May 2017 | Issue Brief State Variation in Medicaid Per Enrollee Spending for Seniors and People with Disabilities MaryBeth Musumeci and Katherine Young Proposals to fundamentally restructure Medicaid financing and substantially reduce federal funds under a per capita cap, such as the House GOP’s American Health Care Act, have important implications for the over 6 million seniors and 10 million nonelderly adults and children with disabilities who rely on the program for necessary medical and long-term care. Medicaid’s current financing structure guarantees federal matching funds as state spending increases. As a result of the options available under current law, there is substantial variation among state Medicaid programs in the eligibility pathways and covered services for seniors and people with disabilities. This in turn contributes to differences among states in spending per enrollee for these populations. A per capita cap would limit the amount of federal Medicaid funding that states could receive per enrollee. Such a change could lock in historic variation in spending among states and limit states’ ability to respond to circumstances that increase health care spending, such as public health emergencies like the opioid epidemic, Flint water crisis, or HIV, natural disasters like Hurricane Katrina, or new medical advances like Hepatitis C drugs. This issue brief explains the variation in Medicaid spending per enrollee for seniors, nonelderly adults with disabilities, and children with disabilities compared to other populations as well as variation in per enrollee spending for these populations among states. It also provides a snapshot of state choices about optional eligibility pathways and covered services important to many seniors and people with disabilities. Seniors and people with disabilities together account for 23% of Medicaid enrollment but 64% of program spending as of FY 2011 (Figure 1). Figure 1 Children with disabilities and nonelderly adults with Medicaid enrollment and spending by coverage group, FY 2011 disabilities each account for a share of program Nonelderly Adults with spending that is about three times greater than their Children with Disabilities, 12% Nonelderly Adults with Seniors, 9% share of program enrollment (2% vs. 7%, and 12% vs. Disabilities, 2% Disabilities, 36% 36%), while the share of program spending devoted Other Adults, 27% Children with Disabilities, 7% to seniors is more than double their share of Seniors, 21% enrollment (9% vs. 21%). These discrepancies are Other Adults, 15% Other Children, 48% due to the greater health and long-term care needs of Other Children, 21% these populations, resulting in more intensive service Enrollees Expenditures use, compared to adults and children who come into Total = 68.0 Million Total = $397.6 Billion the program based solely on their low incomes. NOTE: Includes both full and partial benefit enrollees. Totals may not sum due to rounding. SOURCE: KFF/Urban Institute estimates based on data from FY 2011 MSIS and CMS-64. MSIS FY 2010 data adjusted to FY 2011 spending were used for states missing FY 2011 data. Medicaid spending per enrollee is substantially higher for seniors and people with disabilities compared to those without disabilities (Figure 2). Per enrollee spending for children with disabilities totaled $16,802 in FY 2011, nearly seven times higher than for other children ($2,463). In addition, per enrollee spending for nonelderly adults with disabilities is over five times higher ($16,613), and per enrollee spending for seniors is four times higher ($13,249), than per enrollee spending for other adults ($3,247). Some of these differences are due to seniors and people with disabilities’ greater use of long-term care services compared to those without disabilities. Some Figure 2 children and adults whose Medicaid eligibility is Medicaid acute and long-term care spending per enrollee by coverage group, FY 2011 based solely on their low incomes do have disabilities $16,802 Long-Term Care and use long-term care services. However, seniors $16,613 Acute Care $3,211 and people with disabilities also have higher $13,249 $6,690 spending per enrollee for acute care services compared to those without disabilities. Medicaid $9,158 acute care spending per enrollee is nearly six times $13,591 $9,922 higher for children with disabilities ($13,591) $2,463 $64 $3,247 $13 $4,091 compared to other children ($2,399) and over three $2,399 $3,234 times higher for nonelderly adults with disabilities Other Children Other Adults Children with Disabilities Nonelderly Adults with Disabilities Seniors ($9,922) compared to other nonelderly adults NOTE: Includes both full and partial benefit enrollees. Long-term care services include fee-for-service spending for institutional services (nursing facilities, ICF/IDD, ICF/IMD) and HCBS (home health, personal care, and HCBS waivers). SOURCE: KFF/Urban Institute estimates based on data from FY 2011 MSIS and CMS-64 reports. MSIS FY 2010 data were used for states missing 2011 data. ($3,234). Per enrollee spending for seniors and people with disabilities varies substantially by state. Per enrollee spending for children with disabilities ranges from $6,945 in Tennessee to $53,557 in New Hampshire (Table 1). Seventeen states spend less than $15,000 per enrollee for children with disabilities, while six states spend $25,000 or more (Figure 3). Per enrollee spending for nonelderly adults with disabilities ranges from $9,903 in Alabama to $37,132 in New York (Table 1). Ten states spend less than $15,000 per enrollee for nonelderly adults with disabilities while seven states spend $25,000 or more (Figure 4). Per enrollee spending for seniors ranges from $10,518 in North Carolina to $32,199 in Wyoming (Table 1). Eleven states spend less than $15,000 per enrollee for seniors, while another 11 states spend $25,000 or more (Figure 5). The variation in per enrollee spending by state is due to state choices about eligibility and services, as many age and Figure 3 Figure 4 Medicaid spending per enrollee for children with Medicaid spending per enrollee for nonelderly adults with disabilities, FY 2011 disabilities, FY 2011 WA VT ME WA VT ME MT ND MT ND NH NH MN MN MA OR WI NY MA OR WI NY ID SD ID SD MI MI CT RI WY CT RI WY PA PA NJ IA NJ IA NE NE OH DE OH DE NV IL IN MD NV IL IN MD UT WV UT WV VA CO VA CO DC KS MO KY DC KS MO KY CA CA NC NC TN TN OK AR SC OK AR SC AZ NM AZ NM MS AL GA MS AL GA TX LA TX LA FL FL AK AK HI HI $6,000-$14,999 (17 states) $9,000-$14,999 (10 states) $15,000-$19,999 (15 states) $15,000-$19,999 (25 states) U.S. average: $16,758 $20,000-$24,999 (13 states) U.S. average: $18,912 $20,000-$24,999 (9 states) $25,000-$53,999 (6 states) $25,000-$37,999 (7 states) NOTES: Includes full benefit enrollees. SOURCE: KFF and Urban Institute estimates based on data from FY 2011 MSIS and CMS-64 reports. NOTES: Includes full benefit enrollees. SOURCE: KFF and Urban Institute estimates based on data from FY 2011 MSIS and CMS-64 reports. Because FY 2011 data were unavailable, FY 2010 data were used for FL, KS, ME, MD, MT, NM, NJ, OK, TX, and UT. Because FY 2011 data were unavailable, FY 2010 data were used for FL, KS, ME, MD, MT, NM, NJ, OK, TX, and UT. State Variation in Medicaid Per Enrollee Spending for Seniors and People with Disabilities 2 disability-related coverage pathways and most home and community-based long-term care services are offered at state option. Figure 5 Figure 6 Medicaid spending per enrollee for seniors, FY 2011 State adoption of selected optional Medicaid eligibility pathways related to seniors and people with disabilities Number of states covering: WA VT ME MT ND NH MN 50 OR WI NY MA ID SD MI 44 44 WY CT RI PA NJ IA NE OH DE NV IL IN MD UT WV VA CO KS MO DC KY CA NC 21 TN OK AR SC AZ NM* MS AL GA TX LA FL AK Seniors and People with Katie Beckett or Buy-in for Working Special Income Rule for HI Disabilities >75-100% FPL Equivalent Waiver for People with Disabilties Long-Term Care Eligibility $10,000-$14,999 (11 states) Children with Disabilities Up to 300% SSI $15,000-$19,999 (20 states) U.S. average: $17,522 $20,000-$24,999 (8 states) $25,000-$32,999 (11 states) NOTES: Includes full benefit enrollees. *Excludes NM due to data quality issues. SOURCE: KFF and Urban Institute estimates based on data from FY 2011 MSIS and CMS-64 reports. Because FY 2011 data were unavailable, FY 2010 data were used for FL, KS, ME, MD, MT, NJ, OK, TX, and UT. SOURCE: Kaiser Family Foundation, Medicaid Financial Eligibility for Seniors and People with Disabilities in 2015 (March, 2016). Many age and disability-related coverage pathways are offered at state option (Figure 6 and Table 1), contributing to the variation among states in per enrollee spending for seniors and people with disabilities. Mandatory Medicaid eligibility for seniors and people with disabilities generally is limited to those receiving Supplemental Security Income (SSI) benefits (equivalent to 74% FPL, or $8,820 per year for an individual, in 2017).1 However, all states have expanded eligibility for seniors and people with disabilities by offering optional coverage pathways. As of 2015, 21 states have increased eligibility for seniors and individuals with disabilities above the SSI level up to a federal maximum of 100% FPL ($12,060 per year for an individual in 2017). Nearly all states offer an eligibility pathway for children with significant disabilities living at home without regard to parental income who would be Medicaid-eligible if institutionalized. Forty- four states allow working individuals with disabilities with income above eligibility limits to buy into Medicaid. Forty-four states allowed people in need of nursing facility care to qualify for Medicaid with income up to 300% of SSI ($26,460 per year for an individual in 2017), and nearly all of these states use the same expanded financial eligibility standard for people receiving long-term care in the community. Variation among states in spending per enrollee for seniors and people with disabilities also is influenced by different state choices about Figure 7 Medicaid-covered services, as most home and State adoption of selected optional Medicaid home and community-based long-term care services are community-based services offered at state option (Figure 7 and Table 1). Number of states covering: 51 Federal minimum long-term care benefits include nursing facility services and home health services for 32 those who qualify for nursing facility 17 services. Beyond federal minimum requirements, all 8 states offer some home and community-based Personal Care Services Section 1915 (c) or Section 1915 (i) Home Community First Choice services targeted to particular populations through Section 1115 Waiver and Community-Based Services Services Services optional Section 1915 (c) or equivalent Section 1115 waivers. Seventeen states offer targeted HCBS to SOURCE: KFF, Medicaid Financial Eligibility for Seniors and People with Disabilities in 2015 (March, 2016); KFF, Medicaid Home and Community-Based Services Programs: 2013 Data Update (Oct. 2016); KFF, State Health Facts, Section 1915(k) Community First Choice State Plan Option (March 2016). State Variation in Medicaid Per Enrollee Spending for Seniors and People with Disabilities 3 those at risk of future institutional care through the Section 1915 (i) state plan option as of 2015. In addition, 32 states offer personal care services as of 2013, and eight states offer Community First Choice attendant care services and supports as of 2016. Figure 8 Predominant Care Setting for Medicaid Beneficiaries Using The share of Medicaid enrollees receiving Long-Term Care Services, FY 2011 community-based, as opposed to Community Institutions institutional, long-term care services varies 0.2 million 1.5 million 1.9 million by population (Figure 8). Most children with disabilities (88%) and nonelderly adults with 50% 79% 88% disabilities (79%) receiving Medicaid long-term care services reside in the community, with the remainder 50% in institutions. Equal shares of seniors receiving 12% 21% Medicaid long-term care services reside in the Children with Disabilities Nonelderly Adults with Seniors Disabilties community and in institutions. NOTE: Individuals who used both institutional and community-based services in the same year are classified as using institutional services. SOURCE: KFF and Urban Institute estimates based on MSIS and CMS-64 FY 2011 data. Looking Ahead Seniors and people with disabilities account for a minority (23%) of Medicaid program enrollment but a majority (64%) of spending. This is due to their greater health and long-term care needs and more intensive services use compared to adults and children whose eligibility is not based on old age or disability. Medicaid per enrollee spending for both acute and long-term care services is substantially higher for seniors and people with disabilities compared to nonelderly adults and children without disabilities. Many of these services, especially long-term care in the community and nursing homes, are generally unavailable through private insurance and too costly to afford out-of-pocket. Medicaid spending per enrollee for seniors and people with disabilities also varies substantially across states and reflects the fact that many eligibility pathways and services relevant to seniors and people with disabilities are optional. Medicaid’s financing structure, which allows federal spending to increase as state spending increases, accommodates state policy choices about optional populations and services. Current program financing also ensures that federal spending will be available as state spending increases due to new drug therapies or other medical advances yet to be developed that could offer important new treatments for seniors and people with disabilities and to help states meet their obligation to serve people in the community instead of institutions under the Americans with Disabilities Act and the Supreme Court’s Olmstead decision. Changing federal Medicaid financing to a per capita capped allotment beginning in FY 2020, and repealing the Medicaid expansion as proposed in the American Health Care Act, would result in an estimated $839 billion reduction in federal Medicaid spending from 2017 to 2026, according to the Congressional Budget Office (CBO). The CBO decreased its initial estimate of $880 billion less in federal Medicaid spending over the 10- year period, which amounts to a reduction of about 25% by 2026, compared to current law, by an additional $41 billion to account for the effects of the House manager’s policy amendment. The amendment would increase states’ annual per capita allotments for enrollees in the elderly and blind/disabled categories by medical-CPI plus one percentage point beginning in FY 2020, while the allotments for children, expansion adults, and other adults would increase by medical-CPI. The CBO projects that Medicaid spending per enrollee will grow at a faster average annual rate than medical-CPI (4.4% vs. 3.7%) between 2017-2026. However, the State Variation in Medicaid Per Enrollee Spending for Seniors and People with Disabilities 4 inflationary factor to adjust state spending from the FY 2016 base year to FY 2019 when determining initial per capita cap funding levels remains at medical-CPI for all groups; the additional percentage point for the elderly and blind/disabled groups is not included in that calculation. A per capita cap could lock in historical state differences in the scope of coverage and spending for seniors and people with disabilities. Tying Medicaid spending levels to a base year under a per capita cap also does not account for future spending increases due to new drug therapies or other medical advances yet to be developed and which could offer important new treatments for seniors and people with disabilities. Finally, seniors and people with disabilities may be especially affected by a per capita cap as most age and disability-related coverage pathways and many important services, such as community-based long-term care, are provided at state option, making them subject to potential cuts if states are faced with federal funding reductions. Appendix Table 1: State Variation in Medicaid Per Enrollee Spending, Eligibility, and Services for Seniors and People with Disabilities State Spending Per Enrollee, FY 2011 Optional Eligibility Pathways, 2015 Optional HCBS Children Nonelderly Seniors 100% Katie Work LTC Pers. Sec. CFC, with Adults with FPL Beckett Dis. Special Care 1915 2016 Disabilities Disabilities or Buy In Income Serv., (i), equiv. Rule 2013 2015 waiver Alabama $11,020 $9,903 $18,473 X X Alaska $32,734 $28,151 $24,288 X X X X Arizona $32,303 $19,300 $16,145 X X X X Arkansas $14,317 $13,894 $20,484 X X X X X California $24,909 $19,268 $12,019 X X X X X X Colorado $17,834 $20,045 $18,478 X X X X Connecticut $17,273 $31,039 $30,560 X X X X X Delaware $20,091 $24,136 $27,666 X X X X X DC $21,952 $29,948 $27,336 X X X X X X Florida $13,373 $15,584 $14,253 X X X X X Georgia $7,829 $11,475 $14,142 X X X Hawaii $21,472 $16,574 $18,439 X X Idaho $23,073 $21,426 $15,558 X X X X X X Illinois $12,534 $16,941 $11,431 X X X Indiana $14,827 $20,151 $21,269 X X X X X Iowa $21,263 $20,036 $21,163 X X X X Kansas $14,282 $17,875 $18,328 X X X X Kentucky $12,442 $12,954 $15,757 X X X Louisiana $11,264 $16,235 $15,491 X X X X X Maine $22,424 $16,270 $19,881 X X X X X Maryland $20,678 $24,415 $23,491 X X X X X X Massachusetts $10,351 $19,146 $27,205 X X X X X Michigan $16,994 $14,784 $17,599 X X X X X X Minnesota $25,425 $27,159 $25,030 X X X X X Mississippi $11,963 $13,260 $18,592 X X X X Missouri $20,759 $17,370 $17,020 X X X Montana $21,203 $15,549 $26,704 X X X X X X Nebraska $17,451 $17,449 $14,997 X X X Nevada $12,391 $16,762 $13,226 X X X X X New $53,557 $21,313 $26,794 X X X X X Hampshire State Variation in Medicaid Per Enrollee Spending for Seniors and People with Disabilities 5 New Jersey $18,759 $20,217 $19,160 X X X X X New Mexico $21,966 $17,661 N/A X X X X New York $20,082 $37,132 $28,336 X X X X X North Carolina $17,971 $14,403 $10,518 X X X X North Dakota $18,360 $29,813 $31,155 X X X Ohio $15,499 $22,768 $27,494 X X X X Oklahoma $14,460 $15,117 $12,315 X X X X Oregon $18,737 $18,180 $24,253 X X X X X X Pennsylvania $16,634 $16,372 $21,372 X X X X Rhode Island $30,043 $19,588 $16,998 X X X X X South Carolina $13,366 $12,707 $12,256 X X X South Dakota $16,689 $19,816 $16,374 X X X X Tennessee $6,945 $16,044 $15,745 X X Texas $18,261 $17,503 $14,739 X X X X Utah $21,683 $19,391 $11,763 X X X X X Vermont $42,030 $13,967 $14,258 X X X X Virginia $15,418 $19,681 $16,367 X X X X Washington $17,152 $16,072 $16,183 X X X X X West Virginia $14,045 $12,867 $23,243 X X X X Wisconsin $9,950 $18,130 $16,344 X X X X X Wyoming $18,684 $26,830 $32,199 X X X United States $16,758 $18,912 $17,522 21 50 44 44 32 17 8 states states states states states states states NOTES: Spending per enrollee includes full benefit enrollees. All spending per enrollee categories exclude those in ME enrolled only in Q4 and seniors excludes NM due to data quality issues. SOURCE: KFF & Urban Institute estimates based on data from FY 2011 MSIS & CMS-64 reports. Because FY 2011 data were unavailable, FY 2010 data were used for FL, KS, ME, MD, MT, NM, NJ, OK, TX, & UT. KFF, Medicaid Financial Eligibility for Seniors and People with Disabilities in 2015 (March, 2016). KFF, Medicaid Home and Community-Based Services Programs: 2013 Data Update (Oct. 2016). KFF, Medicaid Section 1115 Managed Long-Term Services and Supports Waivers: A Survey of Enrollment, Spending, and Program Policies (Jan. 2017). KFF, State Health Facts, Section 1915(k) Community First Choice State Plan Option (March 2016). . Endnotes 1 As of 2015, 10 states elect the § 209(b) option to use disability or financial eligibility standards that are more restrictive than the federal SSI rules, so long as the state’s rules are not more restrictive than those in effect in January 1972. Section 209(b) states must allow SSI beneficiaries to establish Medicaid eligibility through a spend-down by deducting unreimbursed out-of-pocket medical expenses from their countable income. Section 209(b) states also must provide Medicaid to children who receive SSI and who meet the state’s financial eligibility rules for the AFDC program as of July 16, 1996. In addition to covering SSI beneficiaries, states also must offer Medicare Savings Programs through which low-income Medicare beneficiaries with incomes generally below 135% FPL (or about $16,000 per year for an individual in 2016) receive Medicaid assistance with some or all of their Medicare premiums, deductibles, and other cost-sharing requirements (these “partial dual eligible” beneficiaries do not receive Medicaid benefits). The Henry J. Kaiser Family Foundation Headquarters: 2400 Sand Hill Road, Menlo Park, CA 94025 | Phone 650-854-9400 Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270 www.kff.org | Email Alerts: kff.org/email | facebook.com/KaiserFamilyFoundation | twitter.com/KaiserFamFound Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.