Key Findings

• After one month in office, a majority of the public (62%) approve of the way President Biden is handling the coronavirus pandemic – including nine in ten Democrats (92%).
• The pandemic’s economic effects continue to be felt as 37% of adults say they or another adult in their household have had trouble paying for basic expenses, such as food or housing, in the past three months. A majority of lower-income adults say they have experienced these financial difficulties, as do about half of Black and Hispanic compared to 31% of White adults.
• Amidst efforts by the Biden Administration and Democratic Congressional leaders to pass a COVID-19 relief bill by mid-March largely aimed at helping those who have been economically impacted by the pandemic, most of the public (73%) – including more than seven in ten across partisans – say Congress is not doing enough to help people who have lost jobs or income due to the pandemic. President Biden, on the other hand, receives slightly more positive ratings with similar shares saying he is doing the “right amount” (41%) as say he is “not doing enough” (45%). Democrats are more positive in their assessment of President Biden with two-thirds saying he is doing about the right amount, though half of independents and seven in ten Republicans say he is not doing enough.
• Most adults, including majorities of Democrats and independents and large shares of Republicans, support provisions included in the COVID-19 relief bill which would expand federal subsidies for people who purchase their own health insurance plans (69%) and which would provide additional federal funding to states that have not yet expanded their Medicaid program if those states expand Medicaid to cover more low-income adults (76%).
• The Biden administration recently sent a letter to the Supreme Court, disavowing the Trump administration’s questioning of the constitutionality of the Affordable Care Act and asked the Supreme Court to uphold the law. The latest KFF Heath Tracking poll finds about half of the public (54%) have a favorable view of the ACA while 39% have an unfavorable view of the law. Moreover, half of the public say they want the Biden Administration to build on the ACA while about one in four say they want the law repealed.

Biden Gets High Marks On Handling Of Coronavirus Pandemic

One month into the Biden presidency and amidst the ongoing COVID-19 vaccination rollout, a majority of the public (62%) approve of the way President Biden is handling the coronavirus pandemic in the U.S., while three in ten (30%) disapprove. An overwhelming majority of Democrats (92%) approve of the way President Biden is handling the pandemic, as do six in ten independents. However, among Republicans, nearly seven in ten (69%) disapprove of the way Biden is handling the coronavirus pandemic.

The Biden administration and Democratic congressional leaders are hoping to pass a COVID-19 relief bill by mid-March which would include a number of provisions aimed at helping those who may have been financially affected by the economic impact of the coronavirus pandemic. Most of the public (73%) say Congress is “not doing enough” to help people who have lost jobs or income due to the pandemic. Just 6% of the public say Congress is doing too much to help those who have been financially impacted by the pandemic. There is partisan consensus that Congress is not doing enough to help those who lost a job or income due to the pandemic with majorities of Republicans (79%), Democrats (74%), and independents (74%) saying Congress isn’t doing enough.

Nonetheless, the partisan consensus on the shortcoming of aid to those financially impacted by the pandemic does not extend to the President. Two-thirds of Democrats say President Biden is doing about the right amount to help those who lost a job or income due to the pandemic, while half of independents and seven in ten Republicans say he is not doing enough.

More Than Four In Ten Say Their Household Have Lost A Job Or Income Due To The Pandemic

The economic impact of the coronavirus pandemic continues to be felt by many across the country with more than four in ten adults (44%) saying their household experienced a job or income loss due to the coronavirus outbreak – including a majority of young adults ages 18 to 29 (56%). Across racial and ethnic groups, about six in ten Hispanic adults (59%) and about half of Black adults (51%) say their household lost a job or income, compared to about four in ten White adults (39%) who say the same.

A COVID-19 diagnosis can often have negative economic impact as individuals need to take time off work to quarantine and recover. Indeed, six in ten (61%) of those who say someone in their household tested positive for COVID-19 say their household lost a job or income due to the coronavirus outbreak compared to 41% of those in a household where no one tested positive.

As Congress considers a COVID-19 relief bill which may provide a third round of checks sent directly to the public, 37% of adults say they or another adult in their household has had problems paying or affording household bills, medical bills or some basic expenses in the past three months. This includes about one in four who say they have fallen behind on their credit card or other bills (23%), and about one in six who say they have had trouble paying for food (17%) or have fallen behind on their rent or mortgage (16%). Additionally, a similar share say they have had trouble paying for health insurance coverage (16%) or their medical bills (16%). In July 2020, similar shares said they had fallen behind or had trouble paying these basic living expenses.

Adults with a household income under $40,000 are three times as likely as those with a household income of $90,000 or more to say they have had trouble paying for basic living expenses in the last three months (55% vs. 19%). Larger shares of Black and Hispanic adults report experiencing negative economic impacts with about half saying they have had difficulty paying for basic expenses in the last three months (compared to 31% of White adults).

Congressional Actions To Expand Health Insurance Coverage

A majority of the public, including at least half of Republicans, approve two provisions currently included in the COVID-19 relief bill aimed at expanding health insurance coverage for Americans. About seven in ten adults (69%), including majorities of Democrats (79%), independents (71%) and Republicans (55%) say they support expanding federal subsidies for people who purchase their own health insurance plans. About three in four adults support another provision which would provide additional federal funding to states that have not yet expanded their Medicaid program if those states expand Medicaid to cover more low-income adults. Large majorities of Democrats (93%) and independents (78%) and half of Republicans support this provision. Notably, seven in ten adults (71%) living in states that have not expanded their Medicaid program support the proposal to provide more federal funding to those states if they expand Medicaid to cover more low-income adults.

Most View The ACA Favorably, Half Want To Build On The Law

In November 2020, the Supreme Court heard arguments in the California v. Texas case challenging the constitutionality of the 2010 Affordable Care Act. On February 10, 2021, the Justice Department under the new Biden administration sent a letter to the Supreme Court, in which they changed the position of the federal respondents on the case, disavowing the Trump administration’s questioning of the constitutionality of the law and asked the Supreme Court to uphold the law. The latest KFF Heath Tracking poll finds about half of the public (54%) have a favorable view of the ACA while 39% have an unfavorable view of the law. While a majority of the public view the law favorably, partisans continue to differ in their views with three in four Republicans saying they view law unfavorably while eight in ten Democrats (82%) have a favorable view of the law. Independents are more likely to view the law favorably (54%) than unfavorably (40%).

Building on the ACA has been a focal point of President Biden’s health care agenda and recently, in his confirmation hearing, Health and Human Services secretary nominee Xavier Becerra stated that building on the ACA is his priority. Half of U.S. adults share this view and say they want the Biden administration and Congress to build on what the ACA does (49%). A smaller share want to keep the law as it is (13%) and about three in ten want to either scale back what the law does (8%) or repeal it entirely (23%). Partisans differ on these approaches, with three in four Democrats wanting the Biden administration and Congress to build on what the law does (77%), while two-thirds of Republicans want the law to be scaled back (16%) or repealed entirely (51%).

This KFF Health Tracking Poll was designed and analyzed by public opinion researchers at the Kaiser Family Foundation (KFF). The survey was conducted February 15-23, 2021, among a nationally representative random digit dial telephone sample of 1,874 adults ages 18 and older (including interviews from 506 Hispanic adults and 507 non-Hispanic Black adults), living in the United States, including Alaska and Hawaii (note: persons without a telephone could not be included in the random selection process). Phone numbers used for this study were randomly generated from cell phone and landline sampling frames, with an overlapping frame design, and disproportionate stratification aimed at reaching Hispanic and non-Hispanic Black respondents. Stratification was based on incidence of the race/ethnicity subgroups within each frame. Specifically, the cell phone frame was stratified as: (1) High Hispanic: Cell phone numbers associated with rate centers from counties where at least 35% of the population is Hispanic; (2) High Black: Cell phone numbers associated with remaining rate centers from counties where at least 35% of the population is non-Hispanic Black; (3) Else: numbers from all remaining rate centers. The landline frame was stratified as: (1) High Black: landline exchanges associated with Census block groups where at least 35% of the population is Black; (2) Else: all -remaining landline exchanges. The sample also included 190 respondents reached by calling back respondents that had previously completed an interview on the KFF Health Tracking poll at least nine months ago. Another 387 interviews were completed with respondents who had previously completed an interview on the SSRS Omnibus poll (and other RDD polls) and identified as Hispanic (n = 180; including 50 in Spanish) or non-Hispanic Black (n=207). Computer-assisted telephone interviews conducted by landline (339) and cell phone (1,535, including 1,143 who had no landline telephone) were carried out in English and Spanish by SSRS of Glen Mills, PA. To efficiently obtain a sample of lower-income and non-White respondents, the sample also included an oversample of prepaid (pay-as-you-go) telephone numbers (25% of the cell phone sample consisted of prepaid numbers) Both the random digit dial landline and cell phone samples were provided by Marketing Systems Group (MSG). For the landline sample, respondents were selected by asking for the youngest adult male or female currently at home based on a random rotation. If no one of that gender was available, interviewers asked to speak with the youngest adult of the opposite gender. For the cell phone sample, interviews were conducted with the adult who answered the phone. KFF paid for all costs associated with the survey.

The combined landline and cell phone sample was weighted to balance the sample demographics to match estimates for the national population using data from the Census Bureau’s 2019 U.S. American Community Survey (ACS), on sex, age, education, race, Hispanic origin, and region, within race-groups, along with data from the 2010 Census on population density. The sample was also weighted to match current patterns of telephone use using data from the January- June 2020 National Health Interview Survey. The weight takes into account the fact that respondents with both a landline and cell phone have a higher probability of selection in the combined sample and also adjusts for the household size for the landline sample, and design modifications, namely, the oversampling of prepaid cell phones and likelihood of non-response for the re-contacted sample. All statistical tests of significance account for the effect of weighting.

The margin of sampling error including the design effect for the full sample is plus or minus 3 percentage points. Numbers of respondents and margins of sampling error for key subgroups are shown in the table below. For results based on other subgroups, the margin of sampling error may be higher. Sample sizes and margins of sampling error for other subgroups are available by request. Note that sampling error is only one of many potential sources of error in this or any other public opinion poll. Kaiser Family Foundation public opinion and survey research is a charter member of the Transparency Initiative of the American Association for Public Opinion Research.

This work was supported in part by a grant from the Chan Zuckerberg Initiative DAF, an advised fund of Silicon Valley Community Foundation. We value our funders. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

The COVID-19 pandemic has taken a heavy toll on people in nursing homes, with those in long-term care facilities accounting for a disproportionate share of all deaths attributable to COVID-19 to date. However, less attention has been paid to nonelderly people with disabilities who use long-term services and supports (LTSS) but live outside of nursing homes. This population includes people with a range of disabilities, such as people with autism or Down’s syndrome who live in group homes, people with physical disabilities who receive personal care services at home, and people who are receiving behavioral health treatment in residential facilities. Some nonelderly people with disabilities receive LTSS in a variety of community-based settings such as group homes, adult day health programs, and/or their own homes. Other nonelderly people with disabilities receive LTSS in institutional settings such as intermediate care facilities for people with intellectual or developmental disabilities (ICF/IDDs) or behavioral health treatment centers for people with mental illness or substance use disorder. Many nonelderly people with disabilities, both in the community and in institutions, rely on Medicaid as the primary payer for the LTSS on which they depend for meeting daily self-care needs.

Nonelderly people with disabilities and the direct care workers who provide their LTSS have similar risk factors for serious illness or death from COVID-19 compared to their counterparts in nursing homes, due to the close contact required to provide assistance with daily personal care tasks, such as eating, dressing, and bathing; the congregate nature of many of these settings; and the highly transmissible nature of the coronavirus. Seniors in nursing homes are explicitly included in the top priority group in all states’ COVID-19 vaccine distribution plans, but nonelderly people with disabilities who use LTSS may be not prioritized. This issue brief presents current state-level data about COVID-19 cases and deaths in settings that primarily serve nonelderly people with disabilities and summarizes available research on this population’s elevated risk of severe illness and death; explains how nonelderly people with disabilities and their LTSS providers are reflected in state vaccine prioritization plans; and discusses key issues related to vaccine access for these populations.

What is known about COVID-19 among people with disabilities?

As of February 11, 2021, 31 states report at least some data on COVID-19 cases and deaths in LTSS settings that primarily serve nonelderly people with disabilities (Figure 1 and Appendix Table 1). These settings include both home and community-based settings such as group homes, personal care homes, adult day programs, and other community-based settings; and institutional settings such as intermediate care facilities and psychiatric institutions. Not all states report all types of settings within each category. These data exclude settings that primarily serve elderly adults, such as nursing facilities and assisted living facilities (ALFs), to best reflect cases and deaths solely among nonelderly adults with disabilities. For state-level data broken out by resident/staff cases/deaths, details on the types of facilities included in each state’s count, dates of data, links to the state reports, and additional notes, see Appendix Table 1.

The wide variety in state reporting makes it difficult to compare between states or have a complete understanding of how people with disabilities have been impacted by the pandemic. Among states reporting data, there were 111,000 cases and over 6,500 deaths across these settings as of February 11, 2021 (Figure 1). Of the 31 states reporting data, 8 states report data only for institutional settings, 8 states report data only for home and community-based settings, and 15 states report data for both settings. Thirty-one states report cases and 25 states report deaths. States also vary in whether they report only data on residents and staff separately or combined (Appendix Table 1). State reporting also varies in other ways, such as inclusion of only active cases (e.g., MA, UT), inclusion of data within broader long-term care reporting (e.g., ID, MD, MS, OK, GA, KY, LA, NC, ND), and level of detail in facility-level information. Additionally, states use different definitions or categorizations for the same types of facilities, making cross-state comparison challenging.

Data from a limited number of states suggest that LTSS residents in institutions other than nursing and assisted living facilities, as well as those in some community-based settings, face an elevated risk of COVID-19 infection (Table 1). Overall, limited data on the number of people in HCBS and institutional settings other than nursing and assisted living facilities makes calculating case or death rates difficult. However, eight states (CT, IL, NJ, OR, PA, WA, WI, TX) provide resident census data to calculate the shares of residents that have been impacted in certain settings. Among the states that provide census data on institutional settings, cumulative data show that between 19% (Connecticut’s mental health facilities) and 50% (Pennsylvania’s state centers for individuals with intellectual disabilities) of residents were infected. These rates are on par with the share of residents infected in nursing homes, which, using 2019 resident census data and resident case counts as of the end of January 2021, is about 50%. These rates are also higher than population level rates, which show more than 8% of the US population infected as of mid-February 2021. For states that provide census data on home or community-based settings, between 2% (Oregon’s Adults with Intellectual or Developmental Disabilities Foster Care HCBS waiver) and 19% (Illinois’ Community Integrated Living Arrangements group homes) of residents were infected. Given the limited sample size and wide state variation, this data should be interpreted with caution. However, this data supports other research suggesting that congregate settings, particularly larger facilities, are at high risk of having an outbreak.

Other research shows that nonelderly people with disabilities who receive LTSS in settings other than nursing homes face similar COVID-19 risk factors compared to people in nursing homes. Like those in nursing homes, people with disabilities rely on the close physical proximity of caregivers for communication and daily needs, which limits their ability to adopt preventive measures such as social distancing. An October 2020 study found that people with I/DD living in group homes in New York are at greater risk of contracting and dying from COVID-19 compared to the general population. Another study from July 2020 found greater risk for contracting COVID-19 among people with I/DD, and a greater case fatality rate for nonelderly adults with I/DD, compared to those without I/DD. A November 2020 analysis of private insurance claims found that people with “developmental disorders” (such as speech/language, scholastic skills, and central auditory processing disorders) had the highest odds of dying from COVID-19 and those with intellectual disabilities (such as Down’s syndrome) had the third highest risk of death from COVID-19.

Research also suggests that people with disabilities who are members of racial or ethnic minority groups are disparately affected by COVID-19. A January 2021 study found that counties with higher rates of COVID-19 were home to disproportionately higher shares of people with I/DD who are Black, Asian, Hispanic or Native American; below poverty; young; and female. A January 2021 House Ways & Means Committee Majority Staff report noted that Black working people with disabilities are more likely to have experienced job loss during pandemic, compared to other racial or ethnic groups.

In addition to increased risk from COVID-19, people with disabilities who rely on LTSS to meet daily needs also risk experiencing adverse health outcomes due to interruptions in care caused by the pandemic. An HHS report on direct service providers found that workforce shortages have been exacerbated during the pandemic, increasing the risk of adverse health outcomes among people with disabilities due to lack of care. A MACPAC report on people with I/DD noted that some people with disabilities have suspended in-home services during the pandemic and some workers have declined to enter client homes due to health and safety concerns, including challenges with accessing personal protective equipment. People with disabilities also have faced discriminatory access to care and care rationing based on disability during the pandemic, which has been the subject of HHS Office for Civil Rights guidance and several case settlements.

Direct care workers who provide LTSS to people with disabilities outside of nursing homes also face increased risks from COVID-19, similar to their nursing home counterparts. For example, a House Oversight Committee survey in August 2020 found that behavioral health treatment facility staff are more likely to have contracted COVID-19 compared to the general population. In addition, 24% of family caregivers for people with I/DD are over age 60 and therefore at higher risk of complications and death themselves from COVID-19.

How are people with disabilities reflected in state vaccine prioritization plans?

State vaccine prioritization plans explicitly include people in nursing homes and seniors in general, consistent with the Centers for Disease Control and Prevention (CDC) Advisory Committee on Immunization Practices (ACIP) recommendations. In December 2020, ACIP recommended that health care personnel and long-term care facility residents be placed in the top priority group (Phase 1a) for COVID-19 vaccine distribution. The ACIP recommendations define long-term care facilities as nursing homes, skilled nursing facilities, and assisted living facilities. Other ACIP guidance notes that states may choose to include people who reside in congregate living facilities, such as group homes, in the same priority group as frontline facility staff, due to “their shared increased risk of disease.” States have discretion about which groups to prioritize in their vaccine distribution plans. State vaccination plans and priority groups are continuing to evolve in response to changes in federal guidance as well as other considerations such as vaccine availability. State plans also vary widely in their comprehensiveness and transparency, with some offering more detail on priority populations than others.

Few state vaccination plans explicitly mention people with disabilities (other than people with “high risk medical conditions”). Prioritizing certain high risk medical conditions may include some but not all people with disabilities. In addition, the high risk medical conditions group does not always include or account for the increased risk to nonelderly people with disabilities who receive direct care services and/or live in congregate settings outside nursing homes. A few states do specifically prioritize people with disabilities in their vaccination plans. For example, Tennessee includes people ages 18-74 who are unable to live independently and Oregon includes people with disabilities who receive services in their homes in Phase 1a, the same priority level as people in nursing homes. Maryland and Ohio include people with developmental disabilities in Phase 1b, Illinois includes people with disabilities in Phase 1b, and Nevada and Washington include people with disabilities in Phase 1c (limited to those with disabilities that prevent their adopting of protective measures in Washington). California recently clarified that as of March 15, 2021, health care providers can use their clinical judgment to prioritize people with a developmental or “other severe high-risk disability” who, if infected with COVID-19, are likely to develop severe life-threatening illness or death, will have limited ability to receive ongoing care or services vital to well-being and survival, or will face challenges in adequate and timely COVID-19 care due to their disability.

While all state vaccination plans include people in nursing homes in Phase 1a, and most include ALFs, few mention other LTSS settings, and those that do typically do not place other LTSS settings at the same priority level as nursing homes. Three states (DC, NJ, OH) include psychiatric hospitals in Phase 1a. Nine states include group homes in Phase 1b (AK, AL, DC, MD, NM, ND, SD, WA) or 1c (DE for those with high risk conditions). Two states (WI, WY) include people receiving services under certain Medicaid HCBS waivers in Phase 1b. A few states include other LTSS settings in Phase 1b:  behavioral health treatment centers (IA, ND, NM), ICF/IDDs (DC, NH), and people receiving LTSS at home (IA, PA). Other state plans generally mention congregate settings (in Phase 1b or 1c) without further details so it is unclear whether LTSS settings are included.

Few state vaccination plans explicitly mention direct care workers who provide LTSS in settings other than nursing homes. Staff at congregate settings typically are included in the same phase or earlier than residents. Some states specify staff in different LTSS settings in Phase 1a, but it is not always clear from state plans that all LTSS workers are included in the “health care workers” category. For example, some family caregivers and others who provide self-directed HCBS are recognized as Medicaid HCBS providers for purposes of reimbursement but may not work through a provider agency or be recognized as having the same licensing as providers in LTSS facilities.

What other policy issues will affect access to vaccines for people with disabilities?

People with disabilities who receive services in the community or in non-nursing facility institutions may face accessibility barriers at vaccine distribution sites. In many cases, people with disabilities will need to travel to a distribution site to receive their vaccines. For example, to date, the federal government’s Long-Term Care Pharmacy Partnership program has been limited to facilities where the majority of residents are age 65 or older, and has not included congregate settings that primarily serve nonelderly people with disabilities, such as those with I/DD or behavioral health needs. The Biden Administration’s National Strategy for COVID-19 Response and Pandemic Preparedness supports expanding this program to other congregate settings, including those that serve people with I/DD. The accessibility of community-based vaccine distribution sites also could affect the ability of people with disabilities to receive vaccines. These considerations include factors such as whether sites are physically accessible for people with mobility impairments and whether reliable public or other transportation is available to get people to the site. Vaccine distribution efforts could consider partnering with state Medicaid agencies to leverage Medicaid’s non-emergency medical transportation (NEMT) benefit. Medicaid benefit provides transportation to and from healthcare providers and could be used to facilitate access to community-based vaccine distribution sites for enrollees, including those with disabilities. Transportation to receive vaccines may be especially important due to the temperature and storage requirements that may create challenges for administering the currently approved vaccines in people’s homes.

People with disabilities and their direct care providers may benefit from focused messaging as part of general vaccine outreach and public education efforts. Outreach efforts targeted to people with disabilities could be part of broader public education strategies related to vaccine distribution. Making information available in plain language and in accessible formats (such as for people with vision, hearing, or cognitive disabilities) can help ensure that it is useful to people with disabilities. Accessible information about where and when to access the vaccine will be important, especially as state prioritization plans continue to evolve, and many people with disabilities are eager to receive the vaccine given their increased risk. Public outreach campaigns also may consider how to address concerns about the COVID-19 vaccine that stem from health care discrimination experienced by people with disabilities by offering opportunities for two-way dialogue to discuss questions and concerns and build trust. Historically, many people with disabilities have experienced discrimination by being segregated in institutions and subject to involuntary sterilization. People with disabilities continue to experience barriers to needed healthcare services, due to inaccessible buildings or medical equipment (such as examination tables, radiology machines, and scales) or ineffective communication (such as lack of sign language interpreters during medical appointments). In addition, during the COVID-19 pandemic, policies to ration access to treatment, such as ventilators, have been successfully challenged as discriminating against people with disabilities. Public health departments and others involved in outreach efforts could partner with state Medicaid agencies to reach vulnerable populations, such as people with disabilities and their health care providers. Many people with disabilities receive Medicaid, and state Medicaid programs already may have established relationships with community-based health care and LTSS providers who may be trusted sources of information for enrollees.

Finally, policymakers may want to consider people with disabilities in data collection efforts to help inform and refine current vaccine distribution and access efforts and identify disparities such as those based on race or ethnicity. The Biden Administration’s National Strategy acknowledges that gaps in data exist and endorses improved COVID-19 data collection and public health guidance specific to high risk populations, including people with disabilities and those who are members of racial/ethnic minority groups.

Looking ahead more broadly in pandemic response efforts, provisions in the House Energy and Commerce Committee’s COVID-19 relief bill recognize the similar risks posed to residents and direct care workers in nursing homes and congregate community-based settings. The bill would provide $1.8 billion for COVID-19 testing, contact tracing, and mitigation activities in congregate settings, including shared living arrangements for people with disabilities as well as institutional settings such as long-term care facilities, psychiatric hospitals, psychiatric residential treatment facilities, intermediate care facilities, and other residential care facilities. In addition, the bill would allow states to use temporary enhanced federal matching funds for Medicaid home and community-based services to help seniors and people with disabilities in both nursing homes and congregate community settings relocate to their own homes in the community. The COVID-19 pandemic’s disproportionate impact on people who live and work in both institutional and community-based congregate settings has renewed interest among policymakers, seniors, people with disabilities, direct care workers, caregivers, and others in Medicaid’s role in providing services and supports for independent community living.

The cost of health care is becoming less affordable for both privately insured individuals and employers who offer health insurance coverage. Long-standing concerns about high and rising health care costs in the United States have been recently exacerbated by the COVID-19 pandemic, which has increased financial pressure on many employers and individuals and led to record unemployment, furloughs and reduced wages.¹  A large body of research has documented that private insurers pay higher prices than Medicare and that this gap is growing. Health care spending in the United States is nearly double the average amount spent by other high-income countries on a per-person basis without clear evidence that the overall quality of care is proportionately higher in the United States. This disparity is driven largely by higher health care prices across the United States. Reducing the prices private insurers pay for health care services could help alleviate the financial burden of health care for employers and individuals with private insurance. However, doing so would reduce revenue for hospitals and other health care providers, with uncertain effects on patient care.

In this analysis, we use data from MarketScan and FAIR Health²  to estimate the total annual reduction in health care spending by employers and privately insured individuals that would result from having private insurers reimburse hospitals and other health care providers at Medicare rates. A variety of policy levers could be used to move the health system in this direction, including Medicare for all, a public option, or regulatory controls over private prices. Our estimate illustrates the extreme of what could be accomplished in terms of reductions in spending; smaller reductions would be achieved if private sector health care prices were reduced to some multiple of current Medicare rates or if lower rates were phased in gradually. We discuss but do not model the potential effects of price reductions on the supply of services, utilization of health care services, or quality of health care. We also do not estimate the effects on tax obligations for individuals or employers, nor quantify the impact of this change on the federal budget or the Medicare program. For additional information about our approach, see the methods appendix and limitations section of this report.

With ongoing interest in proposals to address the burden of health care costs for individuals and employers—including options that align private insurance rates more closely with Medicare rates—our analysis illustrates the potentially substantial decrease in health care spending that would come from lowering private insurance rates to align more closely with Medicare levels.

Our analysis finds:

• Total health care spending for the privately insured population would be an estimated $352 billion lower in 2021 if employers and other insurers reimbursed health care providers at Medicare rates. This represents a 41% decrease from the $859 billion that is projected to be spent in 2021.
• Aggregate employer contributions toward employee premiums would decrease by about $194 billion, assuming employers’ share of premiums stays constant after private rates drop to Medicare levels.
• Employees and their dependents would spend at least $116 billion less for health care, through a combination of lower premiums and out-of-pocket spending. The reduction in federal and individual spending on health care for an estimated 19 million people in the non-group market would total $42 billion.
• Nearly half of the total reduction in spending (45%) would be for outpatient hospital services, due in part to high private rates relative to Medicare rates for outpatient care, compared to most other services. Inpatient services account for 27% of the decrease in spending, and physician office visits account for 14% of the decrease.
• Health care spending for privately insured adults ages 55 to 64 would be an estimated $115 billion lower in 2021 if private insurers used Medicare rates—this is one third of the estimated total reduction in spending. The proportion of the decrease in spending attributable to adults 55 to 64 is roughly equivalent to their share of current spending.

A detailed description of our data and methodology is discussed in the appendix of this brief. Our estimates of spending reductions are sensitive to assumptions, such as the current ratio of private-to-Medicare rates by service and market area. In addition, the estimates are sensitive to policy choices, such as whether private insurance payments should be adjusted to Medicare levels, or a higher ratio. We discuss the potential impact of these assumptions on our results in the limitations section.

Introduction

The United States spends nearly twice as much as much per person on health care as comparable countries, and much of this is driven by higher prices paid by private health insurers.³  The high and rising cost of private health care has led to premiums and deductibles for employer-sponsored coverage growing faster than wages and general inflation. A large body of research has documented that private insurance pays higher prices than Medicare pays for comparable services, and that gap is growing. Between 2010 and 2018, Medicare per capita spending grew considerably more slowly than private insurance spending, increasing at an average annual rate of just 1.7% over this time period, while average annual private health insurance spending per capita grew at 3.8%.

Private Insurance Rates: Private insurance accounts for 31% of total health care spending in the United States⁴  and is subsidized by the federal government through the exclusion of health insurance premiums from taxable income and through ACA marketplace subsidies. High prices paid for health care services covered by private insurance lead to higher premiums and out-of-pocket costs for workers and their families with private insurance, and for employers who contribute to the cost of that coverage. Nationwide, 173 million people under age 65 had private health insurance in 2018, either from an employer plan (154 million) or the non-group market (19 million). Health expenses for employers are rising more rapidly than other prices and are consuming a growing share of total compensation. This dampens wages and may negatively impact the recovery of the job market.⁵ 

Prices paid by private insurance are largely dictated by market conditions—with providers commanding higher prices when they have more leverage in negotiations with private insurers. Provider consolidation has increased the number of markets where providers have the upper hand in these negotiations.⁶  While there have been some anti-trust enforcement actions in health care, health care mergers have continued and the share of health care markets with highly concentrated providers has increased.⁷  Increasing consolidation and rising prices for health care raise questions about whether private insurers, third party administrators and employers who offer insurance are able to control increases in health care prices.

Medicare Rates: Medicare typically reimburses hospitals and other health care providers at lower rates than private insurance. Providers generally must agree to accept the established payment rates in order to participate in Medicare, and (with the exception of a few more specialized providers, such as psychiatrists) virtually all providers are either unable or unwilling to forgo participation in Medicare. Over the years, Congress has made changes to Medicare payment systems to manage program spending and encourage providers to operate more efficiently. This has also helped to slow the growth in premiums and other costs for beneficiaries. The Medicare Payment Advisory Commission (MedPAC), an independent congressional agency, makes recommendations to Congress on Medicare payment policy, and monitors access, quality and other beneficiary issues.

MedPAC has found that “the vast majority of [Medicare] beneficiaries report being satisfied with their care, describe using an appropriate usual source of care, and report no trouble accessing timely care.”⁸  Compared to adults 50 to 64 with private insurance, Medicare beneficiaries age 65 and older were more likely to report being very or somewhat satisfied with the overall quality of their care (87% vs 80%).⁹  Despite lower payment rates for physicians from Medicare than private insurance, Medicare beneficiaries are less likely than people with private insurance to report problems finding a new doctor.¹⁰  Medicare beneficiaries also report forgoing medical care at similar or lower rates than older adults (50-64) with private insurance. However, it is not clear if or how lowering private insurance reimbursement to Medicare rates would impact access and quality for people with Medicare or private insurance.

Policy Context. Over the years, federal and state lawmakers have proposed using Medicare rates to rein in health care prices. While some of this has been in the context of discussions of switching to a Medicare for all system or a public option, Medicare rates have been used in other contexts as well. Most recently, the Department of Health and Human Services specified that Medicare rates would be used to reimburse providers for care for uninsured COVID-19 patients and to set reimbursement for out-of-network COVID-19 vaccine administration.¹¹  Washington State settled on a multiple of Medicare rates,160%, as part of a negotiated compromise in establishing a public option.¹²  In the state of Maryland, instead of using Medicare to set private insurance rates, the state created a Health Services Cost Review Commission that sets hospital rates for all hospital patients (regardless of insurance) according to an all-payer rate setting system. Maryland’s system also allowed the state to take steps to increase payments from all payers to hospitals to help stabilize their financial health during the COVID-19 pandemic.¹³  With or without a public option, legislation at the federal or state level could limit the prices health care providers charge private insurers while retaining other aspects of the private health insurance system, as in an all-payer rates setting system.

Any proposals to limit private insurance reimbursement would undoubtedly be met with fierce opposition from health care providers, since it would decrease their revenue. This phenomenon was illustrated in the recent debate over surprise medical bills when providers successfully prevented the final legislation from using Medicare rates (or a percentage of Medicare rates) as a benchmark for out-of-network reimbursement. Opponents of proposals such as Medicare for all or a public option that adopt Medicare rates argue that a broader use of Medicare rates would cause hospitals to lose money, which could lead to cost cutting that adversely affects the quality of patient care, and potentially spark the closure of some hospitals.¹⁴  The Congressional Budget Office (CBO) also has said that, in general, lowering provider reimbursement as part of a single-payer system would decrease the supply of health care.¹⁵  At the same time, analysis by MedPAC suggests that efficient providers can either cover their expenses with Medicare rates or could do so with relatively minor (2%) increases in Medicare rates for hospitals.¹⁶ 

In this brief, we estimate how much less individuals and employers would spend on health care if private insurance reimbursed health care providers at Medicare rates, assuming full implementation in 2021. Our analysis essentially reprices private insurance expenditures at Medicare rates; we do not make assumptions about changes in behavior or health care access or quality that could result from reduced reimbursement from private insurance. Our estimates illustrate the extreme of what could be accomplished in terms of reductions in spending. It is intended to provide a way of thinking about the effects of prices on health care spending, rather than a forecast or prediction, illustrative of the potential magnitude of savings possible from bringing private health care prices in line with Medicare. We do not estimate the impact of such a change on wages or tax obligations, nor do we model the impact on the federal budget or the Medicare program. However, we do broadly consider these issues in the limitations section of our brief. A more detailed description of the data we used and the assumptions we made are in the limitations section of this report and in the methods appendix.

Findings

Our analysis looks at the expected reduction in private health insurance spending that would occur if private insurers used Medicare rates. We estimate the aggregate reduction in spending, the aggregate reduction for employers and individuals with employer-sponsored insurance, the aggregate reduction in spending on services for those in the non-group market, the aggregate reduction by type of service and by age, and the estimated reduction in per-person spending by age group.

Total reduction in spending from using Medicare rates for people with private insurance

Health care spending would decline by more than $350 billion in 2021 if private insurance reimbursed health care providers using Medicare rates. Total spending for the approximately 173 million people under age 65 with private health insurance in our analysis is projected to reach $859 billion in 2021. At Medicare rates, total spending instead would be $507 billion (Figure 1). That $352 billion difference represents a 41% decrease in spending on care for people with private health insurance.

.Estimated reduction in spending for health care covered by employer-sponsored and private non-group health insurance

Of the 173 million people in our analysis with private insurance, 154 million have employer-sponsored coverage and spending on their care totals $757 billion (table 1 and appendix table 1). The remaining 19 million with private coverage are covered in the non-group market. Total spending for that group is about $102 billion in 2021. Full results are in the appendix.

Total health spending for people with employer-sponsored insurance would decrease by an estimated $310 billion if private insurers used Medicare rates, assuming no change in plan design. Our analysis suggests that more than $100 billion of that reduction would be in the form of lower premiums and out-of-pocket costs paid by employees (Figure 2). In total, spending on health care for people with employer-sponsored coverage would decrease from $757 billion to an estimated $447 billion. Assuming that difference is allocated proportionately to current spending, employees would contribute an estimated $72 billion less to premiums for services paid on their behalf by insurers and spend $44 billion less on out-of-pocket costs for care covered by their insurance—for a total reduction in spending of $116 billion. Spending on services funded by employer contributions would decrease from $474 to $280 billion, a decline of $194 billion in 2021.

As discussed in greater detail in the limitations section, these estimates do not account for changes in taxable income. On the one hand, wages could decrease in the health care sector due to declines in revenue. On the other hand, wages could increase in other parts of the economy if employers pass through health savings to workers. The degree to which the health care savings are passed though would likely vary across jobs and labor markets.¹⁷  Because employer-sponsored health benefits are not taxable as income while wages are, these shifts could also affect taxes paid by employers and employees and revenues for the federal government and states.

.Spending for individuals who purchase their own insurance in the non-group market, including the ACA marketplace, would decrease by an estimated $42 billion if insurers reimbursed providers at Medicare rates—some of this reduction would come from a drop in federal spending on subsidies for people with marketplace coverage. Currently, a total of $102 billion is directly spent on health care services for the 19 million individuals with non-group insurance, including amounts paid by the federal government on behalf of the 8.5 million people who receive premium subsidies for marketplace coverage. Total spending in the non-group market would decrease to $60 billion if payments to hospitals, physicians and other providers were set at Medicare rates. Part of this reduction in spending would directly accrue to the federal government, and part to individuals, some of whom do not currently receive federal subsidies for their coverage.

Individuals who receive premium subsidies for marketplace coverage may not see their premiums decrease because premiums for benchmark plans are set as a percent of the enrollee’s income. However, enrollees with out-of-pocket expenses below the out-of-pocket maximum, as most enrollees have, would likely benefit from a lower deductible and other out-of-pocket costs. On average, the combined (medical and pharmacy) deductibles for silver and bronze plans are currently about $4,800 and $6,900, respectively.¹⁸  Combined deductibles are substantially lower—averaging about $180—for individuals from 100 to 150% of the federal poverty line who qualify for the largest reductions in cost sharing. A decrease in spending for health care services covered by non-group plans would lead to lower deductibles and copayments since each plan covers a set percentage of total costs. Costs for services that individuals pay for before they meet their deductible would also go down because the prices of the services they are buying would be lower.

Individuals who purchase their own health insurance outside of the marketplaces or who do not qualify for federal subsidies would see their premiums and out-of-pocket costs decline if Medicare rates were used. For these individuals, the federal government will not directly benefit from the lower rates because individuals themselves are paying the full premium cost. However, in some cases these individuals (including those who are self-employed) may currently deduct their health expenses from their taxes and in those cases federal tax revenue could increase if health insurance costs for those with private, non-group insurance declined.¹⁹ 

Reduction in spending by type of service

Almost half (45%) of the total reduction in spending, by service, would come from outpatient hospital services, if private insurance adopted Medicare rates. In total, outpatient, inpatient and emergency department care account for 69% of current spending on care covered by private insurance but would account for 78% of the reduction in spending if Medicare rates were used. Outpatient care accounts for 36% of current spending covered by private insurance, but 45% of the reduction in spending (Figure 3). Using FAIR Health’s Medicare to imputed allowed amount data and MarketScan data, we estimated that outpatient negotiated rates with private insurers are 203% of Medicare reimbursement (appendix table 2). This is a higher percentage than for most other types of services. Recently, an analysis from RAND included similar estimates of the potential reduction in spending from a switch to Medicare rates for hospital inpatient and outpatient care.²⁰ 

.Our analysis used data from 2018, which is before Medicare made changes to payments for some hospital off-campus outpatient departments that lowered their reimbursement to be closer to reimbursement for physician office visits.²¹  By 2020, regulatory changes lowered reimbursement by 60% for the most common hospital outpatient code, hospital outpatient clinic visit.²²  Since our analysis does not account for this regulatory change that occurred after 2018, our analysis likely overestimates Medicare hospital outpatient rates and thus underestimates the reduction in outpatient spending that would occur.

Reduction in spending by age

About one-third of the total reduction in spending would come from people age 55 to 64—which would amount to $115 billion less in health care spending in 2021 (Figure 4). The proportion of the decrease in spending attributable to each age group is roughly equivalent to their share of spending (see appendix table 3). Spending on individuals age 60 to 64 would be $59 billion lower if Medicare rates were used (data not shown).

.President Biden has proposed giving individuals age 60 to 64 the option of enrolling in Medicare. We did not analyze that policy but our analysis does suggest that re-pricing private health care spending for this population using Medicare rates could result in a substantial reduction in health spending overall (assuming no change in covered benefits and that all people with private insurance in that age range switch to Medicare). While the details of President Biden’s policy have not been specified, lower payment rates would likely lead to lower overall health spending for adults ages 60 to 64, but higher federal spending if costs are shifted from employers and individuals to the federal government. A full analysis of the impact of this policy is outside the scope of our paper. Such an analysis would require accounting for multiple factors, including: health insurance coverage decisions by individuals and employers; changes in the labor market and health insurance risk pools; differences between Medicare and private insurance benefit designs; and available premium and cost-sharing subsidies compared to private coverage.

Reduction in health spending, per-person

On average, per-person health care spending for those with private insurance would be an estimated $2,096 less for adults ages 19 to 64 and $1,033 less per child if Medicare rates were used. The potential reduction in per-person spending attributable to switching to Medicare rates increases steadily with age after age 3, approximately tripling from $1,387 for adults ages 19 to 35 to $3,944 among adults 55 to 64 (Figure 5). On average, per-person health care spending for adults age 19 to 64 with private insurance would be $2,096 less and per-person health care spending for children age 0 to 18 would be $1,033 less if Medicare rates were used (see appendix table 4).

.Limitations

While our analysis provides a way of thinking about the effects of prices on health care spending, this analysis is not intended to be a forecast or prediction. The direct and indirect effects would depend on the specifics of how a reduction in private sector health care prices is achieved. Our analysis is instead meant to be illustrative of the potential magnitude of savings possible from bringing private health care prices in line with Medicare.

We did not estimate the impact a reduction in aggregate health care spending would have on the labor market, employee compensation, and employers’ decisions to offer coverage. We also did not estimate how lowering health care prices would impact the market for health care services. Any changes to the prices paid for services may have other effects on health care in the United States. For example, lower reimbursement rates could decrease the number of practicing physicians or cause hospitals to contract or close. Lower reimbursement could also decrease investments in new technology. Lowering prices could also increase demand for care (particularly for those with high deductible plans). The potential combination of reduced supply and increased demand could impact access to care, health care quality and net health care spending.

While we calculated per-person declines in health care spending, we do not attempt to model the tax implications of this change, which would affect how savings are distributed between employers, employees, and the federal government and states. Increasing taxable wages would mean that individuals would not see a dollar-for-dollar increase in their after-tax income. There could also be payroll tax implications for employers if compensation shifts from tax-exempt health benefits to taxable wages. We also do not attempt to estimate the impact that shifting to Medicare rates would have on federal or state budgets. If the change led to an increase in taxable income, that would generate higher federal and state revenues. Lower payment rates would also mean lower federal spending on premium and cost sharing subsidies for marketplace coverage, and reduced health care spending for federal employees. At the same time, the reduction in private insurance reimbursement rates would likely result in lower income for some people who are employed in the health care sector, which would negatively impact tax revenues.

Further, we did not estimate the implications for Medicare and the Medicare Hospital Insurance Trust Fund. An increase in taxable wages would increase payroll tax revenue. However, if these changes led to pressure to increase Medicare payment rates, higher rates could increase outlays from the Medicare Trust Fund.

Factors that impact the size of our estimates

There are several factors that suggest we may have underestimated how much lower private health care spending would be if Medicare rates were used. Most significantly, we believe that the private reimbursement to Medicare ratios used in our analysis are conservative. Overall, the private insurance rates as a percentage of Medicare rates that were calculated using FAIR Health data were 165% for inpatient, 203% for outpatient and 133% for physician services (Figure 6). While these are within the range of the results of the studies in recent KFF review of the literature on private insurance payment rates compared to Medicare rates, they are each below the average among the studies. We discuss the possible reasons for this in the methods appendix.

Aside from the ratios we used to re-price health care reimbursed by private insurance, several other factors lowered our estimates of the impact of this change. As discussed earlier in this paper, we do not capture recent changes to Medicare hospital outpatient reimbursment that have reduced Medicare payments in certain instances. Our estimates also do not include savings from lower administrative costs. Assuming a constant medical loss ratio of 85%, lowering health care spending would lead to an additional $62 billion less in administrative costs (see appendix table 2). Additionally, if lower reimbursement led to a decline in the supply of care, it could negatively impact access and also further lower spending.

Conversely, several factors could lead our estimates to overstate the potential reduction in spending on health care for individuals and employers. First, if Congress increased Medicare rates after they were used to determine private insurance reimbursement, that would lead to a smaller reduction in spending than we estimate. An increase in Medicare payments to hospitals and other providers would also lead to higher Medicare spending, premiums and cost-sharing, and accelerate the depletion of the Medicare Hospital Insurance Trust Fund. Additionally, our estimates did not account for how higher taxes would potentially offset some of the reduction in health spending for individuals and employers. We would expect that much of the reduction in spending on health care would eventually become taxable income—therefore individuals and employers would not reap the full benefits of this change, with some financial benefit accruing to the government instead. Additionally, if this policy change were phased in or instead used a multiple of Medicare rates (for example, 150% of Medicare rates), the estimated reduction in spending would be lower.

Our analysis also assumed that provider payment rates are the same in the non-group and large employer markets. However, due to narrower networks, non-group insurance may have lower provider payment rates than employer-sponsored coverage. Additionally, due to higher cost sharing, people with non-group coverage may have lower total health care spending than they would have if they had employer-sponsored coverage. Thus, our analysis may overestimate spending in the non-group market and also overestimate the potential to reduce spending by switching to Medicare rates.

Another more technical factor that affects the size of our estimates is that the private-to-Medicare reimbursement ratios used from FAIR Health do not factor in adjustments to Medicare reimbursements for indirect payments to hospitals such as disproportionate share hospital (DSH) payments, uncompensated care payments, indirect medical education payments (IME) payments. If the FAIR Health data included these Medicare payments, then the ratios of private-to-Medicare inpatient spending would be lower than the ratios used in our analysis because the Medicare reimbursement rates themselves would be higher. This would then lead to a somewhat lower estimated reduction in spending if Medicare rates were used for the privately insured. Using a MedPAC estimate that about 15% of Medicare inpatient payments are made in the form of DSH, uncompensated care and IME payments, we estimate that if those three types of payments had been factored into our analysis, it would increase private insurance inpatient reimbursement at Medicare rates by approximately $26 billion in 2021.²³  However, these indirect payments serve a broader purpose in the health care system than direct payment for health care services, so it is not clear how they would be treated in a policy that sought to curtail private prices.

Discussion

As our analysis shows, policies that limit private insurance reimbursement to Medicare rates would dramatically cut health care spending, leading to lower costs for employers and individuals with health coverage from employer-sponsored or non-group insurance, including marketplace coverage. This analysis illustrates the potential for a substantial reduction in total health spending from policies like Medicare for all, a public option, lowering the age of Medicare eligibility, or all-payer rate-setting—all other things equal. At the same time, the decrease in spending would translate into a drop in revenue for hospitals, and to a lesser extent physicians and other providers.

Health care expenditures are projected to account for 18% the United States gross domestic product (GDP) in 2021. Shifting private insurance to Medicare rates would decrease this by about 1.5 percentage points, making the share of GDP spent on health care 16.5% of GDP.²⁴  This would still be a far higher amount than comparable countries spend on health care, which ranges between 9% and 12% of GDP.

There has historically been strong resistance by hospitals and other health care providers to proposals that jeopardize their revenue, and there is every reason to suspect ongoing opposition to such policies in the future. Yet, it is not clear what the broader impact on the health care system would be. MedPAC has previously found that high reimbursement from private insurers currently reduces incentives for hospitals to operate efficiently.²⁵  When providers operate efficiently, according to MedPAC, Medicare rates are largely sufficient or could be sufficient with relatively minor adjustments, such as a 2% increase in hospital reimbursement.²⁶ 

If the reduction in hospital revenue caused some hospitals to close or limit future investments, it could negatively impact access to care and health care quality. Additionally, lower reimbursement could also negatively impact access to physicians and other health care providers. It would certainly affect physician income. However, other comparable countries spend far less than the United States does on health care per capita, and yet the United States still lags behind those countries when it comes to many measures of health outcomes, quality of care, and access to services. In all likelihood, policymakers would want to closely track the effects of this policy, and if necessary, adjust payments which would affect reductions in spending, not unlike what they have done over the years in monitoring the implementation of payment policy changes under Medicare.

At the same time, the current high prices paid for health care puts a strain on the U.S. economy—raising the cost of hiring workers with health benefits and leaving consumers with less money to spend on other goods and services. Current trends suggest that this strain is likely to worsen without policy interventions. The gap between private insurance and Medicare per enrollee spending is continuing to grow—largely due to rising health care prices.²⁷  If health care prices and insurance premiums were to decrease, economists suggest that the resulting employer savings would lead to higher wages and increase full-time employment.²⁸  At a time when wages for most workers have barely kept up with inflation²⁹  and are growing slower than health costs, a reduction in health spending could lead to a meaningful improvement in economic wellbeing and could potentially increase tax revenue.

Any reduction in health care spending for people with private insurance would be very sensitive to the specifics of how the policy was developed and how Medicare rates were used. Under a Medicare for all system, payment rates might not end up being current Medicare rates, but rather some average of Medicare, Medicaid, and private rates. Likewise, it is also possible that a public option health plan would not set private insurance rates exactly at Medicare rates but instead use a multiple of Medicare rates, for example 160% of Medicare rates, as Washington State has done. Under an all-payer rate-setting system, Medicare rates or a multiple of Medicare rates could be a ceiling for reimbursement—with insurers free to negotiate discounts below that ceiling. Setting a ceiling would allow for the possibility of even greater overall savings than using the same percentage of Medicare to set all rates, because some payers might be able to negotiate lower reimbursement rates.

This approach could be phased in gradually, which would limit the magnitude of the spending reduction, while allowing policymakers to monitor and respond, if necessary, to any adverse effects on health care providers and patient care. If such a change were considered while the United States is still recovering from the COVID-19 pandemic, policy makers may pay particular attention to the impact of changes to payments rates for the health care providers that are most vulnerable due to the pandemic. While health utilization plummeted early in the pandemic, overall spending has since rebounded. As of the third quarter of 2020, year-to-date health services spending was down by just 2.4% (relative to year-to-date spending as of third quarter in 2019). Additionally, in response to concerns about the loss of revenue due to the pandemic, the federal government has allocated about $150 billion in federal grants to hospitals and other health care providers of the $178 billion authorized as of February 12, 2020, along with loans and other financial assistance. However, it is not yet clear whether the pandemic will have a longer-term fiscal impact on certain hospitals and other providers.

During the pandemic, Medicare rates are being used to reimburse providers for treating the uninsured and to set reasonable rates for out-of-network COVID-19 vaccine administration.³⁰  Broadening the use of Medicare rates to set reimbursement for private insurance would be a dramatic shift but one that could lead to substantial reduction in health care spending. With the United States economy still reeling from the impact of COVID-19, lowering private insurance reimbursement by using Medicare rates (or a multiple of Medicare rates) has the potential to put more money in the pockets of consumers and businesses. It would also help address the high and rising cost of health care for people with private insurance. Any policy debate of this magnitude would highlight the significant tradeoffs, weighing the potential reduction in health spending against strong opposition from industry stakeholders, and concerns about the potential impact on quality and access.

This work was supported in part by Arnold Ventures. We value our funders. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

To calculate the amount that would be spent on health care for people with private insurance at Medicare rates, we used ratios of 2018 Medicare reimbursement to private insurance allowed amounts calculated by FAIR Health. FAIR Health used their private health care claims dataset. FAIR Health received approximately 2 billion medical and dental claims for the 2018 year. FAIR Health calculated Medicare reimbursement rates by applying the rules of the inpatient prospective payment system (IPPS), outpatient prospective payment system (OPPS), Medicare Physician Fee Schedule (MPFS), Medicare home health prospective payment system (PPS), Medicare Inpatient Psychiatric Facility PPS, Medicare Inpatient Rehabilitation Facility PPS, Medicare Skilled Nursing Facility (SNF) PPS, Medicare Ambulance Fee Schedule, Anesthesia Reimbursement Fee Schedule, Medicare Durable Medical Equipment, Prosthetics/Orthotics & Supplies Fee Schedule (DMEPOS), Medicare ASP Drug Pricing Files and the Clinical Laboratory fee schedule (CLAB) made available from CMS to services on claims submitted for those with private insurance. As discussed in the limitations section, FAIR Health did not include adjustments to Medicare reimbursements for indirect payments such as DSH, uncompensated care and IME. The FAIR Health ratios of Medicare reimbursement to commercial allowed amounts were calculated by metropolitan statistical area, service category, and by age group. The service categories that were used are: inpatient, outpatient, physician office, skilled nursing facility, laboratory, emergency department and urgent care center. Both facility and physician fees are included. The age groups that were used in our analysis are: 0 to 3, 4 to 18, 19 to 35, 36 to 44, 45 to 54 and 55 to 64.

As discussed in the limitations section of the report, the private-to-Medicare ratios that were used in our analysis are lower than those found in many other studies. Private insurance payment rates in those earlier studies varied based on the characteristics of the markets examined by each study and the author’s methods. Higher private payment rates were often seen in studies looking at more consolidated health care markets where providers have stronger negotiating leverage over insurers. Other factors influencing the results of the studies KFF examined were the representativeness of hospitals, physicians, and insurers used in the analysis and the data collection period, as well as differences in the services included across studies. Additionally, the FAIR Health ratios compare spending rather than prices. If people with private insurance use services more often that have relatively higher Medicare rates, then the ratio of private to Medicare spending for a set of services will be lower than the ratio of individual prices. Since our analysis focuses on spending, using ratios that compare spending rather than prices should give us a more accurate result.

The ratios from FAIR Health were then applied to 2018 spending data from IBM Health Analytics MarketScan Commercial Claims and Encounters Database (IBM Corporation). We indexed 2018 spending to the current year (2021) by applying the projected growth in spending and enrollment for those with private health insurance from the National Health Expenditures data to our estimates of 2018 spending. MarketScan is a convenience sample of health care claims provided primarily by large employers and health plans. Our analysis used claims for almost 18 million people representing about 22% of the 82 million people in the large group market in 2018. The advantage of using claims information to analyze spending is that we can look beyond plan provisions and focus on actual payment liabilities incurred by enrollees. MarketScan includes information on cost-sharing, as well as enrollees that do not have any health spending.

These data reflect out-of-pocket spending incurred under the benefit plan, but do not include balance-billing payments made to health care providers for out-of-network services or out-of-pocket payments for non-covered services. Costs for retail prescription drugs were excluded from our analysis. Our approach would not have been appropriate for prescription drug spending because there is not one Medicare price for retail prescription drugs, since those drugs are covered through the Medicare Part D program, which relies on private Part D plans that negotiate with drug manufacturers.

We reweighted the MarketScan data to represent the distribution of the entire population with private insurance. Weights were applied to match counts in the 2018 American Community Survey (ACS) for non-elderly enrollees with either employer or non-group coverage by sex, age and state. Weights were trimmed at eight times the interquartile range. In total, our analytic sample reflects a universe count of 173 million people. The ACS asks respondents about their health insurance coverage at the time of the survey. Respondents may report having more than one type of coverage; however, individuals are sorted into only one category of insurance coverage. Hospital costs were trimmed to exclude the lowest 1.5% and highest 0.5% of hospital costs within DRG. We also excluded MarketScan observations with negative spending. Due to data constraints, our analysis assumes the distribution of spending for people with private non-group insurance matches the distribution of spending for people with large group employer insurance.

To calculate what spending by private insurance would have been if Medicare rates were used instead of private insurance allowed amounts, we applied the FAIR Health ratios to total spending calculated using MarketScan within age and service category. For example, the ratio for spending on outpatient services for ages 0-3 was applied to total outpatient spending using MarketScan data for people with private insurance who are ages 0-3. We then summed spending across all age and spending categories. This approach assumes the distribution of services in MarketScan is similar to those in the FAIR Health data set on which the commercial to Medicare ratios were estimated.

We break out estimates of the reduction of spending for those that directly purchase health insurance, out-of-pocket spending for enrollees in employer plans, and the reduction in payments to providers made on behalf of enrollees in employer insurance (financed by employee and employer premium contributions). To estimate the reduction in spending attributed to services for those that directly purchase health insurance, we calculated the share of the population with private insurance in each age-sex category that was enrolled in a direct purchase plan. We multiplied the estimates of spending under current commercial rates, Medicare rates, and the reduction in savings by these shares and summed across all age and sex categories. We did not breakout out-of-pocket spending and payer spending for the direct purchase market. For those with employer insurance, we calculated out-of-pocket spending by applying the out-of-pocket share of total spending observed in the MarketScan data for each age group to the estimated spending under Medicare rates and aggregated across all groups. To estimate the share of payer spending financed by employer and employee premiums, respectively, we used MEPS data to calculate the average share of premiums covered by employer contributions (73%) and employees (27%).³¹ 

We made several simplifying assumptions to allocate the distribution of the decrease in spending among enrollee premiums and out-of-pocket spending, and employer contributions. Notably, our analysis did not account for changes in benefit design, including enrollee cost-sharing, supply of health care, or enrollment patterns if payment rates for all private insurers were set at Medicare rates. Instead, we assumed that the actuarial value of the average employer plan would stay the same if Medicare rates were used, and we used that percentage to allocate the reduction in spending across out-of-pocket costs and premiums. We also assumed that employers would keep their share of premiums constant and that the use of health care would stay the same if prices dropped.

1. Rakesh Kochhar “Unemployment rose higher in three months of COVID-19 than it did in two years of the Great Recession,” Pew Research, June 11, 2020; U.S. Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey,” February 5, 2021; Kim Parker, Rachel Minkin, and Jesse Bennett, “Economic Fallout From COVID-19 Continues To Hit Lower-Income Americans the Hardest,” Pew Research, September 24, 2020. ↩︎
2. Research for this brief is based partly upon health care claims data compiled and maintained by FAIR Health, Inc. KFF is solely responsible for the research and conclusions reflected in this brief. FAIR Health, Inc. is not responsible for any of the opinions expressed in this brief. ↩︎
3. Zach Cooper, “High Prices Drive High Health Care Spending In The US, But So Too Do Other Factors: A Response To Anderson And Colleagues,” Health Affairs, January 14, 2019. ↩︎
4. Centers for Medicare and Medicaid Services. 2019. National Health Expenditures 2018 Highlights. Washington, D.C.: Centers for Medicare and Medicaid Services. https://www.cms.gov/files/document/highlights.pdf   ↩︎
5. Benjamin Sommers, “Who Really Pays for Health Insurance?” Int J Health Care Finance Econ 5, 89–118 (2005). https://doi.org/10.1007/s10754-005-6603-5; Daniel Arnold and Christopher Whaley, “Who Pays for Health Care Costs?” Santa Monica, CA: RAND Corporation, 2020. Available at: https://www.rand.org/pubs/working_papers/WRA621-2.html; Katherine Baicker and Amitabh Chandra, “The Labor Market Effects of Rising Health Insurance Premiums,” Journal of Labor Economics 2006 24:3, 609-634. ↩︎
6. David M. Cutler and Fiona Scott Morton. “Hospitals, Market Share, and Consolidation.” JAMA vol. 310 no. 18 (November 13, 2013); Brent D. Fulton. “Health Care Market Concentration Trends In The United States: Evidence And Policy Responses.” Health Affairs 36, no. 9 (September 1, 2017): 1530–38. https://doi.org/10.1377/hlthaff.2017.0556. ↩︎
7. Brent D. Fulton. “Health Care Market Concentration Trends In The United States: Evidence And Policy Responses.” Health Affairs 36, no. 9 (September 1, 2017): 1530–38. https://doi.org/10.1377/hlthaff.2017.0556. ↩︎
8. MedPAC, March 2020 Report to the Congress: Medicare Payment Policy, March 13, 2020. ↩︎
9. MedPAC, March 2020 Report to the Congress: Medicare Payment Policy, March 13, 2020. See table 4-2. ↩︎
10. MedPAC, March 2020 Report to the Congress: Medicare Payment Policy, March 13, 2020. ↩︎
11. HHS, “HHS Launches COVID-19 Uninsured Program Portal,” HHS press release, April 27, 2020; 85 FR 71142. ↩︎
12. Washington State Health Care Authority, “Cascade Care FAQ,” Washington State Health Care Authority, January 2020. Available at https://www.hca.wa.gov/assets/program/cascade-care-one-pager.pdf ↩︎
13. Chris L. Peterson and Dale N. Schumacher, “How Maryland’s Total Cost Of Care Model Has Helped Hospitals Manage The COVID-19 Stress Test,” Health Affairs, October 7, 2020. ↩︎
14. Lane Koeing, et al, “The Impact of Medicare-X Choice on Coverage, Healthcare Use and Hospitals,” KNG Health Consulting, March 12, 2019. Available at: https://www.aha.org/system/files/2019-03/the-impact-of-medicare-X-choice-final-report-2019.pdf; Jeff Goldsmith, Jeff Leibach, and Kurt Eicher, “Medicare Expansion: A Preliminary Analysis of Hospital Financial Impacts,” Navigant. Available at: https://americashealthcarefuture.org/wp-content/uploads/2020/03/Navigant_Medicare-Expansion-Hospitals.pdf ↩︎
15. Congressional Budget Office, “How CBO Analyzes the Costs of Proposals for Single-Payer Health Care Systems That Are Based on Medicare’s Fee-for-Service Program,” Working Paper 2020-08, December 2020. ↩︎
16. MedPAC, March 2020 Report to the Congress: Medicare Payment Policy, March 13, 2020. Available at: http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch4_sec.pdf?sfvrsn=0 ↩︎
17. Darren Lubotsk and Craig A.Olson, “Premium copayments and the trade-off between wages and employer-provided health insurance,” Journal of Health Economics, Vol. 44, December 2015, Pages 63-79; Jeffrey Clemens and David M. Cutler, “Who pays for public employee health costs?” Journal of Health Economics, December 2014;38:65-76; Paige Qin and Michael Chernew, “Compensating wage differentials and the impact of health insurance in the public sector on wages and hours” Journal of Health Economics, December 2014;38:77-87; Jonathan T. Kolstad and Amanda E. Kowalski, “Mandate-based health reform and the labor market: Evidence from the Massachusetts reform,” Journal of Health Economics, May 2016;47:81-106; Craig A. Olson “Do Workers Accept Lower Wages in Exchange for Health Benefits?” Journal of Labor Economics, April 2002;20: S91-S114; The Incidental Economist, “Premium-wage tradeoff literature review: The public sector,” Dec. 10, 2015, available at: https://theincidentaleconomist.com/wordpress/premium-wage-tradeoff-literature-review-the-public-sector/; The Incidental Economist, “The economic theory of premium-wage tradeoffs,” April 12, 2016, Available at: https://theincidentaleconomist.com/wordpress/the-economic-theory-of-premium-wage-tradeoffs/; The Incidental Economist, “The premium-wage tradeoff in the private sector,” April 13, 2016, Available at: https://theincidentaleconomist.com/wordpress/the-premium-wage-tradeoff-in-the-private-sector/. ↩︎
18. KFF, “Cost-Sharing for Plans Offered in the Federal Marketplace, 2014-2021,” Jan. 15, 2021, Available at: https://modern.kff.org/slideshow/cost-sharing-for-plans-offered-in-the-federal-marketplace/. ↩︎
19. Individuals can deduct health care costs (including premiums) above 7.5% from their federal taxes. See Internal Revenue Service, “Topic No. 502 Medical and Dental Expenses,” Jan. 20, 2021, Available at: https://www.irs.gov/taxtopics/tc502.; Individuals who are self-employed may be able to deduct their entire health insurance premium. See Internal Revenue Service, “Publication 535 (2019), Business Expenses,” March 5, 2020, Available at: https://www.irs.gov/publications/p535#en_US_2019_publink1000208843 ↩︎
20. Liu, Jodi L., Zachary M. Levinson, Nabeel Shariq Qureshi, and Christopher M. Whaley, Impact of Policy Options for Reducing Hospital Prices Paid by Private Health Plans. Santa Monica, CA: RAND Corporation, 2021. https://www.rand.org/pubs/research_reports/RRA805-1.html. ↩︎
21. This change impacted the outpatient departments that had been grandfathered from changes under the Bipartisan Budget Act of 2015 that switched Medicare reimbursement for new, off-campus hospital outpatient departments to rates based on the physician fee schedule, which had the impact of lowering reimbursement for those new facilities. ↩︎
22. Federal Register Vol. 84, No. 218. ↩︎
23. Mark Miller, “Hospital Policy Issues,” MedPAC, July 22, 2015. Testimony before House Ways and Means Committee. Available at: http://www.medpac.gov/docs/default-source/congressional-testimony/testimony-hospital-policy-issues-ways-and-means-.pdf?sfvrsn=0 ↩︎
24. Calculated using Table 01 National Health Expenditures and Selected Economic Indicators, Levels and Annual Percent Change: Calendar Years 2012-2028, available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected ↩︎
25. MedPAC, March 2020 Report to the Congress: Medicare Payment Policy, March 13, 2020 (see page 61). ↩︎
26. MedPAC, March 2020 Report to the Congress: Medicare Payment Policy, March 13, 2020. ↩︎
27. Health Care Costs Institute, “2018 Health Care Cost and Utilization Report,” February 2020. ↩︎
28. Katherine Baicker and Amitabh Chandra, “The Labor Market Effects of Rising Health Insurance Premiums,” Journal of Labor Economics 2006 24:3, 609-634. ↩︎
29. Drew Desilver, “For most U.S. workers, real wages have barely budged in decades,” Pew Research, August 7, 2018. ↩︎
30. HHS, “HHS Launches COVID-19 Uninsured Program Portal,” HHS press release, April 27, 2020; 85 FR 71142. ↩︎
31. Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, “2019 Medical Expenditure Panel Survey – Insurance Component,” Available at:  https://meps.ahrq.gov/data_stats/summ_tables/insr/national/series_4/2019/ic19_iva_b.pdf. To determine the average contributions by employers and employees we summed the amounts contributed by employers and employees for single and non-single coverage for those in the private, state, and local government sector. On average employers contributed 73% of total costs and employees contributed 27%. This is slightly higher than the 72% the federal government contributes toward the most commonly chosen plans in the federal employee health benefits program. ↩︎

Medicaid is a key source of coverage for seniors and people with disabilities, including those who need long-term services and supports (LTSS) to meet daily needs. Waivers are the primary way that states expand financial eligibility and offer home and community-based services (HCBS) benefit packages to seniors and people with disabilities. Unlike Medicaid state plan authorities, which require states to cover (and provide federal matching funds for) everyone who meets the associated eligibility criteria, waivers allow states to limit the number of people served. States’ ability to cap HCBS waiver enrollment can result in waiting lists when the number of people seeking services exceeds the number of waiver slots available.

Waiting lists are one proxy for unmet need for HCBS, but waiting lists alone are an incomplete measure. Most eligibility pathways based on old age or disability, and nearly all HCBS benefits, are optional, creating a great deal of variation among states. This brief draws on several KFF state-level surveys to examine multiple measures, beyond waiting lists, to evaluate state choices about optional Medicaid eligibility pathways, spending, and services for seniors and people with disabilities.

Our review of a range of measures finds substantial state variation in adoption of policies to expand Medicaid for seniors and people with disabilities. While there has been some criticism that the ACA Medicaid expansion might crowd out other benefits, states’ ACA expansion status does not appear to be a strong predictor of policy choices related to seniors and people with disabilities. In some cases, a state’s choice to adopt the ACA expansion is associated with state take-up of options to expand eligibility and services for seniors and people with disabilities, while in many cases, state variation in policies for seniors and people with disabilities appears to be entirely unrelated to ACA expansion status.

Understanding current state-level variation in Medicaid eligibility, spending, and services for seniors and people with disabilities is important to inform upcoming policy debates. The Biden Administration supports expanding Medicaid HCBS through legislative changes to eliminate waiver waiting lists. COVID relief legislation being discussed in Congress would provide a time-limited 7.35 percentage point increase in federal Medicaid matching funds for state spending on HCBS, to fund a variety of activities to expand access to HCBS and support direct care providers during the COVID-19 public health emergency. Policymakers also may consider legislation to end Medicaid’s historical institutional bias by making HCBS a mandatory benefit, a policy that has garnered more interest in the recent months, given COVID-19’s disproportionate impact on people in institutional settings.

Introduction

Medicaid is a key source of coverage for seniors and people with disabilities, including those who need long-term services and supports (LTSS) to meet daily self-care and independent living needs. Many of the Medicaid eligibility pathways that are based on old age or disability, and nearly all home and community-based services (HCBS), are offered at state option, resulting in variation among states. Waivers continue to be the primary way that states expand financial eligibility and offer HCBS benefit packages to seniors and people with disabilities.

Unlike Medicaid state plan authorities, which require states to cover (and provide federal matching funds for) everyone who meets the associated eligibility criteria, waivers allow states to limit the number of people served. States’ ability to cap HCBS waiver enrollment can result in waiting lists when the number of people seeking services exceeds the number of waiver slots available. More than three-quarters of states (41) reported a HCBS waiver waiting list in 2018 (the most current year for which data are available).¹ 

Waiting lists are one proxy for unmet need for HCBS, but waiting lists alone are an incomplete measure of state capacity and unmet need. Waiting lists reflect the populations a state chooses to serve and how the state defines those populations, as well as the resources it commits. In addition, states’ waiting list management approaches differ with regard to prioritization and eligibility screening processes, making comparisons across states difficult. While some Affordable Care Act (ACA) opponents cite waiver waiting lists to argue that expansion diverts funds from seniors and people with disabilities in need of HCBS, research shows that the ACA Medicaid expansion has led to gains in coverage for people with disabilities and chronic illnesses. The ACA expansion is a pathway to Medicaid eligibility for people with disabilities, many of whom previously were ineligible for coverage (Box 1). In addition, HCBS waiver waiting lists predate the ACA Medicaid expansion, which became effective in most states in 2014. Waiver enrollment caps have existed since HCBS waiver authority was added to federal Medicaid law in the early 1980s, and states have reported waiver waiting lists in each year of the KFF 50-state Medicaid HCBS waiver program survey, dating back to 2002. Among the nearly 820,000 people on an HCBS waiver waiting list nationally, two-thirds reside in a non-expansion state.² 

This brief takes a closer look at multiple measures beyond waiver waiting lists to evaluate state choices about optional Medicaid eligibility pathways, spending, and services for seniors and people with disabilities as of 2018.³  The analysis draws on several KFF resources, including 50-state surveys of Medicaid financial eligibility pathways for seniors and people with disabilities, HCBS waiver programs, and state plan benefits offered, as well as state Medicaid LTSS expenditures reported by Mathematica.⁴  We find substantial state variation in adoption of policies to expand Medicaid for seniors and people with disabilities, with states’ ACA expansion status not a strong predictor of policy choices related to seniors and people with disabilities. The Appendix contains detailed data tables. Understanding current state-level variation in Medicaid eligibility, spending, and services for seniors and people with disabilities will be important to inform upcoming policy debates about proposals, including those supported by President Biden during the campaign, to expand HCBS and eliminate Medicaid’s historical institutional bias.

Key Areas of State Variation in Medicaid LTSS Policies

This brief takes a closer look at over 50 measures across three key areas (optional Medicaid eligibility pathways, spending, and services for seniors and people with disabilities) to assess state variation in LTSS policy choices beyond waiver waiting lists⁶  (Figure 1). The analysis identifies measures that demonstrate general state-level variation and measures that vary notably by states’ ACA expansion status. If a measure is presented by the binary “adopted” or “not adopted,” we consider this measure to vary notably by expansion status if it meets the following two criteria: 1) at least 15 states adopt that measure, and 2) there is at least a ten percentage point difference in the share of states that adopt that measure, by expansion status. Measures that are presented as medians or averages are considered to vary notably by expansion status if they meet the following two criteria: 1) there are at least 15 states included in calculation of the median or average, and 2) there is any degree of difference between the expansion and non-expansion averages/medians. Measures that do not vary by expansion status are considered to exhibit more general state variation.

Eligibility and Enrollment

We examined 14 key measures related to eligibility and enrollment policies for seniors and people with disabilities, including optional eligibility pathways, financial and functional eligibility criteria, post-eligibility treatment of income, and renewals. Specific measures are listed in Table 1. While nearly all states offer at least one optional state plan eligibility pathway based on old age or disability, state choices about which pathways adopted vary. Nearly all states choose to cover children with significant disabilities and working people with disabilities, and three-quarters cover medically needy seniors and/or people with disabilities. Less than half of states cover seniors and people with disabilities up to the federal poverty level, and very few states elect the Section 1915 (i) optional eligibility pathway (Appendix Table 1). Within these optional pathways, a minority of states opt to expand or eliminate asset limits (Appendix Tables 2-5). Nearly all states expand LTSS financial eligibility for both institutions and HCBS beyond state plan limits (Appendix Tables 6-9), and most states apply the same or less stringent financial and functional eligibility criteria to pathways for institutional LTSS and HCBS (Appendix Table 10). Post-eligibility treatment of income policies and spousal impoverishment standards vary across states (Appendix Table 11). Most states have adopted the ACA options to streamline renewals for pathways based on old age or disability (Appendix Table 12).

Some state policy choices related to Medicaid eligibility and enrollment for seniors and people with disabilities vary by states’ ACA expansion status, most notably with regard to optional coverage pathways. Expansion states are more likely than non-expansion states to offer coverage through certain state plan pathways, including the medically needy pathway and the buy-in for working people with disabilities (Appendix Tables 1-3, 5). Expansion states also are more likely than non-expansion states to not apply an asset limit to the buy-in for working people with disabilities (Appendix Tables 2, 5). While non-expansion states are more likely to expand financial eligibility for institutional LTSS beyond state plan pathway limits, expansion states are more likely to expand financial eligibility for several HCBS waiver populations (Appendix Tables 6-9). Expansion states typically adopt a higher median monthly personal needs allowance, expanding financial eligibility for HCBS waiver enrollees (Appendix Table 11). Additionally, non-expansion states are more likely than expansion states to adopt the ACA options to streamline Medicaid eligibility renewals for pathways based on old age or disability, including offering pre-populated forms and a reconsideration period (Appendix Table 12).⁷ 

Spending and Other Policies to Reduce Institutional Bias

We examined 17 key measures related to Medicaid LTSS spending and other policies to reduce institutional bias, including the share of LTSS spending devoted to HCBS, participation in federal HCBS grant programs, utilization controls, and waiting lists. Specific measures are listed in Table 2. Nationally, 56% of total Medicaid LTSS dollars are spent on HCBS as opposed to institutional care, with substantial variation among states, ranging from 30% to 83% (Appendix Table 13).⁸  Most states participate in the Money Follows the Person program, while over one-third were both eligible for and participated in the Balancing Incentive Program (Appendix Table 14).⁹  Two-thirds of states apply cost caps to HCBS waiver services, while very few do so for state plan home health or personal care services (Appendix Table 15). Half of states apply hour caps to home health state plan services, while less than half do so for personal care state plan services and HCBS waiver services (Appendix Table 15). Few states apply geographic limits to their HCBS waivers (Appendix Table 15). The majority of states screen people on a HCBS waiver waiting list for eligibility prior to waiting list enrollment and prioritize individuals with certain characteristics to receive waiver services when slots become available (Appendix Table 16-17). There is substantial variation among states in the average waiting period for waiver services by target population (Appendix Table 16-17).

Certain state policy choices to increase HCBS spending and reduce institutional bias vary by states’ ACA expansion status. Nearly half of all expansion states spend above the national average  (56%) of their total LTSS dollars on HCBS (vs. institutional care) compared to under one-third of non-expansion states¹⁰  (Appendix Table 13). Additionally, among the states that were eligible for the ACA’s Balancing Incentive Program (BIP), expansion states were more than twice as likely to participate as non-expansion states¹¹  (Appendix Table 14). The overall average waiting period for waiver services was longer among individuals living in expansion states compared to non-expansion states (Appendix Tables 16-17).

Covered Services

We examined 22 key measures related to Medicaid covered services for seniors and people with disabilities, including optional state plan benefits, HCBS waiver services, and self-direction policies. Specific measures are listed in Table 3. There is a great deal of variation in terms of state adoption of optional state plan HCBS, ranging from nearly all states adopting the rehabilitative services option to eight states adopting Community First Choice (CFC) attendant services (Appendix Table 18). In addition to the rehabilitative services option, half or more of states offer targeted case management, personal care, PACE, and private duty nursing state plan benefits (Appendix Table 18). Just under half of states offer ACA health homes, while fewer states offer case management or Section 1915 (i) state plan HCBS (Appendix Table 18). States’ HCBS waiver benefit packages vary widely by target population (Appendix Tables 19-24). Nearly all states offer options to self-direct state plan and/or HCBS waiver services¹²  (Appendix Table 25). When evaluating state variation in policies related to optional covered services, there is no clear relationship to states’ ACA expansion status.

Looking Ahead

Our review of a range of measures, beyond waiver waiting lists, finds substantial state variation in adoption of policies to expand Medicaid for seniors and people with disabilities, with states’ ACA expansion status not a strong predictor of policy choices related to seniors and people with disabilities. In some cases, a state’s choice to adopt the ACA expansion is associated with state take-up of options to expand eligibility for seniors and people with disabilities, while in many cases, state variation in policies for seniors and people with disabilities appears to be unrelated to ACA expansion status.

Understanding current state-level variation in Medicaid eligibility, spending, and services for seniors and people with disabilities is important to inform upcoming policy debates. President Biden during the campaign supported expanding Medicaid HCBS through legislative changes to eliminate waiver waiting lists. COVID relief legislation being discussed in Congress would provide a time-limited 7.35 percentage point increase in federal Medicaid matching funds for state spending on HCBS, to fund a variety of activities to expand access to HCBS and support direct care providers during the COVID-19 public health emergency. Policymakers also may consider legislation to end Medicaid’s historical institutional bias by making HCBS a mandatory benefit, a policy that has garnered more interest in the recent months, given COVID-19’s disproportionate impact on people in institutional settings.

Though Medicaid is serving as a safety net during the public health emergency and economic downturn, state budget shortfalls could make it challenging for states to maintain optional LTSS without additional federal fiscal support. The Families First Coronavirus Response Act provided states with a temporary 6.2 percentage point increase in federal Medicaid matching funds to support their COVID-19 response, provided that states provide continuous coverage for current enrollees and meet other maintenance of effort (MOE) requirements. Notably, a few states – all of which have adopted the ACA Medicaid expansion — reported plans to expand optional eligibility pathways based on old age or disability in FY 2021.¹³  Still, as the pandemic and economic downturn continue, states may be forced to look to cutting provider payments or eliminating optional benefits, without further fiscal relief. The Biden Administration has indicated that the PHE is expected to extend through 2021, which would ensure that states can continue to receive the FMAP bump and prevent states from scaling back optional eligibility pathways. The MOE prevents states from adopting eligibility standards more restrictive than those in effect on January 1, 2020, while states are receiving enhanced federal matching funds, although changes to optional benefits, cost-sharing (including for LTSS), and provider payments are permitted.

The Biden Administration can take a variety of administrative actions to support state Medicaid programs and ensure continued coverage for enrollees during the public health emergency. States are using various Medicaid emergency authorities to expand eligibility for seniors and people with disabilities, including those who need LTSS, during the pandemic, and the Biden Administration’s indication that the PHE declaration is likely to continue through 2021, ensures that these authorities remain available to states. Over half of states have expanded eligibility criteria for seniors and people with disabilities, while a few states have increased the total number of HCBS waiver enrollees served. Nearly all states have streamlined enrollment processes, and over one-third of states have eased premium and/or cost-sharing requirements for seniors and people with disabilities. After the public health emergency ends, the Biden Administration could encourage and work with states to incorporate policy changes to support coverage adopted during the pandemic into their regular Medicaid programs. CMS guidance issued in December 2020 specifically encourages states to identify any temporary authorities that increased HCBS access and make those changes permanent.

1. KFF, Key State Policy Choices About Medicaid Home and Community-Based Services (Feb. 2020), https://modern.kff.org/medicaid/issue-brief/key-state-policy-choices-about-medicaid-home-and-community-based-services/. ↩︎
2. Id. ↩︎
3. To align with available data sources, this report uses states’ ACA expansion status as of 2018 (33 expansion states and 18 non-expansion states). Medicaid expansion coverage became effective January 1, 2014 in all states that have adopted the expansion except for the following: Michigan (4/1/2014), New Hampshire (8/15/2014), Pennsylvania (1/1/2015), Indiana (2/1/2015), Alaska (9/1/2015), Montana (1/1/2016), Louisiana (7/1/2016), Virginia (1/1/2019), Maine (1/10/2019 with coverage retroactive to 7/2/2018), Idaho (1/1/2020), Utah (1/1/2020), Nebraska (10/1/2020), Oklahoma (planned for 7/1/2021), and Missouri (planned for 7/1/2021). For purposes of this analysis, Idaho, Utah, Nebraska, Oklahoma, and Missouri are considered non-expansion states because they implemented expansion after 2018. ↩︎
4. Mathematica, Medicaid Long-Term Services and Supports Annual Expenditures Report: Federal Fiscal Years 2017 and 2018 (Jan. 2021), https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltssexpenditures-2017-2018.pdf. ↩︎
5. KFF, People with Disabilities Are At Risk of Losing Medicaid Coverage Without the ACA Expansion (Nov. 2020), https://modern.kff.org/medicaid/issue-brief/people-with-disabilities-are-at-risk-of-losing-medicaid-coverage-without-the-aca-expansion/. ↩︎
6. To align with available data sources, this report uses states’ ACA expansion status as of 2018 (33 expansion states and 18 non-expansion states). Medicaid expansion coverage became effective January 1, 2014 in all states that have adopted the expansion except for the following: Michigan (4/1/2014), New Hampshire (8/15/2014), Pennsylvania (1/1/2015), Indiana (2/1/2015), Alaska (9/1/2015), Montana (1/1/2016), Louisiana (7/1/2016), Virginia (1/1/2019), Maine (1/10/2019 with coverage retroactive to 7/2/2018), Idaho (1/1/2020), Utah (1/1/2020), Nebraska (10/1/2020), Oklahoma (planned for 7/1/2021), and Missouri (planned for 7/1/2021). For purposes of this analysis, Idaho, Utah, Nebraska, Oklahoma, and Missouri are considered non-expansion states because they implemented expansion after 2018. ↩︎
7. Aside from the Medicaid expansion, the ACA introduced other reforms that simplify and modernize Medicaid eligibility and enrollment processes. All states must adopt these reforms for poverty-related coverage pathways, and states can choose whether to apply them to age and disability-related pathways. 42 C.F.R. § 435.916; KFF, Medicaid Financial Eligibility for Seniors and People with Disabilities: Findings From a 50-State Survey (June 2019), https://modern.kff.org/report-section/medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-findings-from-a-50-state-survey-issue-brief/. ↩︎
8. The overall shift in spending from institutional services to HCBS reflects decades long rebalancing efforts by states and the federal government to meet beneficiary preferences for community living and community integration obligations under the Americans with Disabilities Act and the Supreme Court’s Olmstead decision and provide services in the most cost effective setting. ↩︎
9. The MFP program operates in 29 Medicaid expansion states and 15 non-expansion states, and as of December 2019, 101,540 individuals have transitioned from an institution into the community since MFP began. Mathematica, Money Follows the Person: State Transitions as of December 31, 2019 (Sept. 2020), https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/mfp-2019-transitions-brief.pdf. ↩︎
10. Notably, spending data for five states (CA, IL, NC, NY and VA) are excluded, as a large share of services are provided by managed care organizations for which data are unavailable. Mathematica, Medicaid Long-Term Services and Supports Annual Expenditures Report: Federal Fiscal Years 2017 and 2018 (Jan. 2021), https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltssexpenditures-2017-2018.pdf. ↩︎
11. The BIP offered states temporary enhanced federal matching funds for Medicaid HCBS in exchange for making certain structural changes to their LTSS delivery systems. Participation in BIP was limited to states that, as of 2009, were devoting less than half of their total Medicaid LTSS spending to HCBS; 14 expansion states and four non-expansion participated. This total excludes three states (IN, LA, and NE) who initially participated in BIP but terminated their programs before completion. KFF, Medicaid Balancing Incentive Program: A Survey of Participating States (June 2015), https://modern.kff.org/medicaid/report/medicaid-balancing-incentive-program-a-survey-of-participating-states/. ↩︎
12. Self-direction typically allows individuals to select and dismiss their direct care workers and determine workers schedules. Most states also allow individuals to set worker payment rates and/or allocate their service budgets. ↩︎
13. California is expanding financial eligibility for the optional aged, blind, disabled population from 100% to 138% FPL and adding a new income disregard in the amount of the Medicare Part B premium. New Hampshire plans to expand its Medicaid buy-in program for working people with disabilities to include seniors up to 250% FPL. Louisiana is expanding HCBS waiver coverage for children with significant disabilities without regard to household income and assets. KFF, State Medicaid Programs Respond to Meet COVID-19 Challenges: Results from a 50-State Medicaid Budget Survey For State Fiscal Years 2000 and 2001 (Oct. 2020), https://modern.kff.org/medicaid/report/state-medicaid-programs-respond-to-meet-covid-19-challenges/. ↩︎