A Primer on Medicare: Key Facts About the Medicare Program and the People it Covers
What is the role of Medicare for dual-eligible beneficiaries?
Medicare and Medicaid play important but different roles for people who are eligible for both programs.
For the 10 million low-income elderly and disabled people who are covered under both the Medicare and Medicaid programs (often referred to as “dual-eligible” beneficiaries), Medicare is their primary source of health insurance (Figure 14). Medicare covers most medical services, including inpatient and outpatient care, physician services, diagnostic and preventive care and, since 2006, outpatient prescription drugs under Part D plans. Medicare does not cover routine outpatient dental care or non-skilled long-term services and supports, such as in home care or extended home and personal care in the community. Medicaid, a need-based program funded jointly by the federal and state governments, supplements Medicare by providing help with Medicare’s premiums and cost-sharing requirements, and by helping to pay for the services that are not covered by Medicare. Together, these two programs help to shield very low-income Medicare beneficiaries from potentially unaffordable out-of-pocket medical and long-term care costs.
Dual-eligible beneficiaries are disproportionately counted among both Medicare and Medicaid’s high spenders. In 2010, dual-eligible beneficiaries comprised 20 percent of Medicare beneficiaries but 34 percent of Medicare spending, and, similarly, 14 percent of the Medicaid population but 34 percent of Medicaid spending (Figure 15).1
Dual-eligible beneficiaries are poorer and have more medical needs than beneficiaries who are not dually eligible.
Dual-eligible Medicare beneficiaries are more likely than other Medicare beneficiaries to be frail, live with multiple chronic conditions, and have functional and cognitive impairments. Four in 10 dual-eligible beneficiaries (39%) are under age 65 and living with disabilities, compared to about one in 10 (11%) non-dual eligible beneficiaries. Nearly half (48%) of all dual-eligible beneficiaries rate their health status as fair or poor, more than double the share of non-dual eligible beneficiaries (22%). A larger share of dual-eligible beneficiaries than non-dual eligible beneficiaries have three or more chronic conditions (70% versus 63%); more than half (56%) of all dual-eligible beneficiaries have a cognitive or mental impairment, compared to one quarter (25%) of non-dual eligible beneficiaries; and more than half (55%) live with one or more functional impairments in activities of daily living (ADLs), compared to 29 percent of other Medicare beneficiaries. A substantially greater share of dual-eligible beneficiaries than other Medicare beneficiaries live in long-term care facility settings (17% versus 2%) (Figure 16).
As a result of having greater medical needs, dual-eligible beneficiaries also use more Medicare services, particularly acute care services, than other Medicare beneficiaries. Among dual-eligible beneficiaries in traditional Medicare, one-quarter (25%) had at least one hospitalization in 2010 (versus 16% of other beneficiaries) and 11 percent had two or more hospitalizations (versus 6% of other beneficiaries). Dual-eligible beneficiaries were also more likely to use the emergency room in 2010: 44 percent had at least one emergency department visit versus 24 percent of other beneficiaries.
Many, but not all, dual-eligible beneficiaries are high-need, high-cost beneficiaries.
Some dual-eligible beneficiaries, often described as “high need” or “high cost,” have extensive need for acute, post-acute, and long-term care services and supports. One quarter (25%) had Medicare spending of $20,000 or more in 2010, and another 17 percent had Medicare spending between $10,000 and $20,000 (Figure 17). Other dual-eligible beneficiaries use relatively few services and incur relatively low Medicare spending, including more than one-quarter (26%) with Medicare spending below $2,500. Three-quarters (75%) of all dual-eligible beneficiaries had no inpatient hospitalization and more than half (56%) had no emergency department visit in 2010—two of the most expensive health care services on a per capita basis.
Dual-eligible beneficiaries who are under age 65 with disabilities have different needs and lower Medicare costs, on average, than those dual-eligible beneficiaries who are age 65 and older. Specifically, a smaller share of those under age 65 have 3 or more chronic conditions compared to those age 65 and older (61% versus 77%), but a larger share have cognitive or mental impairments (65% versus 51%).2 However, a similar share of dual-eligible beneficiaries in traditional Medicare who were under age 65 compared to those age 65 or older had an inpatient stay (21% versus 28%) and a similar share had one or more emergency department visits (47% versus 42%) in 2010.3
Efforts are underway to improve the coordination of care for dual-eligible beneficiaries.
Policymakers at the federal and state levels are developing initiatives for dual-eligible beneficiaries to improve the coordination of their care and to reduce spending for both Medicare and Medicaid. Currently, the Centers for Medicare & Medicaid (CMS) has approved 13 federal-state demonstrations in 12 states (California, Colorado, Illinois, Massachusetts, Michigan, Minnesota, New York, Ohio, South Carolina, Virginia, and Washington) to improve care coordination and align financing for up to 1.5 million dual-eligible beneficiaries. Most states are pursuing capitated managed care options; two states (Colorado and Washington) are testing managed fee-for-service (FFS) models, and one state (Minnesota) will integrate administrative, but not financial, alignment. As of October 2014, 166,580 beneficiaries were enrolled in demonstrations in California, Illinois, Massachusetts, Ohio, and Virginia. CMS has also undertaken an initiative to prevent unnecessary hospitalizations of nursing home residents, two-thirds (67%) of whom are dual-eligible beneficiaries, by providing enhanced on-site services and supports.What types of supplemental insurance do beneficiaries have? How do Medicare beneficiaries fare with respect to access to care?