Health Affairs Forum

Medicaid at 50: Growth Continues Amid Challenges

July 14, 2015 04:15 pm Michael Laff Washington, D.C. –

For decades, Medicaid was misrepresented simply as "health care for the poor." But today, because of the joint state-federal program's growing size and the widening range of individuals who receive care through the program, including children and the disabled, Medicaid resists such easy labels.

Nadereh Pourat, Ph.D., M.S.P.H., a professor at the University of California, Los Angeles, Fielding School of Public Health, speaks recently during a Health Affairs panel discussion on the evolution of Medicaid.

Changes to national health policy mean Medicaid, which will hit its 50th anniversary on July 30, is evolving into a public-private insurance plan that now enrolls an estimated 71 million people. Health Affairs convened a panel of analysts this month to discuss what that evolution means for the delivery of health care.

"Integrated Partnership"

"We can no longer call Medicaid a federal program or a state program," said Michael Sparer, Ph.D., J.D., chair of Columbia University's Department of Health Policy and Management. "It's an integrated partnership."

And that partnership now has to factor in the expansion of eligibility to individuals with higher incomes in several states under the Patient Protection and Affordable Care Act (ACA). The increase in beneficiaries raises the question of whether there is a shortage of primary care physicians or simply a shortage of those who are willing to take on more Medicaid patients.

Story highlights
  • Experts at a Health Affairs event this month discussed the evolution of Medicaid as the program approaches its 50th anniversary.
  • Narrow insurance networks and low reimbursement rates create obstacles to health care delivery as more individuals enroll in Medicaid.
  • Addressing problems on the federal level rather than state by state could improve Medicaid for physicians and beneficiaries, panelists said.

According to panelist Nadereh Pourat, Ph.D., M.S.P.H., a professor at the University of California, Los Angeles, Fielding School of Public Health, the ACA has not affected the primary care shortage. Instead, she pointed to narrow insurance networks and said insurers create an obstacle when they choose which physicians are in their plans.

In a paper published this month in Health Affairs titled "In California, Primary Care Continuity Was Associated With Reduced Emergency Department Use And Fewer Hospitalizations,"( Pourat said individuals who have gone long periods without a primary care physician will often seek health care at the first place they can get an appointment, leading to fragmented care and higher rates of hospital admissions and ER visits.

Panelist Randall Cebul, M.D., director of the Case Western Reserve University-MetroHealth System Center for Health Care Research and Policy, looked at the issue of a primary care shortage from another perspective.

"Are there enough doctors to care for the Medicaid population?" asked Cebul. "Yes. Are there enough physicians who want to care for the Medicaid population? No. It's not as though the doctors aren't there."

Low reimbursement rates leave many physicians reluctant to take on a significant number of Medicaid beneficiaries. The program pays only 66 percent of Medicare rates overall and only 58 percent of Medicare rates for primary care. More physicians had been willing to accept new Medicaid patients before the Medicare-Medicaid parity payment for certain services provided by primary care physicians -- a program created by the ACA -- ended Dec. 31, 2014.

Overall, uncompensated care cost an estimated $74 billion in 2013, and physicians covered 14 percent of that.

Shaping Medicaid's Growth

Medicaid grew slowly at first, with enrollment still below 20 million in the early 1980s, but that growth has increased rapidly since the mid-1990s despite obstacles such as low payment, social stigma and a high number of eligible individuals who have not enrolled, said Sparer.

Still, expansion and acceptance remains slow in some states. Arizona, for example, did not create a Medicaid program until 1982, 17 years after initial federal passage. But Sparer said the shared management of Medicaid between the federal and state governments benefits states.

"Medicaid allows states to do good during a strong economy while the federal government pays the bill," Sparer said.

Sparer predicted that all 21 states that have so far declined to expand Medicaid will eventually do so, but not until after the 2016 presidential election. Early returns suggest that expansion reduces costs. In Connecticut, the cost of hospital uncompensated care dropped by one-third because of Medicaid expansion, according to a study published this month in Health Affairs, "Early Medicaid Expansion in Connecticut Stemmed the Growth in Hospital Uncompensated Care."(

Sparer said he expects the difference between Medicaid and the state insurance exchanges introduced under the ACA to blur over time until health insurance becomes a single public initiative.

Similarly, other panelists intimated that the state exchanges could transition into a more uniform network of some type.

"After we get past the point of political palatability, are we going to continue to have 50 different programs?" asked Nicole Huberfeld, J.D., a professor at the University of Kentucky College of Law. "The answer has to be no."

The problem of tying funding to state budgets can be seen in the Medicare-Medicaid parity payment, which only a handful of states continued to provide after Congress let it expire at the close of 2014.

"States are balancing their budgets on the backs of Medicaid beneficiaries," Huberfeld said.

Possible Path to Higher Payments

Although the U.S. Supreme Court's March decision in Armstrong v. Exceptional Child Center Inc.( didn't generate nearly as many headlines as did this summer's King v. Burwell ruling on health insurance subsidies, that earlier case carried a heavy influence on Medicaid payments. The court ruled in Armstrong that Medicaid providers cannot sue states for higher reimbursements.

Considering that ruling, Sparer suggested that one route to increased Medicaid payments may be the growth of consolidated insurance plans and health systems. Large managed care plans could use their leverage to negotiate for higher rates in a way that smaller institutions could not, even through litigation.

And Huberfeld said decisions on Medicaid payments or eligibility should not be made at the state level, where the program is often the victim of other budget priorities.

"States are not a good proxy for any health care policy," said Huberfeld. "It has to be made at the federal level."

Some panelists said payment disputes are a relic of the fee-for-service model, but Huberfeld said the Armstrong decision reflects a larger problem of Medicaid policy not being respected.

"It doesn't matter what the payment delivery system is if the legislature is not willing to pay," she said. "If the state is not following its own rules regarding payment, then that is a problem."

Related AAFP News Coverage
Medicaid Parity Is Key Topic CMS Official Addresses in Meeting With FPs


Ask the Expert
Is Medicaid Parity Achieving Goal of Boosting Primary Care Access?