Are the States Shifting Medicaid Costs to Medicare?

There is considerable variation in Medicare spending across regions and states, even after adjustment for a variety of health and socioeconomic factors. A new study in the journal Health Affairs suggests that a partial answer comes from actions by the states, in which they shift health care services from Medicaid, to Medicare.

If the states can shift “dual eligibles” (people who qualify for both programs) from Medicaid (which is funded partially by the states) to Medicare (which is wholly federally funded) they can reduce their costs. A new Health Affairs study is summarized in Daily Policy Digest:

  • The new study used data compiled by the Kaiser Family Foundation of 1,027,660 Medicare enrollees, 533,479 of whom were dual eligibles.
  • Average Medicare expenditures for dual eligibles in this age group was $9,878 in 2007, considerably higher than average Medicare spending for enrollees in the age group who were not dual eligibles ($7,428).
  • The study found evidence of a negative association between Medicaid and Medicare spending for dual eligibles under age 65 by state, suggesting that Medicare expenditures appeared to substitute for Medicaid expenditures.
  • Thus, states with lower rates of Medicaid spending experienced higher rates of Medicare expenditures, and vice versa.
  • Total Medicare per capita spending for dual eligibles under age 65 ranged from $7,072 in Vermont to $14,597 in Texas, a twofold difference that has no other explanation than differing policies among the states and program-shifting efforts.

The study also found that state-level spending patterns for dual eligibles were very similar to those for Medicare enrollees under age 65 who did not qualify for Medicaid. This suggests that states have made a concerted effort to limit their expenses with dual eligibles to the point that they received few services through the Medicaid program.

Comments (7)

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  1. Devon Herrick says:

    States foisting as much of the cost of Medicaid (and Medicare dual eligibles) onto the federal government as possible is a scam that virtually all engage in. Oddly enough, it’s often done with the full complicity of the federal government.

  2. Ken says:

    This proves that states are self interested, just like people.

  3. Todd says:

    Eliminate dual-eligibles. Lower the age of Medicare to 25. Problem solved!

  4. Joe S. says:

    Can’t blame them.

  5. Linda Gorman says:

    If the summary is accurate, the interpretation is strange. These data could be just as well explained by the fact that the two groups differ in their health conditions.

    Dual eligibles over 65 have high nursing home use. Thus, one would expect their Medicare spending to be higher.

    Dual eligibles under 65 tend to be disabled. Medicare pays about 30% of their costs according to MedPac. It pays 40% of the cost of care for the over 65s.

    Per capita spending on disabled people under 65 not in nursing homes is about $16,900 a year. If they are in a nursing home it is $74,500 a year. For the over 65 duals, out of nursing home spending is $22,500. In nursing home spending is $84,400.

    Dementia makes a big difference as it increases the amount of labor required to care for someone.

  6. Carolin says:

    I went to France for hip replacement! It costs there around 18000. The result is great. The importaint thing is to do it in a serious clinic. For example me, I asked my friends and one of them recommended samci! the diagnostics and operation took place in Paris. I was pleasantly surprised by the prices.
    Good luck!

  7. Scott Muff says:

    Hi John,

    I just finished reading your post titled: Are the States Shifting Medicaid Costs to Medicare? I thought the point you made about state-level spending patterns for dual eligibles were very similar to those for Medicare enrollees under age 65 who did not qualify for Medicaid was interesting.

    I wanted to let you know that TeleVox recently released a report titled, “Healthcare Change: The Time is Now.” The report which I think you will find some interesting information in addresses the healthcare industry’s essential shift away from primarily treating illness to keeping people healthy. Unfortunately the report also reveals that the majority of healthcare practices across the country aren’t prepared to meet the demand of the 46.6 million Medicare beneficiaries who are now eligible for wellness visits.

    Here are a few study highlights I wanted to share.

    * The aging Baby Boom population is straining the Medicare program finances, which are projected to balloon to $929 billion by 2020, an 80 percent increase over 10 years.
    * More than half (56%) of American baby boomers do not feel their overall personal health is in good shape, and one in four (26%) say they’re struggling to be healthy.
    * Two in three (66%) healthcare practices report being ill prepared to create personalized prevention plans that are tailored to each individual patient’s daily routine, psyche and family life.
    * Despite the fact that doctors are now being reimbursed by Medicare for talking with patients on an ongoing basis about healthy behaviors, 71 percent of healthcare practices report being unprepared to engage patients throughout the year with communications that help them adhere to their personalized prevention plans.

    There are many more findings revealed in the full study, which can be downloaded here.

    We also have some infographics that may be useful for your blog. The infographics can be downloaded here:

    And the full release can be found here.

    Feel free to reference the report or link directly to it or if you would like embed the infographics.

    If you need anything else please feel free to contact me.

    Scott Muff
    On Behalf of TeleVox