Medicaid Managed Care - U.S. Senate Special Committee on Aging

265
This chapter presents background information for understanding the policy debate that is likely to
occur in the 105th Congress. It begins with an overview of the <strong>Medicaid</strong> program, including a brief
review of the impact of welfare reform on the program. It presents trends in <strong>Medicaid</strong> spcnding.
updating previous Physician Payment Review Commission reports that summarized spending by
enrollment group, type of service, and state. This section also looks at evidence of a slowdown in
<strong>Medicaid</strong> spending since 1992 and lower projections for future spending than those that drove policy
debates in the last Congress.
The next section of the chapter focuses on <strong>Medicaid</strong> managed care. It first reviews state options for
managed care, the waivers of federal rules that are needed to establish different programs, and the
types of arrangements that states use. An analysis of how many beneficiaries are enrolled in managed
care and how much of overall program spending goes to managed-care plans is then presented. This
analysis is more difficult than it appears because of certain inconsistencies in the way beneficiaries and
dollars are counted in <strong>Medicaid</strong> program data and in the different ways managed care is defined.
Included in this analysis is the distribution of managed-care enrollment by state and by type of plan.
Finally, the chapter looks at the implementation of <strong>Medicaid</strong> managed care. The purpose of this
section is to see what lessons can be learned from the experiences of the states-lessons that could be
helpful to other <strong>Medicaid</strong> programs or to policymakers considering Medicare changes. Specific areas
considered include restrictions on plan marketing, use of enrollment brokers, provision of information
to beneficiaries, use of competitive bidding to select plans, and capitation payments to plans. This
section concludes with suggestions for further research.
MEDICAID PROGRAM FEATURES AND EXPENDITURES
Much of the impetus for change in the <strong>Medicaid</strong> program has focused on rising federal and state
expenditures. Although the rapid spending growth of the late 1980s has abated somewhat, spending is
still projected to grow more quickly than the overall economy.
Financing
<strong>Medicaid</strong> is jointly funded by the states and the federal government.' The federal share of expenditures
is determined by a formula based on state per capita income, under which states with relatively low per
capita incomes receive higher federal matching rates. For example, Mississippi, with a per capita
income that is less than 70 percent of the national average, had a matching rate of about 79 percent,
while Connecticut, with a per capita income that is nearly 135 percent of the national average, received
In addition to cited sources, the <strong>Medicaid</strong> Source Book was consulted for general information on the <strong>Medicaid</strong> program
(CRS 1993).
1997 Annual Report to Congress/Chapter 20 414