Medicaid Plays Important Role in State’s Economy

Seldom do we hear about healthcare programs that benefit Connecticut’s economy.

With much of the chatter focusing on the ever-increasing cost of care and ever-expanding role of the government, we try to reinvent the wheel rather than focus on past success.

Connecticut’s Medicaid program is one of those successes. 

In 2010, Connecticut was the first state to expand Medicaid coverage, with a second expansion in 2014.

The expansions made Medicaid the second most prevalent type of healthcare coverage in Connecticut at 22%, with employer-sponsored coverage continuing to lead the way at 54%. 

After the expansion authorized under the Affordable Care Act, Medicaid has continued to provide  coverage for over 800,000 Connecticut residents.

Eligibility Requirements

Medicaid’s eligibility requirements and funding structure are what set its economic impact apart from other plans.

Medicaid eligibility is determined by financial need and other criteria.

While Medicaid services are intended for individuals up to 155% of the federal poverty level, it also covers long-term care services for older adults and people with disabilities of all ages who live in nursing homes and the community.

After employer-sponsored plans, Medicaid is the second most prevalent type of healthcare coverage.

The eligibility structure of Medicaid correlates to the strength of the economy.

Since eligibility requirements are directly tied to the federal poverty level, if the economy improves and wages increase, fewer individuals will qualify for Medicaid.

The same corollary effect is realized if a recession hits. When wages decrease and the state loses jobs, more individuals become eligible for Medicaid. 

Partnership

Medicaid funding operates as a partnership between the state and the federal government. Currently, the federal government contributes 59.5% to Medicaid funding, while the state pays 40.5%.

That means last year the federal government contributed nearly $5.2 billion to our economy, making Medicaid the largest source of federal funding for Connecticut.

While the federal funding contribution is a helpful way to supplement the state’s healthcare programs, Connecticut has implemented Medicaid to reduce its per person costs more than any other state.

In 2017, Health Affairs reported:

“Connecticut’s Medicaid program led the nation in controlling cost trends on a per enrollee basis for the period from 2010-2014. Connecticut reduced its per person spending by a greater percentage (5.7%) than any other state in the country.”

Connecticut, which currently has the sixth-highest healthcare expenditures in the country for private plans, has the ninth-lowest Medicaid costs per person. 

Although healthcare costs have been at the forefront of the political discussion, that does not diminish the importance of quality of care.

Innovative Solutions

As we’ve seen in the private market, Medicaid has developed innovative solutions by becoming self-insured.

The self-insured model allows Medicaid to address past problems by providing intensive care management, standardizing member and provider supports, and providing new practice transformation resources.

Medicaid has also shifted to value-based payment reform to improve care and effectively utilize dollars. 

Connecticut can attribute its low uninsured rate—just 5%—to Medicaid and its expansion.

Connecticut can also attribute its low uninsured rate to Medicaid and its expansion.

In January 2014, approximately 286,000 individuals in Connecticut were uninsured. It was estimated that, with Medicaid expansion, about 38 percent of the 286,000 would qualify for either Medicaid or CHIP.

In 2018, Connecticut reported one of the lowest uninsured rates in the country at 5%, or 185,000 individuals.

Uncertain Future

Despite the vital role Connecticut’s Medicaid program plays in our healthcare system and how it paves the way for other states, its future is uncertain.

The continuous legislative threat of a public option through the expansion of Medicaid will disrupt an innovative program that has become a national model.

Additionally, the historically high minimum wages increases that are set to take place over the next four years will make many individuals ineligible for Medicaid, yet unable to afford plans off the exchange.

The threat of a public option through the expansion of Medicaid will disrupt an innovative program that has become a national model.

As another legislative session quickly approaches, it is important that we learn from our past failures and preserve our successes.

Through the innovations our state has adopted under Medicaid, we have been able to capitalize on federal dollars, minimize healthcare liability by lowering our uninsured rate, and reduce the cost of care to the eligible population.

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For more information, contact CBIA’s Michelle Rakebrand (860.244.1921) | @MRakebrand