Medicare and Medicaid at 50: Keeping America Healthy and Driving Innovation in Health Care
FACT SHEET: Medicare and Medicaid at 50: Keeping America Healthy and Driving Innovation in Health Care
Today marks the 50th Anniversary of Medicare and Medicaid, both historic social achievements that dramatically changed the health care landscape for seniors, low-income children and adults, and people with disabilities. These programs have greatly reduced the number of uninsured people and have helped create a health care system that is better, smarter, and more comprehensive.
Medicare at 50 – Stronger than Ever
More than 55 million seniors and people with disabilities can afford the care they need to remain healthy because of Medicare. Before the passage of the Social Security Amendments of 1965, about half of Americans age 65 and over lacked health insurance, forcing them to pay out of pocket or forgo needed care. Today, that figure is two percent.
The Affordable Care Act (ACA) has strengthened the Medicare program, helping produce exceptionally slow growth in per-beneficiary costs while improving benefits. This includes:
- Savings on prescription drugs: 9.4 million people with Medicare have saved over $15 billion on their prescriptions, an average of $1,598 per beneficiary.
- Free preventive services: 39 million people with Medicare took advantage of free preventive services under the law, and nearly 4.8 million people took advantage of the Annual Wellness Exam.
- Longer life for the Medicare Trust Fund: The Medicare Hospital Insurance Trust Fund will remain solvent through 2030 – an improvement of 13 years compared to 2009 (pre-ACA).
- Slow Growth Rate: Growth in per-beneficiary Medicare spending is exceptionally low – just 2.3 percent in 2014 – and is below the growth rate of per-capita GDP and about one-half of the average growth rate from 2000-2010.
Medicare is a leader in the health care system, pioneering ways to reward quality over quantity, coordinate services across settings, and provide better value for seniors and taxpayers. The Administration is focused on delivering better care to beneficiaries and putting patients at the center of their care. This includes quality improvements that have reduced hospital readmissions, saved thousands of lives, and lowered health spending by billions of dollars, and we will continue to build on this progress:
- Readmissions are down: Medicare hospital readmissions are down nearly 8 percent since 2012, meaning fewer additional hospital stays for seniors and cost savings to the program.
- Hospital acquired conditions are down: Rates of hospital acquired conditions for Medicare beneficiaries decreased by 17 percent between 2010 and 2013 – the most recent year for data – meaning fewer complications and infections for persons receiving hospital-based care and cost savings to the program.
- Innovation to drive better quality care: The Center for Medicare and Medicaid Innovation (Innovation Center) is testing innovative payment and service delivery models that reduce spending while maintaining or improving quality of care. The Innovation Center has over 20 models engaging more the 60,000 health care providers and more than 2.5 million Medicare, Medicaid, and CHIP beneficiaries are or soon will be receiving care through these initiatives.
- Alternative payment models deliver better care at better value: CMS through the Innovation Center and other programs are creating alternative payment models; including: Accountable Care Organizations (ACOs) and the Medicare Shared Savings Program have already resulted in $417 million in savings for Medicare; over 400 ACOs are participating in the Medicare Shared Savings program, serving over 7 million beneficiaries; and the Comprehensive Primary Care Initiative, a multi-payer initiative involving nearly 500 practices serving 2.5 million beneficiaries, has already resulted in decreased hospital admissions and emergency department visits at some sites.
- Quality improvements save lives and money: Quality improvements like Partnership for Patients, ACOs, Quality Improvement Organizations, and others have resulted in saving 50,000 lives and $12 billion in health spending from 2010 to 2013, according to preliminary estimates.
Medicaid at 50 – Keeping Americans Healthy
Medicaid provides comprehensive coverage to about 70 million eligible children, pregnant women, low-income adults, people living with disabilities, and seniors. It covers essential services like doctor visits, hospital stays, preventive care (such as immunizations, mammograms and colonoscopies), care for new and expecting mothers, mental health care, and dental and vision care for children and low-income families.
Medicaid has produced significant benefits to people of all ages and in all stages of their lives, including:
- Cutting the uninsured rate for children by more than half: Between 1997 and 2014, Medicaid - together with its companion program, the Children's Health Insurance Program (CHIP) - was the driving force behind a dramatic reduction in the rate of uninsured children, from 13.9 percent to 5.5 percent.
- Covering home and community-based services so people with disabilities and seniors can live independently: According to a report by the Kaiser Family Foundation, roughly 80 percent of non-elderly Medicaid beneficiaries with disabilities who use long-term services and supports receive services in the community rather than in institutions, and half of all elderly Medicaid beneficiaries who use long-term care receive services at home or in the community.
- Supporting people with disabilities: Medicaid has led the way in finding creative options to provide holistic services and supports for people with disabilities. Personal Care is an optional state plan benefit that can play an important role in supporting people in their homes and communities, by providing necessary help to caregivers, and helping to prevent the need for institutional care. Self-direction affords individuals an important option for maximum choice and control over the services they receive and helps people live and work in integrated communities. Support for caregivers provides assistance, training, and respite for family members who provide daily care to beneficiaries. And peer supports encourage peer-to-peer mentoring relationships that improve health.
- Contributing to a drop in premature births by reducing the number of early elective deliveries: Through the Strong Start for Mothers and Newborns initiative, a public-private partnership and awareness campaign, HHS is working with hospitals to reduce the number of unnecessary early elective deliveries among women enrolled in Medicaid or CHIP, which will improve health outcomes and reduce costs. HHS collaborated with Hospital Engagement Networks across the country to identify and spread best practices, which contributed to a 70.4 percent reduction in early elective deliveries between 2010 and 2013 among participating hospitals.
Through continual innovation and improvement, Medicaid has been taking steps to deliver better care, spend health care dollars more wisely, and provide better access, including:
- Paying for value, not volume: Medicaid ACOs in a number of states are identifying indicators of access, care coordination, and cost-efficiency and have tied provider payments to meeting or exceeding goals related to those indicators.
- Making it easier to apply for coverage: As a result of the ACA, the process to gain coverage through Medicaid has been streamlined, so individuals can apply online, by telephone, by mail, or in person, and can get help from application assisters in their communities or by calling a toll-free number.
- More timely eligibility decisions: States now rely on available electronic data sources to confirm information on the application, facilitating faster eligibility decisions. States are making substantial progress processing Medicaid and CHIP applications more efficiently for people whose eligibility is based on modified adjusted gross income, often in real or near real-time. For example, in Washington, 92 percent of applications are processed in under 24 hours; in New York, 80 percent of applications are processed in one session; and in Rhode Island, 66 percent of applications are processed without manual intervention or the requirement of additional information.
As a result of the ACA, states have new opportunities to expand their Medicaid programs which extends health coverage to more low-income people. A recent study found that, since October 2013, the uninsurance rate among low-income adults has fallen 5.2 percentage points more in expansion states than in non-expansion states. Medicaid expansion has had other significant beneficial effects as well:
Less uncompensated care: According to the HHS Assistant Secretary of Planning and Evaluation, hospitals provided over $50 billion in uncompensated care in 2013; in 2014, there was a $7.4 billion reduction in uncompensated care costs, with 68 percent of the reduction coming from states that expanded Medicaid.
- Improved Access for Beneficiaries. The Commonwealth Fund Biennial Health Insurance Survey of 2014 looked at the experiences of adults with private insurance compared to Medicaid beneficiaries who had coverage for a full year, as well as adults who were uninsured for some time during the year. The survey found that Medicaid beneficiaries were as likely as those with private insurance, and significantly more likely than uninsured adults, to report having a regular source of care.
- Better health and longer lives: A recent Council of Economic Advisers report estimates that states that have already expanded Medicaid will lower the risks of death. The report estimates that if all states that have not expanded Medicaid did so, an additional 5,200 deaths would be avoided every year once coverage was fully in effect.
- Greater financial security: The Council of Economic Advisers estimates that states that have already expanded Medicaid have reduced the number of people who have trouble paying bills due to the burden of medical costs by 594,000 each year. If all states that have not yet expanded Medicaid did so, 611,000 fewer Americans will have trouble paying other bills due to the burden of medical costs.