudden, the REIT goes from having $40 million invested in those 10 buildings to having only $10 million invested in those buildings,” he said. “I think there’s different ways that the REITs can trim those [portfolios], and that, I think, is a way they can go about trimming their assets.”

Still a place for the smart ones

These new strategies don’t mean there isn’t a place for the major skilled nursing REITs that have an intimate knowledge of the business. Stroiman pointed to Sabra Health Care REIT (Nasdaq: SBRA) and CareTrust REIT (Nasdaq: CTRE) as examples of publicly traded REITs with a strong grounding in the industry, in part due to the skilled nursing experience of CEOs Rick Matros and Greg Stapley, respectively.

“They understand the operations behind the nursing homes, and they structure deals like that all the time because they can, because they understand it,” Stroiman said.

In addition, the favorable ratio of cap rates to lending rates means REITs might be more interested in SNFs than senior housing properties, where the upside isn’t as clear — despite the fact that the assisted and independent living industries come with significantly less regulatory scrutiny and the additional stability of private-pay residents.

“The difference between current debt rates and cap rates, it works,” Stroiman said. “It works so much better than senior housing.”

But Davis also emphasized the growing importance of the regional investor and operator in a landscape torn by local-level reimbursement issues and regulatory changes — especially in a narrow-margin environment where residents and investors want “Four Seasons service for the cost of a Holiday Inn.”

“It’s very difficult to run your business with all these different people’s oversight,” Davis said. “And I think the REITs have found that out, and let’s face it — this kind of environment really puts national players at a huge disadvantage, because you just can’t be as efficient as a national player as a regional [operator] or someone who focuses on one or two states. You just can’t.”

 

Health-Care Transactions Update: Deals Significantly Up in Third Quarter

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Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

July, August, and September have been the most active deal months in 2017 so far, with over 299 recorded deals. That can be contrasted with the same quarter in 2016, during which only 167 deals were recorded, making it the slowest quarter that year.

The three most active sectors in summer 2017 were long-term care, health-care information technology, and physician practices, as strategic and financial buyers continued to actively shop for assets. The much-discussed market uncertainty—stemming from the political environment, regulatory uncertainty, and other factors—doesn’t seem to be hindering transaction activity.

Long-Term Care Has Been Most Active

Long-term care, including home health, continues to outpace the industry, with 215 transactions year to date. The sector remains attractive for many investors looking to position their portfolios for future growth, predominantly due to demand fundamentals such as an aging U.S. population and shifting preferences of seniors.

It is estimated that 10,000 U.S. residents turn 65 each day, adding to an already sizable population demographic that historically utilizes the vast majority of health-care spending. In particular, as the U.S. health-care system increasingly places emphasis on efficient outcomes and lowering cost of care, long-term care will offer a critical value proposition as an effective means of reducing the number of acute-care hospital visits and maintaining the overall health of seniors.

Of note in the third quarter was BlueMountain’s $700 million purchase of skilled nursing and assisted living assets from Kindred Healthcare. Continued interest and heightened activity are expected in this sector.

Physicians Have More Buyer Options for Transactions

Historically, large independent physician networks looking to partner with either a strategic or financial sponsor were limited in their options—mainly larger physician groups and local health systems. The landscape has quickly evolved as more organizations are seeing the value in controlling large patient populations.

Private equity buyers and insurance giants are increasingly interested in physician groups and are willing to purchase partial or complete interests at a premium. In the third quarter, Ares Capital invested $1.45 billion in DuPage Medical Group, a multi-specialty practice in Illinois previously owned by the private equity group Summit Partners.

Financial sponsors see an opportunity to leverage size and scale through acquisition and de novo growth, to increase patient populations and capture added revenues in a changing reimbursement environment. In April, Optum, a subsidiary of UnitedHealth Group, purchased American Health Network, a 300-physician practice in Indiana for $184 million. The insurer’s strategy is to control the delivery and cost of health care in all settings outside of the hospital.

Strategic buyers such as hospitals continue to actively recruit independent physicians, but are increasingly disadvantaged when forced to compete with the deep pockets of private equity investors and large insurers. Further compounding the problem for hospitals are the fair market value requirements that, by regulation, limit physician compensation options.

The single specialty provider space has experienced some of the highest activity in all of health-care services. With over 100 single specialty practices completing or announcing a transaction so far in 2017, independent physician groups are viewing an active mergers and acquisitions marketplace as an opportunity to secure future growth and viability.

A growing shift away from a hospital setting has increased the negotiating power of private practitioners and many are turning to private equity partners as a way to further increase their geographic footprint through aggressive growth strategies.

More and more groups are expected to pursue partnership and sale options as physicians continue to witness these large transaction values.

Size Is Attractive for Hospital Buyers

Bigger isn’t always better, but when it comes to hospital transactions, there is a market for sizable assets. In this quarter, Ascension Health, the country’s largest health system, emerged as the buyer of the struggling Presence Health in the Chicago area.

Despite Presence’s poor operations, it was able to align with a financially strong provider because it offered immediate scale in the Chicago market. With this transaction, Ascension, through its Amita Health joint venture with Adventist, vaulted up the market-share list from number four (8.1 percent) to number one (18.8 percent), according to Presence Health’s 2016 official statement. Acquiring and maintaining strong market share will continue to be a significant driver of financial success, thus the opportunity to immediately acquire scale through an acquisition will always be attractive.

Health-Care IT Remains Active

For many years, experts have thought that technology would be the key to driving value (high quality at a low cost). The activity in this space demonstrates the truth of that belief as there have been 133 transactions year to date. Notably, large private equity players have been active.

Clayton, Dubilier & Rice Inc., a private equity firm, acquired Carestream Dental in the third quarter, purchasing the dental imaging and practice management company with an eye toward growth, and expecting to leverage the technological expertise to grow the business.

Final Thoughts

While the summer months remained active, we believe the market will stay strong through the end of the year. Activity spawns more activity, and sellers are undoubtedly attracted to the high valuation multiples offered by buyers with tremendous access to capital and few investment options more attractive than health care.

Medicaid Has A Bull’s-Eye On Its Back, Which Means No One Is Entirely Safe

Medicaid Has A Bull’s-Eye On Its Back, Which Means No One Is Entirely Safe

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When high levels of lead were discovered in the public water system in Flint, Mich., in 2015, Medicaid stepped in to help thousands of children get tested for poisoning and receive care.

When disabled children need to get to doctors’ appointments — either across town or hundreds of miles away — Medicaid pays for their transportation.

When middle-class older Americans deplete their savings to pay for costly nursing home care, Medicaid offers coverage.

The United States has become a Medicaid nation.

Although it started as a plan to cover only the poor, Medicaid now touches tens of millions of Americans who live above the poverty line. The program serves as a backstop for America’s scattershot health care system, and as Republicans learned this year in their relentless battle to replace the Affordable Care Act, efforts to drastically change that can spur a backlash.

The latest Republican proposal — by Sens. Lindsey Graham (S.C.) and Bill Cassidy (La.) — is being pummeled by doctors, insurers, hospitals and patient advocates because it would scrap the health law’s Medicaid expansion and reduce federal funding for Medicaid. Senate leaders are trying to get a vote before Sept. 30, when special budget rules would allow the package to pass with only 50 votes.

Today, Medicaid is the nation’s largest health insurance program, covering 74 million, or more than 1 in 5 Americans. Over the next weeks, Kaiser Health News will explore the vast reach of the program. Twenty-five percent of Americans will be on Medicaid at some point in their lives — many are just a pink slip away from being eligible.

Medicaid funding protects families from having to sell a home or declare bankruptcy to pay for the care of a disabled child or elderly parent. It responds to cover disaster relief, public health emergencies and programs in schools that lack other sources of funding.

Millions of women who don’t qualify for full Medicaid benefits each year obtain family planning services paid for by Medicaid. These women have incomes as high as triple the federal poverty rate, or over $36,000 for an individual. And thousands of women, who otherwise don’t qualify for the program, get treated each year for breast and cervical cancers through Medicaid.

“Instead of cutting Medicaid, [lawmakers] increased public awareness of its value and made it even harder to cut in the future,” said Jonathan Oberlander, professor of health policy and management at the University of North Carolina-Chapel Hill and a supporter of the federal health law. The Medicaid cuts passed the House, but the ACA overhaul legislation fell short in the Senate in July.

Medicaid is the workhorse of the health system, covering:

  • 39 percent of all children.
  • Nearly half of all births in the country.
  • 60 percent of nursing home and other long-term care expenses.
  • More than one-quarter of all spending on mental health services and over a fifth of all spending on substance abuse treatment.

Unlike Medicare beneficiaries, who keep that insurance for life, most Medicaid enrollees churn in and out of the program every few years, depending on their circumstances.

Such numbers underline the importance of Medicaid, but also provoke alarm among conservatives and some economists who say the U.S. cannot afford the costs over the long run.

Bill Hammond, director of health policy of the fiscally conservative Empire Center for Public Policy in Albany, N.Y., said Medicaid has been a big help for those it was designed to cover — children and the disabled. But it has grown so big that the cost hurts state efforts to pay for other necessary public services, such as education and roads. “I can’t think of any other anti-poverty program that reaches so many people. … It’s too expensive a benefit.”

“We need to transition people to get coverage in the private sector,” he said, noting how millions on the program have incomes above the federal poverty level.

It May Be The Person Down The Block

Joana Weaver, 49, of Salisbury, Md., who has cerebral palsy, has been on and off Medicaid since birth. For the past few years, it’s paid for home nursing services for six hours a day to help her get dressed, bathed and fed. That’s kept her out of a nursing home and enabled her to teach English part time at a local community college.

“For me, Medicaid has meant having my independence,” Weaver said.

Like Weaver, many people getting Medicaid today are not easily typecast. They include grandmothers — one-quarter of Medicaid enrollees are elderly people or disabled adults.

Or the kid next door. About half of Medicaid enrollees are children, many with physical or mental disabilities.

Many of the rest — about 24 million enrollees — are adults under 65 without disabilities who earn too little to afford health insurance otherwise. About 60 percent of non-disabled adult enrollees have a job. Many of those who don’t work are caregivers.

“It’s the mechanic down the street, the woman waiting tables where you go for breakfast and people working at the grocery store,” said Sara Rosenbaum, a health policy expert at George Washington University in Washington, D.C.

While all states rely on Medicaid, it’s used more in some places than others because of varying state eligibility rules and poverty rates. As of August, about 44 percent of New Mexico residents are insured by Medicaid. In West Virginia and California, the rate is nearly 1 in 3.

peak or walk. It also covers costs for his wheelchair, walker and home health care. (Nick Krug/Lawrence Journal-World)

Jane and Fred Fergus, in Lawrence, Kan., said Medicaid has been a cornerstone in their lives since their son, Franklin, was born eight years ago with a severe genetic disability that left him unable to speak or walk. He is blind and deaf on one side of his body.

Although the family has insurance through Fred’s job as a high school history teacher, Franklin was eligible for Medicaid through an optional program that states use to help families let their children be cared for at home, rather than moving to a hospital or nursing home. Medicaid pays all his medical bills, including monthly transportation costs to Cincinnati Children’s Hospital, where for the past 18 months he has been receiving an experimental chemotherapy drug to help shrink tumors blocking his airway, Jane Fergus said. It also covers his wheelchair, walker and daily nursing care at home.

“We have such great health care for him because of Medicaid,” his mother said.

Jane Fergus was never politically active until this year, when she feared that the GOP plans to cut Medicaid funding would reduce services for her son.

“If there is a silver lining in all this debate, it’s that we have been given a voice, and people in power are being educated on the role of Medicaid,” she said.

Moving Beyond Its Roots

Medicaid was born in a 1965 political deal to help bring more support for President Lyndon Johnson’s dream of Medicare, the national health insurance program for the elderly.

Over the past 40 years and in particular since the 1980s, Medicaid expanded beyond its roots as a welfare program. In 1987, Congress added coverage for pregnant women and children living in families with incomes nearly twice the federal poverty level (about $49,200 today for a family of four).

In 1997, Congress added the Children’s Health Insurance Program to help cover kids from families with incomes too high for Medicaid.

And since September 2013, Obamacare allowed states to expand the program to anyone earning under 138 percent of poverty (or $16,394 for an individual in 2016), adding 17 million people.

In addition, more than 11 million Medicare beneficiaries also receive Medicaid coverage, which helps them get long-term care and pay for Medicare premiums.

“Medicaid is plugging the holes in our health system,” said Joan Alker, executive director of the Georgetown University Center for Children and Families, “and our health system has a lot of holes.”

But that comes at a steep price. 

A Blessing And A Curse

With increasing enrollments and health costs steadily rising, the cost of Medicaid has soared. Federal and state governments spent about $575 billion combined last year, nearly triple the level of 2000.

Those dollars have become both a blessing and a curse for states.

The federal government matches state Medicaid spending, with Washington paying from half to 74 percent of a state’s costs in 2016. Poorer states get the higher shares.

The funding is provided on an open-ended basis, so the more states spend the more they receive from Washington. That guarantee protects states when they have sudden enrollment spikes because of downturns in the economy, health emergencies such as the opioid crisis or natural disasters such as Hurricane Katrina.

The program is the largest source of federal funding to states. And Medicaid is often the biggest program in state budgets, after public education.

“Medicaid is the elephant in the room for health care,” said Jameson Taylor, vice president for policy for the Mississippi Center for Public Policy, a free-market think tank. He said states have become dependent on the federal funding to help fill their state budget coffers. While the poorest states, such as Mississippi, get a higher percentage of federal Medicaid dollars, that still often isn’t enough to keep up with health care costs, he said.

Extensive Benefits

Medicaid provides significant financing for hospitals, community health centers, physicians, nursing homes and jobs in the health care sector.

But the revenue stream flows further. Billions in annual Medicaid spending goes to U.S. schools to pay for nurses; physical, occupational and speech therapists; and school-based screenings and treatment for children from low-income families, as well as wheelchairs and buses to transport kids with special needs.

Medicaid also often covers services that private health insurers and Medicare do not — such as non-emergency transportation to medical appointments, vision care and dental care. To help people with disabilities stay out of expensive nursing homes, Medicaid pays for renovations to their homes, such as wheelchair ramps, and personal care aides.

Rena Schrager, 42, of Jupiter, Fla., who has severe vision problems, has relied on Medicaid  for more than 20 years. Although she often has difficulty finding doctors who will accept Medicaid’s reimbursements — which are often lower than private insurance and Medicare — she is grateful for the coverage. “When you do not have anything else, you are glad to have anything,” Schraeger said.

As it’s grown, Medicaid has become more popular, another reason why politicians are cautious to curtail benefits or spending.

A recent survey by the Kaiser Family Foundation showed three-fourths of the public, including majorities of Democrats (84 percent) and Republicans (61 percent), hold a favorable view of Medicaid. That’s nearly as high as Americans’ views on Medicare. (Kaiser Health News is an editorially independent program of the foundation.)

But it may still have a bull’s-eye on its back.

“The fact that the House passed a bill to cut $800 billion from Medicaid and it came one vote short to passing the Senate shows Medicaid is stronger than maybe many Republican leaders anticipated,” said Oberlander. “But politically it is still in a precarious position.”