Why Medicaid Matters to People with Medicare

Medicare and Medicaid, which together serve over 95 million Americans,[1] or nearly one third of the U.S. population, are our two major national public health insurance programs offering secure and stable access to health care for beneficiaries, and peace of mind for their families.

Last month's upset victory by Democrat Kathy Hochul in a traditionally Republican New York Congressional district signaled that the Republican proposal to end the guaranteed benefit structure of Medicare is not popular with the American public.  Nonetheless, Medicare remains threatened by proposals to impose global or health care spending caps. Previous CMA Alerts have focused on Medicare proposals, including the Center for Medicare Advocacy's own recommendations to promote Medicare's solvency.

Medicare has received most of the recent headlines regarding proposals from Congress and the Administration to reduce the federal deficit and raise the federal debt ceiling. Proposals to restructure Medicaid have been receiving less attention than those about Medicare.  But Medicaid, which serves nearly 60 million American − older people, people with disabilities, pregnant women, children and their families – may well be more threatened than Medicare.  The good news is that more than 50% of all Americans either have received services through Medicaid or have a friend or family member who has.[2] This means that most Americans know something about Medicaid and its importance to them, their families and friends.

Medicare and Medicaid – Inextricably Intertwined

Protecting Medicare from deep budget cuts without also protecting Medicaid will be insufficient and unacceptable for the nearly nine million low-income Medicare beneficiaries who depend on Medicaid to help them pay Medicare's significant premiums and cost-sharing[3] and to pay for services erroneously denied or excluded from Medicare coverage, including nursing home care and community-based long-term supports and services.

The nine million Medicare beneficiaries who are eligible for some Medicaid coverage are generally poorer and sicker than the general Medicare population and thus require more health services.  They comprise 21% of Medicare enrollees, and use 36% of Medicare dollars.[4] They comprise 15% of Medicaid enrollees and use 40% of Medicaid dollars.[5]  Medicaid is critical to the health and well-being of these individuals and their families.

• Medicare's Out-of-Pocket Costs – Medicaid pays for all of Medicare's cost-sharing for about four million Medicare beneficiaries and pays the Part B premium – generally more than $1,300 in 2011 – for more than eight million beneficiaries.  Most of these people have incomes of less than $1,200 month.  Under current Medicaid law, states are required to pay these costs for the poorest Medicare beneficiaries, but with block grants to states or annual spending caps, as have been proposed, states would likely have greater flexibility to discontinue making such payments.

• Long-Term Care Supports and Services — More than 10 million people in the U.S. have long term care needs and more than 80% of those people live in the community.[6] Families spend billions of dollars in care-giving that is never reimbursed by any public program.  AARP estimated the value of unpaid care-giving at $350 billion in 2006.[7]  Medicare pays for only about one-quarter of spending for long-term care.  When family resources are exhausted or in need of additional support, Medicaid steps in.

• Nursing Facility Services – Medicaid pays for some of the care of 70% of all nursing home residents, most of whom are also eligible for Medicare.[8]  A study of the costs of nursing home care, released April 21, 2011 by John Hancock Financial, reports that "the national average annual cost of care in the U.S. is $85,775 for a private room in a nursing home; $75,555 for a semi-private room in a nursing home."[9]

  Nursing home residents who are eligible for Medicaid still pay a considerable portion of the costs for their care.  They are required to contribute virtually all of their income toward the cost of their nursing home care, usually retaining only a small monthly personal needs allowance.[10]  In addition, states can recapture the cost of a Medicaid resident's nursing home care by placing a lien on the resident's property and by collecting from the resident's estate after the resident's death.[11]

• Home and Community-Based Services – Increasingly, Medicaid is paying for long-term care supports and services in the community in addition to paying for care in nursing facilities. Care in the community is generally less expensive than nursing home care, but still costly:  home health care averages $21/hour.[12]  As with nursing home care, home and community based services are paid for by Medicaid only for those with limited income and resources and only if they qualify medically as needing such services.

  Medicaid long-term care coverage includes financial protections for families, including prohibitions against states requiring family members to contribute to the cost of care, prohibitions on providers asking for payment above the Medicaid rate, and prohibitions on recovering money from beneficiaries’ estates while certain family members are dependent.  These protections would disappear or be diluted under a block grant or capped spending proposal.  Similarly, quality of care, quality of life and residents' rights protections in nursing homes are threatened by such proposals.

Real People Depend On Medicaid to Pay for Medicare or to Provide Coverage When Medicare is Denied

The Center for Medicare Advocacy represents thousands of dually eligible people who need help paying their Medicare cost-sharing or who have been denied Medicare coverage. These older and disabled people would go without necessary health care if they did not have Medicaid to help pay for their Medicare or to rely on when Medicare denies coverage – often erroneously. 

Although our clients may eventually win coverage on appeal, the vast majority of dually-eligible people lack representation, and do not appeal Medicare denials.  They depend on Medicaid to pay for necessary health care.  The ability to fall back on Medicaid payment when Medicare coverage is denied, or is no longer available, is also a blessing for families. Without Medicaid, families of frail older and disabled people would have to try to find the resources to pay for their loved-ones' care, see them go without the care they need, or try to provide it themselves.

Examples of Medicare beneficiaries who would go without health care if they did not have Medicaid include the following:

• Ms. M is an 80 year old resident of Maine. She was paralyzed in a farm accident in 1948.  Because the only Medicare certified home health agency in her area determined that she would not be covered under Medicare, she could not receive home care. Since she is dually eligible, Ms. M was able to obtain some of the care she requires with payment from Medicaid and remain at home.
• Ms.  J is 75 years old and lives in Vermont. She is a Medicare beneficiary, but was denied coverage for her home health care because she has a chronic condition.  If she did not also have Medicaid coverage, Ms. J would be without her home health services and would be unable to remain at home.
• Ms. K is a resident of Connecticut who has congestive heart failure. She was denied coverage for her home health care by Medicare but was able to continue getting home health care with Medicaid payment while she sought Medicare coverage on appeal.  Without Medicaid coverage she could not have paid for this care, which included nursing services for draining leg ulcers. 
• KR is a 51 year old resident of Vermont and is severely disabled. Medicare denied coverage for her home health physical therapy and other home health services.  Fortunately, KR also qualifies for Medicaid, which paid for her home health care, allowing her to stay at home and receive necessary physical therapy.
• Ms. H. is a 56 year old Connecticut resident with bipolar schizoaffective disorder. She was denied coverage by Medicare for medically necessary nursing home care after a two week hospitalization for acute psychosis in order to attempt to stabilize her psychiatric condition. She was not able to manage in the community.  Ms. H was only able to get the nursing facility care she required because she is also eligible for Medicaid which paid for her care.
• Ms. G, a 66 year old resident of Pennsylvania, received monthly Social Security benefits of $695 (77% of Federal Poverty Level) in 2009.  Because her income was so low, Florida, where she had lived before, paid her Medicare premiums through its Medicaid program. When she moved from Florida to Pennsylvania in October 2008, she lost her Medicaid help in paying for her Medicare premiums, through no fault of her own.  Ms. G's Social Securitychecks were reduced to $406.20 (45% of poverty) to pay her Medicare premiums.  Because Medicaid is required to pay for her Medicare premiums, advocates were able to get her Medicaid restored and her check restored to its original amount.

Clearly, Medicaid matters.