Medicaid: U.S. State Public Health Insurance Challenges

Introduction: The Uninsured Crisis in America

Millions of people in the United States today are uninsured, despite the fact that the U.S. government officially sponsors a program called Medicaid designed to help the poorest Americans obtain healthcare. Theoretically, everyone whose income falls below a designated limit should be able to rely upon Medicaid for basic care. But given the realities of economic and political life in the U.S., this is not always the case. In 1998, 16.3% of all individuals — approximately 44.3 million people — had no insurance coverage, and that number has grown significantly since the onset of the recession (Jacobs & Rapoport 2002: 315). Individuals with incomes above the poverty threshold who work multiple jobs that do not offer benefits to part-time employees often must rely upon emergency rooms for basic, primary care, yet they are not technically eligible for Medicaid.

Part of the problem is inconsistency in Medicaid funding and standards from state to state. Unlike Medicare, the program designed to provide healthcare coverage for senior citizens, Medicaid programs are run by the states and financed through both state and federal initiatives. States have been financially strained by the recent recession — there is increased demand for social services, yet less income tax revenue is replenishing state coffers. State-by-state funding is theoretically designed to allow states to tailor their aid to the needs of individual populations, but it has resulted in inconsistent policies and difficulties meeting the needs of the disparate populations Medicaid is designed to serve, including the elderly poor, children, mothers, and the disabled (Jacobs & Rapoport 2002: 323).

How Medicaid Works: Federal and State Funding

Medicaid's reach has been expanding because of the increase in poor children without healthcare. Since 1990, the costs of the program have skyrocketed, as it has provided funding for families whose incomes are technically above the poverty line but whose children remain uninsured. There is also a persistent reluctance among physicians to serve Medicaid patients, driven by low reimbursement rates and a chronic lack of timely payment.

In Illinois, for example, the underfunded Medicaid program accumulated $1.5 billion in unpaid medical claims from 2005 to 2007. There was also a total of $80.6 million in unpaid interest owed to providers treating Medicaid patients between July 1999 and November 2007, despite the existence of an Illinois prompt-payment law. This interest represents money that should not have needed to be spent at all, since payments made on interest do nothing to improve the quality of care for recipients. Another significant problem is the high rate of rejection of Medicaid claims and slow processing of rejection notices — as long as 87 days in fiscal year 2006, according to one recent study (Trapp 2008).

Expanding Costs and Physician Reluctance

This high rate of claims rejection has produced a correspondingly high rate of appointment denials for patients with serious health complaints, including children. A New England Journal of Medicine study published in June 2011 found that 66% of parents who identified themselves as enrolled in Medicaid-CHIP (Children's Health Insurance Program) were denied appointments by specialist physicians for complaints ranging from their children's diabetes, seizures, and asthma to broken bones and depression. By contrast, only 11% of those who identified as privately insured were denied appointments. For those whom specialists agreed to see, the waiting time was on average 22 days longer for Medicaid-CHIP patients than for privately insured patients (McArdle 2011). This results in less efficient care, given that all of the illnesses examined in the study were exacerbated, rather than mitigated, by long, untreated wait times.

Conclusion: The Path Forward for Medicaid Reform