October 21, 2021 The management consulting firm McKinsey & Company has issued a new report estimating that administrative changes and efficiencies could save the US health system more than a quarter trillion dollars.As noted in a Viewpoint article published in JAMA on October 20: "The analysis dissected profit and loss statements of individual health care organizations, estimated spending on specific processes, and compared administrative spending in health care with that of other industries. The conclusion of the report is that an estimated $265 billion, or approximately 28% of annual administrative spending, could be saved without compromising quality or access by…
Health Care in the US Compared to Other High-Income Countries
On August 4, the Commonwealth Fund issued a new report entitled Mirror, Mirror 2021: Reflecting Poorly / Health Care in the US Compared to Other High-Income Countries. The report compares health care systems in eleven nations: the United States, Canada, Switzerland, France, Sweden, New Zealand, Germany, the United Kingdom, Australia, the Netherlands, and Norway. The report's key findings: "The top-performing countries overall are Norway, the Netherlands, and Australia. The United States ranks last overall, despite spending far more of its gross domestic product on health care. The U.S. ranks last on access to care, administrative efficiency, equity, and health care…
Commonwealth Fund “Mirror Mirror”
Overview "The United States ranks last in health care system performance among the 11 countries included in this study (Exhibit 2). The U.S. ranks last in Access, Equity, and Health Care Outcomes, and next to last in Administrative Efficiency, as reported by patients and providers. Only in Care Process does the U.S. perform better, ranking fifth among the 11 countries. Other countries that rank near the bottom on overall performance include France (10th) and Canada (9th)."This analysis reveals striking variations in performance across the domains. No country ranks first consistently across all domains or measures, suggesting that all countries have…
Medicaid Overview
"Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS), to a diverse low-income population, including children, pregnant women, adults, individuals with disabilities, and people aged 65 and older."State participation in Medicaid is voluntary, although all states, the District of Columbia, and the territories<sup>1</sup> choose to participate. States must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute’s basic framework. This flexibility results in variability across state Medicaid programs.The federal government…
Medicaid Enrollment
"The ACA Medicaid expansion has significantly increased Medicaid enrollment and federal Medicaid expenditures. In FY2017, an estimated 12 million individuals were newly eligible for Medicaid through the ACA Medicaid expansion (i.e., expansion adults), and total Medicaid expenditures for the expansion adults were an estimated $71 billion. Enrollment for the expansion adults is projected to be 13 million in FY2026, and expenditures for the expansion adults are projected to be $120 billion in FY2026 (with the federal government paying $108 billion and states paying $12 billion)."Between FY2014 and FY2015, the average per enrollee costs for expansion adults is projected to have…
Financial Eligibility for Medicaid
"Medicaid is also a means-tested program that is limited to those with financial need. However, the criteria used to determine financial eligibility—income and sometimes resource (i.e., asset) tests—vary by eligibility group."For most eligibility groups the criteria used to determine eligibility are based on modified adjusted gross income (MAGI) income counting rules. There is no resource or asset test used to determine Medicaid financial eligibility for MAGI-eligible individuals.26"While MAGI applies to most Medicaid-eligible populations, certain populations such as older adults and individuals with disabilities are statutorily exempt from MAGI income counting rules. Instead, Medicaid financial eligibility for MAGI-exempted populations is based…
Categorical Eligibility for Medicaid
"Medicaid categorical eligibility criteria are the characteristics that define the population qualifying for Medicaid coverage under a particular eligibility pathway; in other words, the nonfinancial requirements that an individual must meet to be considered eligible under an eligibility group. Medicaid covers several broad coverage groups, including children, pregnant women, adults, individuals with disabilities, and individuals 65 years of age and older (i.e., aged). There are a number of distinct Medicaid eligibility pathways within each of these broad coverage groups."Historically, Medicaid eligibility was limited to poor families with dependent children who received cash assistance under the former Aid to Families with…
Medicaid Expenditures
"The cost of Medicaid, like most health expenditures, historically increased at a rate significantly faster than the overall rate of U.S. economic growth, as measured by gross domestic product. In the past, much of Medicaid’s expenditure growth has been due to federal or state expansions of Medicaid eligibility criteria, such as the ACA Medicaid expansion."Medicaid expenditures are influenced by economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates (see the “Medicaid Enrollment” section for a discussion of the impact of the unemployment rate on Medicaid enrollment, which also impacts expenditures), and individuals’ wages. Demographic factors include…
Medicaid Financing
"The federal government and the states jointly finance Medicaid.47 The federal government reimburses states for a portion (i.e., the federal share) of each state’s Medicaid program costs. Because federal Medicaid funding is an open-ended entitlement to states, there is no upper limit or cap on the amount of federal Medicaid funds a state may receive. In FY2018, Medicaid expenditures totaled $616 billion. The federal share totaled $386 billion and the state share was $230 billion.48" Source: U.S. Congressional Research Service. Medicaid: An Overview (R43357; June 24, 2019). https://crsreports.congress.gov/product/pdf/R/R43357
State Share of Medicaid Financing
"The federal government provides broad guidelines to states regarding allowable funding sources for the state share (also referred to as the nonfederal share) of Medicaid expenditures. However, to a large extent, states are free to determine how to fund their share of Medicaid expenditures. As a result, there is significant variation from state to state in funding sources."States can use state general funds (i.e., personal income, sales, and corporate income taxes) and other state funds (e.g., provider taxes,53 local government funds, tobacco settlement funds, etc.) to finance the state share of Medicaid. Federal statute allows as much as 60% of…
