Medicaid at 50
The Medicaid program covers over 6 million low-income elderly Americans, nearly all of whom also have Medicare. This figure translates to more than 1 in every 7 elderly Medicare beneficiaries. Medicaid supplements Medicare for these dually eligible seniors just as it does for dual eligible beneficiaries with disabilities, covering their Medicare premiums and cost-sharing, and, for those with very low income, providing long-term care and, in some states, other benefits such as hearing aids and eyeglasses.
Before the mid-1980s, elderly Medicare beneficiaries could qualify for Medicaid only if they were receiving SSI benefits or met their state’s medically needy standard, but federal legislative action in the late 1980s and early 1990s extended Medicaid protection to more low-income seniors. Congress first gave states an option to provide Medicaid to Medicare beneficiaries with income exceeding SSI levels but below 100% FPL. A couple of years later, in the 1988 Medicare Catastrophic Coverage Act, Congress used the Medicaid program to cushion the impact of rising Medicare premiums and cost-sharing for low-income Medicare beneficiaries, requiring all state Medicaid programs to cover these costs for Medicare beneficiaries with income below the poverty level. Although this law was famously repealed a year later, the expansion of Medicaid assistance to provide financial relief for Medicare beneficiaries was preserved. Subsequent legislation provided for partial Medicaid coverage, including assistance with Medicare premiums and cost-sharing but not Medicaid benefits, for elderly Medicare beneficiaries at somewhat higher income levels, who are known as “partial dual eligibles.”1 Three-quarters of elderly dual eligible beneficiaries are entitled to both full Medicaid benefits and financial assistance. Many states also provide Medicaid eligibility for medically needy individuals, and they can use another Medicaid option to cover institutional care for elderly individuals up to a state-set income limit up to 300% of the SSI standard and an asset test.
The most significant way that Medicaid helps the elderly is by paying for long-term care. The program covers close to 2 million elderly beneficiaries who use long-term care services – about 1 million who mostly use institutional care and another 1 million who mostly use home and community-based services and supports.2 On average, nursing home care costs more than $90,000 a year, assisted living facility care costs over $42,000, and typical use of home health aide services and adult day care each cost in the neighborhood of $20,000 a year.3 4 Such large and unpredictable expenses are difficult to save for and, in the absence of other assistance, virtually impossible to shoulder for elderly Americans living on Social Security and barely able to make ends meet.
A persistent myth about Medicaid is that large numbers of Americans with substantial means transfer their assets to get Medicaid to pay for their long-term care. Actually, people seeking Medicaid for nursing home or community-based long-term care are subject to a review of asset transfers going back five years, and Medicaid eligibility for long-term services and supports is limited to people who are impoverished, often by having spent down their own income and resources to pay for such care. In addition, Medicaid beneficiaries must contribute to the cost of care from their monthly income. The fact that long-term care remains unaffordable for most Americans and that there exists almost no assistance for long-term care other than Medicaid is a current and growing concern.
Medicaid provides crucial services and financial protection for millions of poor elderly Americans. As vital as Medicare is to the elderly, it is not comprehensive coverage and its large benefit gaps and premium and cost-sharing requirements can result in heavy financial burdens and deter Medicare beneficiaries from seeking needed care. For seniors with low or moderate income and limited resources, Medicaid lowers these barriers and provides benefits for nursing home care and community-based long-term services. Still, the goal of enrolling all elderly individuals who qualify for Medicaid has not been fully realized. Lack of awareness and understanding of the assistance Medicaid provides, complex enrollment processes, asset tests, limited federal and state outreach efforts, and beneficiary reluctance to apply for help from a program associated with welfare all contribute to low levels of participation. Navigating and coordinating coverage between Medicare and Medicaid is also a confusing and challenging task for many. Finally, it should be noted that, largely because of the restrictive asset test, Medicaid premium and cost-sharing assistance does not reach all elderly Medicare beneficiaries with very low income; under current eligibility rules, one-quarter of the elderly with income below $10,000 cannot qualify for this help.5
Major chronic conditions, including hypertension, heart disease, and diabetes, are prevalent among elderly dual eligible beneficiaries; nearly one-quarter have Alzheimer’s disease or another kind of dementia and 1 in 5 have depression.6 These conditions entail high and ongoing costs for care. Medicare finances the vast majority of acute care received by elderly dual eligible enrollees, but Medicaid finances 100% of their long-term care. In 2010, Medicaid financed 40% of combined Medicaid and Medicare spending for all services for elderly dual eligible enrollees, not including Medicaid payments for Medicare premiums.7
Largely because of their high use of long-term services and supports and the high cost of this care, the elderly, who make up just under 10% of all Medicaid beneficiaries, drive roughly 20% of Medicaid spending. Long-term care accounts for close to three-quarters of total Medicaid spending for the elderly. Half of all elderly Medicaid beneficiaries who use long-term care are receiving care in nursing homes or other institutions, but half are now receiving services and supports at home or in the community, evidence that Medicaid’s beneficial impact on independent living and community integration extends to older Americans as well as individuals with disabilities.8