Peer Reviewed: State-Level Medicaid Expenditures Attributable to Smoking

Introduction

Medicaid recipients are disproportionately affected by tobacco-related disease because their smoking prevalence is approximately 53% greater than that of the overall US adult population. This study estimates state-level smoking-attributable Medicaid expenditures.

Methods

We used state-level and national data and a 4-part econometric model to estimate the fraction of each state''s Medicaid expenditures attributable to smoking. These fractions were multiplied by state-level Medicaid expenditure estimates obtained from the Centers for Medicare and Medicaid Services to estimate smoking-attributable expenditures.

Results

The smoking-attributable fraction for all states was 11.0% (95% confidence interval, 0.4%-17.0%). Medicaid smoking-attributable expenditures ranged from $40 million (Wyoming) to $3.3 billion (New York) in 2004 and totaled $22 billion nationwide.

Conclusion

Cigarette smoking accounts for a sizeable share of annual state Medicaid expenditures. To reduce smoking prevalence among recipients and the growth rate in smoking-attributable Medicaid expenditures, state health departments and state health plans such as Medicaid are encouraged to provide free or low-cost access to smoking cessation counseling and medication.     

Medicaid physician payment reform: using the Medicare Fee Schedule for Medicaid payments.

OBJECTIVES. The purpose of this article is to provide estimates of the costs of basing Medicaid physician payment levels on the new resource-based Medicare Fee Schedule. Two possible policy options are considered: setting all Medicaid physician fees at the Medicare Fee Schedule level and setting only office visit fees at the new Medicare levels. METHODS. Data on Medicaid physician fees, use patterns, and the Medicare Fee Schedule are used to develop state-level estimates of expenditure changes under each option. RESULTS. Setting Medicaid rates at the Medicare Fee Schedule level could increase expenditures by $3.2 to $4.1 billion nationally; the other option would result in substantially lower increases in expenditures. Because of the current variations in Medicaid physician fees and in the breadth of eligibility across states, the cost of adopting the Medicare Fee Schedule varies considerably among states. CONCLUSIONS. Adopting the new Medicare Fee Schedule for Medicaid payments, proposed by policy-makers as a way to increase access to appropriate medical care, could double physician expenditures in some states. Adoption of more limited versions of the fee schedule might achieve some access gains at lower costs.     

Excluded from universal coverage: ESRD patients not covered by Medicare

Medicaid is believed to serve as the major insurer for end stage renal disease (ESRD) patients who are ineligible for Medicare coverage. Demographics, receipt of dialysis services, and costs of Medicaid-only populations were compared with Medicare ESRD populations in California, Georgia, and Michigan. Notable differences in patient demographics, dialysis practice patterns, and inpatient health resource utilization between the Medicaid and Medicare ESRD populations were observed. Medicaid expenditures for Medicare-ineligible ESRD patients were considerable: in 1991, California spent $46.4 million for 1,239 ESRD patients; Georgia and Michigan each spent nearly $5 million for approximately 140 ESRD patients.     

State-specific prevalence of obesity among adults--United States, 2005

Obesity, one of the 10 leading U.S. health indicators, is associated with increased risk for hypertension, dyslipidemia, type 2 diabetes, coronary heart disease, stroke, and certain cancers. A Healthy People 2010 objective is to reduce to 15% the prevalence of obesity among adults in the United States (objective 19-2). Both national-level data from the National Health and Nutrition Examination Survey (NHANES) and state-level data from the Behavioral Risk Factor Surveillance System (BRFSS) indicate that the prevalence of obesity among adults continued to increase during the past decade. In 2003, one study estimated that state-specific, obesity-attributable medical expenditures ranged from $87 million in Wyoming to $7.7 billion in California. To assess the prevalence of obesity among adults by state and demographic characteristics since 1995, data were analyzed from the 1995, 2000, and 2005 BRFSS surveys. The results of these analyses indicated that 23.9% of U.S. adults were obese in 2005, and the prevalence of obesity increased during 1995-2005 in all states. To reverse this trend, a sustained and effective public health response is needed, including surveillance, research, policies, and programs directed at improving environmental factors, increasing awareness, and changing behaviors to increase physical activity and decrease calorie intake.     

Medicaid support of alcohol, drug abuse, and mental health services

Medicaid expenditures for alcohol, drug abuse, and mental health (ADM) services in 1984 were examined for the States of California and Michigan. Persons receiving such services constituted 9 to 10 percent of the total Medicaid population in the two States and accounted for 22 to 23 percent of total Medicaid expenditures. ADM expenditures were 11 to 12 percent of the total. Although the two States had similar proportions of overall expenditures for these services, Michigan appeared to emphasize inpatient psychiatric care, while California emphasized ambulatory and nursing home care. Based on the experience of the two States, national Medicaid expenditures for ADM services exclusive of long-term care were estimated to be $3.5 to $4.9 billion in 1984, two to three times the level suggested by earlier estimates.     

Children Who Are Medically Fragile in North Carolina: Using Medicaid Data to Estimate Prevalence and Medical Care Costs in 2004

Objectives: The purpose of this paper is to demonstrate a method of using medical insurance paid claims and enrollment data to estimate the prevalence of selected health conditions in a population and to profile associated medical care costs. The examples presented here use North Carolina Medicaid data to produce estimates for children ages 0–19 who are medically fragile. These children with serious health conditions are a small subset of all children with special health care needs. Methods: The children who are medically fragile were identified through selected procedure and durable medical equipment codes. We profiled the expenditures for all medical services provided to these children during 2004. Results: 1,914 children ages 0–19 enrolled in Medicaid were identified as medically fragile (0.22 percent). The amount paid by Medicaid for these children during 2004 for all medical services was $133.8 million, or $69,906 per child. By comparison, the average expenditure by Medicaid during 2004 for a randomly selected group of children receiving well-child care visits was $3,181 per child. The $133.8 million of Medicaid expenditures for the children who are medically fragile represents 6.8 percent of the nearly $2 billion spent by Medicaid in 2004 for all medical services for all children ages 0–19. Conclusions: This study presents a standard methodology to identify children with specific health conditions and describe their medical care costs. Our example uses Medicaid claims and enrollment data to measure prevalence and costs among children who are medically fragile. This approach could be replicated for other health care payer data bases and also in other geographic areas.     

Effects of state Medicaid home care Medicare maximization programs on Medicare expenditures

Some state Medicaid programs have attempted to shift home health care costs to Medicare by using retrospective Medicare maximization billing practices. We used a two-part model with random effects to analyze whether retrospective billing practices increase Medicare expenditures for dual eligibles by analyzing primary data collected from 47 state Medicaid offices supplemented with Medicare Current Beneficiary Survey (MCBS) data from 1992-1997. Retrospective billing practices were projected to increase Medicare home health care expenditures by 73.8 million dollars over six years, although this was not statistically significant. We also found significantly higher Medicare spending in states with lower Medicaid spending levels, suggesting that states with high Medicaid utilization have potential to shift some of these expenditures to Medicare.     

Do public health activities pay for themselves? The effect of county‐level public health expenditures on county‐level public assistance medical care benefits in California

This study estimates the effect of county‐level public health expenditures in reducing county‐level public assistance medical care benefits (public assistance medical care benefits is a measure compiled by the US Bureau of Economic Analysis and includes Medicaid and other medical vendor payments). The effect is modeled using a static panel model and estimated using two‐stage limited information maximum likelihood and a valid instrumental variable. For every $1 invested in county‐level public health expenditures, public assistance medical care benefits are reduced by an average of $3.12 (95% confidence interval: ?$5.62, ?$0.94). Because Medicaid in California is financed via an approximate 50% match of federal dollars with state dollars, savings to the state are approximately one‐half of this, or $1.56 for every $1 invested in county‐level public health expenditures.     

Estimates of the direct and indirect costs of acquired immunodeficiency syndrome in the United States, 1985, 1986, and 1991

This study presents three estimates ranging from low to high of the direct and indirect costs of the acquired immunodeficiency syndrome (AIDS) epidemic in the United States in 1985, 1986, and 1991, based on prevalence estimates provided by the Centers for Disease Control (CDC). According to the author's best estimates, personal medical care costs of AIDS in current dollars will rise from $630 million in 1985 and $1.1 billion in 1986 and $8.5 billion in 1991. Nonpersonal costs (for research, screening, education, and general support services) are estimated to rise from $319 million in 1985 to $542 million in 1986 to $2.3 billion in 1991. Indirect costs attributable to loss of productivity resulting from morbidity and premature mortality are estimated to rise from $3.9 billion in 1985 to $7.0 billion in 1986 to $55.6 billion in 1991. While estimated personal medical care costs of AIDS in 1985 and 1986 represent only 0.2% and 0.3%, respectively, of such estimated expenditures for the U.S. population in these 2 years, they represent 1.4% of these estimated costs in 1991. Similarly, while estimated indirect costs of AIDS represent 1.2% in 1985 and 2.1% in 1986 of the estimated indirect costs of all illness, they are projected to rise to almost 12% in 1991. For estimating the indirect costs, the human capital method was used, and it was assumed that average wages and labor force participation rates of persons with AIDS were the same as those for the general population by age and sex.     

Use and cost of home health agency services under Medicare.

Presented are 1986 data and trend data (1974-86) on the use and cost of home health agency services rendered to aged and disabled Medicare beneficiaries. Since 1974, reimbursements for these services have grown more rapidly than overall Medicare expenditures. From 1974 to 1986, Medicare expenditures for these services increased from $141 million to $1.8 billion, an average annual rate of 24 percent. HHA reimbursements, however, continue to represent only a small proportion (3.6 percent in 1986) of all Medicare expenditures.     

The impact of Medicaid adoption of the Medicare fee schedule

In this article, the authors simulate the effects on Federal and State Medicaid expenditures of increasing Medicaid fees to Medicare fee schedule (MFS) levels. Strict adoption of the MFS by the States would increase total Medicaid spending by approximately 4 percent, $2.5 to $2.9 billion. Because Medicaid fees vary across States, so does the impact of adopting the MFS. Medicaid spending would increase significantly in some wealthy States with large Medicaid populations and in a few small, relatively poor States. Some States currently pay more than the MFS for obstetrical services. If these fees continued at higher levels for obstetrical care, total Medicaid spending would increase by $3.5 to $4.0 billion.     

Financing graduate medical education: an update and a suggestion for reform.

This article reports data pertinent to three issues in the financing of graduate medical education: sources of funds for house staff support, the financing of faculty salaries for educational activities, and reimbursement bias in favor of care provided in inpatient settings. Using data from a 1979 hospital survey, we estimate that total expenditures for house-staff stipends and fringe benefits were almost $1.6 billion. Eighty-seven percent of these funds were derived from patient care revenues. Faculty salaries for educational activities added another $376 million to the cost of graduate medical education. Teaching hospitals collected 81 percent of their charges for inpatient care, but only 72.8 percent of charges for outpatient care. However, Medicare and Medicaid reimbursed approximately the same proportion of charges in both settings. The article concludes by arguing that a unified-charge system for paying teaching hospitals would eliminate most of the issues currently associated with the financing of graduate medical education as matters of public policy.     

Financing graduate medical education: An update and a suggestion for reform

This article reports data pertinent to three issues in the financing of graduate medical education: sources of funds for house staff support, the financing of faculty salaries for educational activities, and reimbursement bias in favor of care provided in inpatient settings. Using data from a 1979 hospital survey, we estimate that total expenditures for house-staff stipends and fringe benefits were almost $1.6 billion. Eighty-seven percent of these funds were derived from patient care revenues. Faculty salaries for educational activities added another $376 million to the cost of graduate medical education. Teaching hospitals collected 81 percent of their charges for inpatient care, but only 72.8 percent of charges for outpatient care. However, Medicare and Medicaid reimbursed approximately the same proportion of charges in both settings. The article concludes by arguing that a unified-charge system for paying teaching hospitals would eliminate most of the issues currently associated with the financing of graduate medical education as matters of public policy.     

Estimates of the direct and indirect costs of acquired immunodeficiency syndrome in the United States, 1985, 1986, and 1991

This study presents three estimates--ranging from low to high--of the direct and indirect costs of the AIDS epidemic in the United States in 1985, 1986, and 1991, based on prevalence estimates provided by the Centers for Disease Control (CDC). According to what the authors consider their best estimates, personal medical care costs of AIDS in current dollars will rise from $630 million in 1985 to $1.1 billion in 1986 to $8.5 billion in 1991. Nonpersonal costs (for research, screening, education, and general support services) are estimated to rise from $319 million in 1985 to $542 million in 1986 to $2.3 billion in 1991. Indirect costs attributable to loss of productivity resulting from morbidity and premature mortality are estimated to rise from $3.9 billion in 1985 to $7.0 billion in 1986 to $55.6 billion in 1991. While estimated personal medical care costs of AIDS represent only 0.2 percent in 1985 and 0.3 percent in 1986 of estimated total personal health care expenditures for the U.S. population, they represent 1.4 percent of estimated personal health care expenditures in 1991. Similarly, while estimated indirect costs of AIDS represent 1.2 percent in 1985 and 2.1 percent in 1986 of the estimated indirect costs of all illness, they are estimated to rise to almost 12 percent in 1991. Estimates of personal medical care costs were based on data from various sources around the United States concerning average number of hospitalizations per year, average length of hospital stay, average charge per hospital day, and average outpatient charges of persons with AIDS. For estimating the indirect costs the human capital method was used, and it was assumed that average wages and labor force participation rates of persons with AIDS were the same as those for the general population by age and sex.     

Policy makers should prepare for major uncertainties in Medicaid enrollment, costs, and needs for physicians under health reform

The Affordable Care Act of 2010 will expand Medicaid to millions of Americans by 2014. How many enroll will greatly affect health care access, demand for clinicians, and the federal budget, yet the precision and validity of enrollment estimates made to date is unknown. We created a simulation model using two nationally representative data sets to determine the range of reasonable projections, estimating eligibility, participation, and population growth using prior research and our data. Our model predicted that the number of additional people enrolling in Medicaid under health reform may vary by more than 10?million, with a base-case estimate of 13.4?million and a possible range of 8.5?million to 22.4?million. Estimated federal spending for new Medicaid enrollees ranged from $34?billion to $98?billion annually, and we projected that 4,500-12,100 new physicians will be needed to care for new enrollees. In the end, Medicaid enrollment will be determined largely by the extent to which federal and state efforts encourage or discourage eligible people from enrolling. Yet our results indicate that policy makers should prepare to handle a broad range of contingencies and uncertainty in Medicaid expansion under health reform.     

Public savings from the prevention of unintended pregnancy: a cost analysis of family planning services in California

OBJECTIVE: To assess the short-term economic savings associated with the prevention of unintended pregnancies through California's Medicaid family planning demonstration project. DATA SOURCES: Secondary data from health and social service programs available to pregnant or parenting women at or below 200 percent of the federal poverty level in California in 2002 and data on the quantity and type of contraceptives dispensed to clients of California's 1115 Federal Medicaid demonstration project. STUDY DESIGN: The cost of providing publicly funded family planning services was compared with an estimate of public savings resulting from the prevention of unintended pregnancies. DATA COLLECTION: To estimate costs and participation rates in each health and social service program, we examined published program reports, government budgetary data, analyses conducted by federal and state level program managers, and calculations from national datasets. FINDINGS: The unintended pregnancies averted by California's family planning demonstration project in 2002 would have incurred $1.1 billion in public expenditures within 2 years and $2.2 billion within 5 years, significantly more than the $403.8 million spent on the project. Each dollar spent generated savings of $2.76 within 2 years and $5.33 within 5 years. CONCLUSIONS: The California 1115 Medicaid family planning demonstration project resulted in significant public cost savings. The cost of the project was substantially less than the public sector health and social service costs which would have occurred in its absence.     

Estimated economic costs of obesity to U.S. business.

OBJECTIVE: To estimate the economic costs of obesity to U.S. business. METHODS: Standard epidemiologic methods for risk attribution and techniques for ascertaining cost of illness were used to estimate obesity-attributable expenditures on selected employee benefits, including health, life, and disability insurance and paid sick leave by private-sector firms in the U.S. in 1994. Data were obtained from a variety of secondary sources, including the National Health Interview Survey, reports from the Bureau of Labor Statistics and other federal agencies, and the published literature. Attention was focused on employees between the ages of 25 and 64 years who were classified according to body mass index (BMI) as "nonobese" (BMI < 25 kg/m2), "mildly obese" (BMI = 25-28.9 kg/m2), or "moderately to severely obese" (BMI > or = 29 kg/m2). RESULTS: The cost of obesity to U.S. business in 1994 was estimated to total $12.7 billion, including $2.6 billion as a result of mild obesity and $10.1 billion due to moderate to severe obesity. Health insurance expenditures constituted $7.7 billion of the total amount, representing 43% of all spending by U.S. business on coronary heart disease, hypertension, type 2 diabetes, hypercholesterolemia, stroke, gallbladder disease, osteoarthritis of the knee, and endometrial cancer. Obesity-attributable business expenditures on paid sick leave, life insurance, and disability insurance amounted to $2.4 billion, $1.8 billion, and $800 million, respectively. CONCLUSIONS: The health-related economic cost of obesity to U.S. business is substantial, representing approximately 5% of total medical care costs. Further research is needed to determine the cost-effectiveness of worksite weight management programs and of other efforts to reduce the prevalence of obesity in the U.S. workforce.     

Medical expenditures during the last year of life: findings from the 1992-1996 Medicare current beneficiary survey

OBJECTIVE: To compare medical expenditures for the elderly (65 years old) over the last year of life with those for nonterminal years. DATA SOURCE: From the 1992-1996 Medicare Current Beneficiary Survey (MCBS) data from about ten thousand elderly persons each year. STUDY DESIGN: Medical expenditures for the last year of life and nonterminal years by source of payment and type of care were estimated using robust covariance linear model approaches applied to MCBS data. DATA COLLECTION: The MCBS is a panel survey of a complex weighted multilevel random sample of Medicare beneficiaries. A structured questionnaire is administered at four-month intervals to collect all medical costs by payer and service. Medicare costs are validated by claims records. PRINCIPAL FINDINGS: From 1992 to 1996, mean annual medical expenditures (1996 dollars) for persons aged 65 and older were $37,581 during the last year of life versus $7,365 for nonterminal years. Mean total last-year-of-life expenditures did not differ greatly by age at death. However, non-Medicare last-year-of-life expenditures were higher and Medicare last-year-of-life expenditures were lower for those dying at older ages. Last-year-of-life expenses constituted 22 percent of all medical, 26 percent of Medicare, 18 percent of all non-Medicare expenditures, and 25 percent of Medicaid expenditures. CONCLUSIONS: While health services delivered near the end of life will continue to consume large portions of medical dollars, the portion paid by non-Medicare sources will likely rise as the population ages. Policies promoting improved allocation of resources for end-of-life care may not affect non-Medicare expenditures, which disproportionately support chronic and custodial care.     

Do Medicaid home and community based service waivers save money?

This article estimates the potential savings to the Medicaid program of using 1915c Home and Community Based Services (HCBS) waivers rather than institutional care. For Medicaid HCBS waiver expenditures of $25 billion in 2006, we estimate the national savings to be over $57 billion, or $57,338 per waiver participant in 2006 compared with the cost of Medicaid institutional care (for which all waiver participants are eligible). When taking into account a potential 50% "woodwork effect" (for people who might have refused institutional services), the saving would be $21 billion. This analysis demonstrates that HCBS waiver programs present significant direct financial savings to Medicaid long-term care (LTC) programs.