Medicaid Everyone Can Count On: Public Choices for Equity and Efficiency

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A comprehensive policymaker's guide to the Medicaid program, Medicaid Everyone Can Count On offers unique insights into the complex interactions among stakeholders in America’s state-based public health care programs. In an era of national health care reform, this volume is an invaluable resource for federal and state lawmakers and program analysts tasked with crafting policies that balance the distinct needs of taxpayers, providers, and the poor. Working from theory to practice, Thomas W. Grannemann and Mark V. Pauly develop an approach to Medicaid policy based on a keen understanding of the forces that have shaped the program. They begin by examining the program’s intellectual foundations—American altruism and the principles of equity, efficiency, and democracy. They then ask the question: What are the inherent strengths and weakness of the American approach to financing medical care for the poor? The answers it turns out have direct implications for how best to approach implementing health reforms that would extend eligibility, control costs, and provide better value both to program recipients and to taxpayers. Building on the theory of public choice and economic analysis, the authors offer new perspectives on the program and its flaws, including unequal benefits among the states, federal funding that is poorly matched to state needs and resources, and disparities in payment to health care providers. To correct these flaws reform initiatives need to focus on two leverage points—federal financing and provider payment—that control the flow of resources and influence the behavior of states and medical care providers. The authors offer suggestions for using these tools to address policy issues in areas such as eligibility, benefits, care management, provider incentives, and federal assistance to the states. At this transitional point in the program’s history, Grannemann and Pauly provide a consistent framework for thinking about Medicaid policy, one which has many practical implications for policy
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Product Details

  • ISBN-13: 9780844743110
  • Publisher: American Enterprise Institute for Public Policy Research
  • Publication date: 3/15/2010
  • Pages: 392
  • Product dimensions: 6.30 (w) x 9.10 (h) x 1.60 (d)

Meet the Author

Mark V. Pauly is Bendheim Professor in the Department of Health Care Management, professor of health care management, insurance and risk management, and business and public policy at the Wharton School, and professor of economics in the School of Arts and Sciences at the University of Pennsylvania. Thomas W. Grannemann is Associate Regional Administrator for Medicare Financial Management and Fee for Service Operations in the Boston Regional Office of the U.S. Centers for Medicare and Medicaid Services.
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Table of Contents

List of Illustrations xi

Acknowledgments xv

Authors' Note xvii

Introduction 1

Part I Keys to Understanding Medicaid 11

1 Financing Care for the Poor in a Democracy 13

Medicaid Was Made in America 13

Medicaid Depends on Altruism, Not Solidarity 14

Medicaid Reflects Public Choices 19

Medicaid Is Tied to the U.S. Health Care System 20

Medicaid Spending Is Unequal among States 23

2 Medicaid's Roles in Our Health Care System 26

Medicaid Is Both Expenditure and Revenue 26

Medicaid's Roles Change Over Time 36

Medicaid Embodies a Set of Implicit Promises 41

Medicaid Promises as a Framework for Enlightened Policymaking 45

Conclusion to Part 1: Fundamental Policy Questions 47

Part II Making and Meeting Promises to the Poor 49

3 Ensuring Access for the Poor Population 51

Disadvantaged Populations 51

Interstate Equity in Eligibility and Benefits 54

Differences in Benefit Levels among the States 55

Equity, Efficiency, and Recipient Income 67

The Questionable Value of Higher Spending 73

4 Medicaid and Care Management 76

Managing Benefits 76

Cost-Sharing and Medicaid 82

Acute Care Management 85

Medicaid Managed Care 91

Long-Term Care Management 100

Concluding Note on Care Management 105

5 Achieving High-Value Care for the Poor 106

Priorities for Care 107

Recommendations for Managing Eligibility and Benefits 109

Conclusion to Part 2: Achieving Access, Control, and Value 119

Part III Making and Meeting Promises to Voter-Taxpayers 121

6 Medicaid Financing as a Product of Democracy 124

The Median Voter Model of Public Spending 126

Medicaid Budgets 131

Desirable Characteristics of Federal-State Financing 134

Conclusion 137

7 Medicaid Financing for Taxpayer Equity 139

Redistribution Effects of Medicaid and CHIP 139

Adjusting Federal Matching to Achieve Medicaid Equilibrium 144

Federal-State Financing Options 147

Conclusion 154

8 Recommendations for Revising Federal Financing 156

Rationale for Changing the Matching-Rate Structure 156

Optimal Matching Rates 157

Categorical Matching Rates 159

Equal-Burden-for-Equal-Benefit Matching 162

Countercyclical Adjustments 172

Expected Effects and Advantages of the Proposed Structure 176

9 Medicaid Financing for Accountability 177

Supplemental Payments and State Financing Arrangements 177

Questionable Financing Arrangements 178

Program Integrity 189

Conclusion 193

Conclusion to Part 3: A Basic Promise: Protecting Taxpayer Interests in Medicaid 194

Part IV Promises to Providers-Payment Policies and Strategies 197

10 Provider Payment in a Democracy 199

Developing a State Medicaid Provider Payment Strategy 200

Payment Requirements and Objectives 202

Medicaid's Relationships with Providers 204

Medicaid Provider Payment Strategies 209

Conclusion 213

11 Medicaid Payment for Provider Equity 215

Why States Can Set Medicaid Payment Rates Low 216

Can Medicaid Shift Costs? 218

Achieving an Equitable Distribution of Payments 228

Conclusion 231

12 Implementing Payment Policy 233

Rate-Setting Methods 233

Provider Payment Issues by Type of Provider 243

Conclusion 249

13 Gaining Control of Provider Payment 250

Provider Payment for Accountability 250

Recommendations for Reforming Provider Payment Methods 257

Conclusion 267

Conclusion to Part 4: Payment to Shape the Delivery System, of the Future 269

Part V Promises to the Near Poor-CHIP and Fiscal Federalism 271

14 From SCHIP to CHIP-Eonomics, Politics, and Policy 273

Background 274

Explaining the Unexplainable 277

What to Do and Why 281

Crowd-Out, Take-Up, and Efficiency 284

EBEB Matching and CHIP 287

CHIP Renewal and Expansion in 2009 288

Conclusion to Part 5: Implications of Subsidizing Coverage for the Near Poor 289

Conclusion 291

Key Policy Choices 292

Managing the Policymaking Process 296

What Is Required of Policymakers 308

Appendix 1 State Tables 313

Appendix 2 Equal-Burden-for-Equal-Benefit Matching Rates 329

Examples Illustrating EBEB Possibilities 331

Notes 347

References 359

Index 371

About the Authors 391

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