Urban Institute Examines Recent Health Policies for Low-Income People in Five States

The Urban Institute has released five reports describing the status of health care financing in California, Massachusetts, Minnesota, New Jersey and Wisconsin, focusing on states' Medicaid and CHIP programs. The reports are part of a series produced for the institute's Assessing the New Federalism project (Assessing the New Federalism release, 4/11). The following is a summary of each report's findings:

• California: Over the past several years, the state has expanded Medi-Cal and Healthy Families, its Medicaid and CHIP programs. Income eligibility limits under Medi-Cal have increased from 74% to 100% of the federal poverty level for adults; 84% to 133% for people with disabilities; and up to 250% of the poverty level for working individuals with disabilities. Healthy Families has expanded coverage to children ages one to 19 with annual household incomes between 100% and 250% of poverty and has received federal approval to cover parents with incomes between 100% and 200% of poverty. The state increased payments to Medi-Cal providers by $800 million in fiscal year 2001 and created a Department of Managed Health Care in 2000. The report states future increases in Medi-Cal enrollment are likely to create "difficult policy tradeoffs" for the state (Lutzky/Zuckerman, "Recent Changes in Health Policy for Low-Income People in California," March 2002). The full report is available online.
• Massachusetts: An expansion of MassHealth, the state's Medicaid program, and high rates of employer-sponsored health insurance have "dramatically reduced" the number of uninsured Massachusetts residents. In 2000, only 6% of adults were uninsured, and less than 3% of children lacked health insurance. With drug price increases becoming a "major concern," the state in 2001 started "Prescription Advantage," a prescription drug plan that offers unlimited pharmaceutical benefits to all seniors, who contribute copayments based on their annual incomes. Even though the state's health system "could see more difficulties" and is "likely to face some cuts," state programs are expected to "fare relatively well ... even in a cutback mode" (Bovbjerg/Ullman, "Recent Changes in Health Policy for Low-Income People in Massachusetts," March 2002). The full report is available online.
• Minnesota: Primarily through Medicaid and MinnesotaCare, a state-subsidized program that provides health care to low-income residents who do not qualify for Medicaid or Medicare, Minnesota has "liberal eligibility policies" and ensures a "rich set of benefits" for many residents. For example, the state provides health benefits for children under age two in families with incomes below 280% of the federal poverty level; adults with children and annual household incomes up to 275% of poverty; and childless adults with incomes below 175% of poverty. The state's public health care programs rely heavily on the use of managed care plans, and by the end of the year, every county in Minnesota will have a Medicaid managed care plan. The report states that there is "increasing stress" on Minnesota's health care system, including a health care worker shortage; increasing indigent care provided in urban areas; and rising health care costs partly because of the state's growing immigrant population (Long/Kendall, "Recent Changes in Health Policy for Low-Income People in Minnesota," March 2002). The full report is available online.
• New Jersey: Income eligibility limits in NJ FamilyCare -- the state's public health care system, which includes Medicaid -- are "among the highest in the nation." By 2001, the state provided health benefits to children with family incomes up to 350% of the federal poverty level, parents up to 200% and childless adults up to 100%. New Jersey has used funds from the nationwide tobacco settlement primarily on health policy concerns. In addition, New Jersey has successfully controlled Medicaid spending, which increased only 3% per year from 1995 to 2000, compared with an annual increase of 5% nationally. The report states, however, that a slowdown in state economic growth will "create considerable uncertainty" for continued expansion of health care programs (Bovbjerg/Ullman, "Recent Changes in Health Policy for Low-Income People in New Jersey," March 2002). The full report is available online. Note: You must have Adobe Acrobat Reader to view the report.
• Wisconsin: Despite the financial pressures of a nationwide economic slowdown, the state cut spending on Medicaid "very slightly" during the current fiscal year. It continued to fund BadgerCare, which provides health coverage for people who do not qualify for Medicaid, and Family Care, which consolidates funding for long-term care by utilizing managed care organizations. Wisconsin lawmakers also have enacted a senior prescription drug benefit program that is "one of the most generous in the country." The program covers seniors with incomes up to 240% of the federal poverty level and is funded by an 18-cent-per-pack tax on cigarettes. Wisconsin also has expanded its use of the Medicaid upper payment limit, commonly known as the Medicaid loophole. Funds from the expanded use will go to nursing homes (Bruen/Wiener, "Recent Changes in Health Policy for Low-Income People in Wisconsin," March 2002). Under current federal Medicaid rules, states can pay public facilities up to 150% of the Medicare rate for certain services, drawing down extra federal matching funds in doing so. The Bush administration says that public hospitals often "kick back" the extra federal money to the states, which can use it for services not related to health care. In an attempt to reduce Medicaid spending, the administration is seeking to reduce Medicaid's upper payment limit to 100% of the Medicare rate, and HHS officials in January published a regulation that would make such changes effective. Under the regulations, states with "long-established" use of the loophole would have five to eight years to reduce their payments to 100%, and states with newer programs would have one to two years. The administration plans to fully phase out the loophole by 2010 (Kaiser Daily Health Policy Report, 2/28). The full report is available online. Note: You must have Adobe Acrobat Reader to view the report.