PUBH 6012 Exam 3

What is Medicare, and what statute authorized it?

Federal health insurance for adults 65+, certain disabilities, and people with end-stage renal disease or ALS.

Authorized under Title XVIII of the Social Security Act, signed by President Johnson in 1965

Run by the Centers for Medicare and Medicaid Services, the second-largest social insurance program in the US

Three pathways to Medicare eligibility?

All require US citizenship or legal permanent residency

- Age 65+ with 10 years of Social Security earnings (your own or a spouse's record)

- Disability - receiving Social Security Disability Income for at least 24 months

- End-stage renal disease or ALS, covered immediately, no waiting period

What does qualifying for Medicare actually get you?

Automatic entitlement to Part A, plus eligibility to enroll in Parts B, C, and D (those are voluntary)

What are the four parts of Medicare?

- Part A: hospital/inpatient services

- Part B: physician/outpatient services

- Part C: Medicare Advantage (private managed care plans)

- Part D: prescription drug plans

Traditional Medicare vs. Medicare Advantage

Traditional Medicare (Parts A & B): fee-for-service. The government pays providers for each service rendered, and the patient can see any provider that accepts Medicare.

Medicare Advantage (Part C): capitated managed care. The government pays a private insurer a set monthly amount per enrollee, and the insurer manages the patient's care with provider networks and prior authorization

Part A: enrollment, coverage, financing

Mandatory once you're eligible

- Covers: inpatient hospital, hospice, skilled nursing facility (short-term nursing care after a hospital stay)

- Does NOT cover long-term care

- Funded mainly by a 2.9% payoll tax (the Hospital Insurance Trust Fund), about 90% of Part A funding

How is the 2.9% Part A payroll tax split?

- Employers pay 1.45%

- Employees play 1.45% on income up to $200k (individual) / $250k (couple)

- Employees pay 2.35% on income above that threshold (the Additional Medicare Tax)

Why does Part A cover hospice but not long-term nursing home care?

Medicare was designed for acute medical care, not custodial/chronic care. Hospice fits acute end-of-life medical needs. Long-term care is Medicaid's role, which is a major reason people end up enrolled in both programs. Skilled nursing facility stays are only covered short-term (cost-sharing kicks in after day 20)

Part B: enrollment, cost sharing, what it covers

- Voluntary enrollment (with a 10% per year permanent late penalty)

- 20% coinsurance after the annual deductible

- Covers: physician services (inpatient or out), outpatient services, durable medical equipment, physician-administered drugs (e.g., chemotherapy), preventive services, home health visits

How is Part B financed?

Through the Supplemental Medical Insurance fund:

- ~73% general federal tax revenue

- ~24% monthly beneficiary premiums

- Higher-income beneficiaries pay higher premiums

This is structurally different from Part A - Part B is NOT funded by payroll taxes

Why does Part B charge a late enrollment penalty?

To prevent adverse selection. If enrollment were voluntary with no penalty, health seniors would wait until they got sick to enroll, driving up premiums for everyone who did enroll.

The permanent 10% per year penalty pushes people to enroll on time and keeps the risk pool balanced between healthy and sick people

Part C (Medicare Advantage)

- A private insurer manages care, paid by Medicare a fixed amount per enrollee

- Must be actuarially equivalent to traditional Medicare, it covers everything Parts A and B cover, at minimum

- Caps out-of-pocket spending (traditional fee-for-service Medicare has no out-of-pocket cap)

Trade-offs of Medicare Advantage vs. traditional Medicare?

Advantage upsides: often adds dental, vision, and hearing; caps out-of-pocket spending; one bundled plan

Advantage downsides: restricted provider networks, prior authorization often required, cannot be paired with Medigap supplemental insurance

How much does Medicare pay Advantage plans relative to fee-for-service?

It averaged 106% of FFS in 2021, meaning Medicare pays private Advantage insurers somewhat more than it would have spent covering the same person through traditional Medicare.

This is a recurring policy concern about whether Advantage actually saves money

How and when was Part D created?

Created by the Medicare Modernization Act of 2003, effective 2006

It's voluntary outpatient prescription drug coverage, with a late-enrollment penalty if you skip it when eligible and don't have equivalent coverage elsewhere

Two delivery formats for Part D?

- Stand-alone prescription drug plans added on to traditional Medicare

- Medicare Advantage prescription drug plans: drug coverage bundled into a Part C plan

People can get drug coverage through an employer or union retiree plan

What 6 drug categories must every Part D plan cover?

The protected classes - a federal floor ensuring access to critical medications:

- Immunosuppressants

- Antidepressants

- Antipsychotics

- Anticonvulsants (seizure medication)

- Antiretrovirals (HIV medications)

- Antinoplastics (cancer medications)

What is the Part D "doughnut hole"?

A historical Part D coverage gap: after initial coverage, beneficiaries had to pay a much larger share of their drug costs until they reached catastrophic coverage. It left enrollees exposed to high mid-range drug spending. The ACA gradually closed it, and the Inflation Reduction Act further restructured Part D cost sharing

Your Part D coverage generally operates in three phases per calendar year:

1. Deductible Phase: You pay 100% of your drug costs until you meet your plan's deductible, which cannot exceed $615.

2. Initial Coverage Phase: You pay your plan's copays or coinsurance for covered drugs.

3. Catastrophic Coverage: Reached once you hit the $2,100 out-of-pocket threshold, completely eliminating your costs for the remainder of the year. [1, 2, 3, 4]

Part D financing

- 74% general federal revenue

- 15% beneficiary premiums

- 11% state contributions

Part D is heavily subsidized by general tax revenue, premiums cover only about a quarter of the cost of drug coverage

Key Inflation Reduction Act (2022) changes to Medicare drug benefits?

- The HHS can now negotiate Part B and Part D prices for eligible drugs (starting 2025)

- Caps drug price increases (inflation rebates)

- $2,000 annual cap on out-of-pocket drug spending

- $35/month cap on insulin

Why is Medicare drug-price negotiation under the Inflation Reduction Act significant?

It's a major policy reversal. The 2003 law that created Part D explicitly prohibited Medicare from negotiating drug prices (the non-interference clause). The Inflation Reduction Act breaks that 20-year barrier, though only for a narrow set of high-spending drugs, and only after a drug has been on the market for several years

3 options for supplemental coverage beyond traditional Medicare?

- Medigap: private supplemental insurance

-Employer-sponsored retiree coverage (~30%, declining over time)

- Medicaid: for people who qualify for both Medicare and Medicaid (dual eligible)

Supplemental coverage is only available to people in traditional Medicare, NOT Medicare Advantage

What is Medigap, and how is it structured?

Private insurance sold to help pay Medicare's cost-sharing (deductibles and coinsurance). There are 20 standardized plan types. All plans with the same letter offer identical benefits, so people can comparison-shop on price alone. Plans C and F covered both the Part A and Part B deductibles for people eligible before 2020

Who are "dual eligibles" and why do they matter?

People enrolled in both Medicare and Medicaid, typically older or disabled people with low incomes and modest assets. Medicaid helps cover their Medicare premiums and cost-sharing, plus services that Medicare doesn't cover (like long-term care).

About 20% of traditional Medicare beneficiaries get supplemental help through state Medicaid programs

What is a Prospective Payment System?

A payment model where Medicare sets a fixed payment amount in advance for a defined service or bundle of services, instead of reimbursing each service after the fact.

The goal is to control costs and create incentives for efficiency. It applies to hospitals and skilled nursing facilities, and is expanding toward physicians.

What are Diagnosis-Related Groups (DRGs)?

The classification system Medicare uses to pay hospitals for inpatient stays. Patients are grouped by diagnosis and severity, and the hospital gets a fixed payment for that group regardless of its actual codes, so it has an incentive to be efficient

What are Accountable Care Organizations (ACOs)?

Groups of providers that coordinate care for Medicare patients to reduce inefficiency and medical errors. If they hit quality and cost-savings targets, they share the savings with Medicare. They're a core "value-based" alternative to traditional fee-for-service payment

What was the Sustainable Growth Rate, and why was it always overridden?

A 1997 formula that would have automatically cut physician Medicare payment rates to control spending. By the 2010s, the required cuts had grown to 20-30%, which would have driven doctors to stop seeing Medicare patients.

Congress passed an annual "doc fix" to block the cut every single year, never letting the formula take effect for ~18 years. It was permanently repealed by MACRA (Medicare Access and CHIP Reauthorization Act) in 2015

MACRA set up a new system that pays doctors based on the quality of care they provide rather than just the quantity of services

What did MACRA (2015) establish?

The Medicare Access and CHIP Reauthorization Act:

- Repealed the Sustainable Growth Rate formula

- Created the Quality Payment Program: pays physicians based on value, not volume

- Physicians choose one of two tracks: the Merit-Based Incentive Payment System (performance scoring) or Alternative Payment Models (like ACOs)

Conceptually, what is the trajectory of Medicare payment reform?

From volume to value. Medicare keeps moving away from fee-for-service towards models that reward quality, outcomes, and efficiency. The tools: prospective/bundled payment, Diagnosis-Related Groups, no payment for hospital-acquired conditions, readmission penalties, ACOs, and the Merit-Based Incentive Payment System

What is the Medicare Hospital Insurance Trust Fund?

The dedicated account that pays for Medicare Part A (hospital/inpatient care). Funded mainly by the 2.9% payroll tax (~90%). It's the fund whose financial stability is at risk because it relies on a fixed payroll-tax stream

3 factors driving the Medicare Hospital Insurance Trust Fund's ability to pay its bills?

- Economic growth: wages and unemployment affect how much payroll taxes come in

- Health care spending trends: per-beneficiary cost growth

- Demographics: Medicare enrollment growth as the baby boomers age in 2022 projection, the Trust Fund stays financially stable through 2026

Medicaid: statute, year, structure?

- Authorized by Title XIX of the Social Security Act

- Signed into law in 1965 (same legislation as Medicare)

- A joint federal-state public health insurance program

- An entitlement: everyone eligible must be covered

- Functions as the U.S. health care safety net

What does it mean that Medicaid is an "entitlement"?

Anyone who meets the eligibility criteria is legally entitled to coverage. States cannot cap enrollment or close the program when money gets tight. This is a key structural difference from CHIP, which has capped federal funding and can freeze enrollment

Why is Medicaid called a "safety net"?

It's the program that catches people in crisis. It's been the main public insurance response to 9/11, Hurricane Katrina, the Flint water crisis, the opioid epidemic, and COVID-19. When disasters or economic shocks hit, Medicaid enrollment surges to cover newly vulnerable people

5 factors that determine Medicaid eligibility?

- Income

- Assets: no asset limit for low-income eligibility; state can set one for old-age/disability eligibility

- State residence

- Citizenship/Immigration status

- Category

Citizenship/immigration rules for Medicaid?

- Undocumented immigrants are ineligible

- Legal immigrants with qualified status are generally eligible after 5 years in the U.S.

- State option: states may cover lawfully present pregnant people and children with less than 5 years of residency

Who was eligible for Medicaid BEFORE 2014 (before the ACA expansion)?

You had to be both poor AND fit into a covered category:

- Pregnant

- Disabled (strict federal standards)

- Elderly

- Children

- Parents of dependent children

Childless, non-disabled adults were generally excluded, no matter how poor they were

What did the ACA Medicaid expansion do?

Starting in 2014, it expanded Medicaid to cover nearly ALL non-elderly adults earning at or below 138% of the FPL, getting rid of the "must fit a category" requirement. This was the first time low-income childless adults became broadly eligible

What were the dollar amounts of 138% of the Federal Poverty Level in 2023?

- $20,120/year for an individual

- $34,307/year for a family of three

Anyone earning at or below these amounts qualifies for Medicaid in a state that adopted the expansion

How did federal funding for the ACA expansion population work?

- From 2014-2016, the federal government paid 100% of the cost for new enrollees after the expansion, and states paid nothing for new enrollees

- Federal share stepped down gradually, landing at 90% in 2020 and staying there ever since, so today, the state pays just 10% of the cost for the expansion group

This enhanced match is much higher than the regular Medicaid match (50-78%) and is meant to give states a strong incentive to expand (poorer states get a bigger federal share, richer states get less). A state is always paying at least 22-50% of the bill out of its own budget for regular Medicaid

What was NFIB v. Sebelius (2012)?

A Supreme Court case where 26 states challenged the ACA Medicaid expansion. In a 7-2 decision, the Court ruled that threatening to take away ALL of a state's existing Medicaid funding if it refused to expand was unconstitutionally coercive.

Result: the Medicaid expansion became optional for states, not mandatory

What is the Medicaid "coverage gap"?

In states that did NOT expand Medicaid, poor adults can be stuck: they earn too much to qualify for traditional Medicaid but too little to qualify for marketplace subsidies (which generally start at 100% FPL). They're left with no affordable coverage option

How long does Medicaid cover pregnant people after birth, traditionally vs. the newer option?

- Traditional rule: coverage ends 60 days after delivery

- Newer state option (available April 1, 2022, authorized for 5 years): extend coverage to 12 months postpartum

States are increasingly adopting the 12-month option to address maternal mortality

Examples of MANDATORY Medicaid benefits (every state must cover)?

- Physician services

- Inpatient and outpatient hospital

- Lab and X-ray

- Children's screening services (EPSDT)

- Family planning

- Federally qualified health centers and rural health clinics

- Nurse-midwife and nurse practitioner services

- Nursing facility care

- Home health for people in nursing facilities

Examples of OPTIONAL Medicaid benefits (states choose)?

Acute care: prescription drugs, dental, vision, DME, rehabilitation/therapy, clinic services

Long-term care: intermediate care facilities, inpatient psychiatric care, home- and community-based waivers, home health, personal care, hospice, and the Program of All-Inclusive Care for the Elderly

Note: prescription drugs are technically optional, but every state covers them

What is the EPSDT benefit?

Early and Periodic Screening, Diagnostic, and Treatment: Medicaid's comprehensive benefit for enrollees from birth through age 21:

- Early: catch problems early

- Periodic: check-ups at age-appropriate intervals

- Screening: physical, mental, developmental, dental, vision, hearing

- Diagnostic: follow-up testing

- Treatment: treat what's found

What are Medicaid Alternative Benefit Plans?

The Medicaid expansion adult population must be covered through an Alternative Benefit Plan. States get flexibility in how they design it (benchmark vs. regular Medicaid benefits), but every plan has a federally required minimum floor of benefits. Must include: the children's EPSDT benefit, family planning, mental health parity, the 10 essential health benefits, health-center access, and non-emergency medical transportation\

Why?

1. It was a political compromise to make expansion palatable (gave states the option to design benefits for the huge new population of enrollees)

2. The expansion population is genuinely different from traditional Medicaid groups (low-income adults who are generally non-elderly and non-disabled)

3. The "benchmark" concept from wanting expansion coverage to resemble private insurance

Two Medicaid delivery systems, which dominates today?

- Fee-for-service: the traditional model; the state pays providers per service, and enrollees can see any participating provider

- Capitated managed care: the predominant model today, health plans get a fixed monthly payment per enrollee, and enrollees are limited to network providers

What is the Federal Medical Assistance Percentage (the "match rate")?

The share of a state's Medicaid spending that the federal government pays. It's calculated from the state's per-capita income relative to the national average, so poorer states get a higher federal match

What is the range of the federal match, and what enhanced rates exist?

- The regular match ranges from 50% (wealthier states) to about 78% (poorer states)

- Enhanced matches exist for certain groups, most notably the 90% match for ACA expansion adults

- Congress can temporarily raise the match during emergencies (e.g., COVID-19, recessions, disasters)

Why does the federal-state Medicaid structure create policy tension?

States want flexibility and lower costs; the federal government wants to guarantee access and quality. The matching funds structure ties them together: a state can't easily cut Medicaid without giving up federal dollars

CHIP basics: statute, year, who it covers?

The Children's Health Insurance Program:

- Authorized by Title XXI of the Social Security Act

- Signed into law in 1997

- A joint federal-state public insurance program

- Covers uninsured children in families earning ABOVE the Medicaid limit

- States may also cover pregnant women

- Has CAPPED federal funding (unlike Medicaid)

- Currently authorized through 2027

Key structural difference: Medicaid vs. CHIP funding?

Medicaid is an entitlement program, the federal government matches whatever a state spends (to a certain percentage), with no ceiling

CHIP has capped federal funding, states get matching dollars only up to a federal limit, so CHIP is more vulnerable to enrollment freezes if the money runs out

3 ways states can run CHIP?

- As an expansion of their existing Medicaid program

- As a separate, standalone CHIP program

- As a combination of the two

How does the CHIP federal match compare to Medicaid?

CHIP gets an enhanced match, generally about 15 pps higher than the state's regular Medicaid match, averaging about 71% nationally. The higher rate was designed to encourage states to cover more children

Required benefits in a separate (standalone) CHIP program?

Benchmark coverage must include:

- Well-baby and well-child visits

- Dental

- Mental health parity

- Vaccines

Vision and hearing are optional

What was Medicaid "continuous enrollment" during COVID-19?

During the COVID-19 pandemic, states got an enhanced federal match (+6.2 pps) in exchange for keeping everyone continuously enrolled, no one enrolled on or after 3/18/2020 could be dropped, even if their circumstances changed.

The result was big enrollment growth and a paused renewal process.

What was Medicaid "unwinding" and why was it a policy concern?

After continuous enrollment ended (3/31/2023), states had to resume normal eligibility checks on millions of people who hadn't been through the process in 3+ years.

Concerns: enrollees unfamiliar with renewals, outdated contact information, complex rules, a huge volume of renewals in a limited time, and the risk that eligible people would lose coverage over paperwork issues

Regular Medicaid eligibility & enrollment process and key timelines

- Application: states must decide eligibility within 45 days (or 90 days if disability determination is needed)

- Verification: via electronic data or paper documentation

- Redetermination: enrollees must report changes that affect eligibility

- Renewal: states review eligibility (usually once a year)

What was the Dahlgren-Whitehead "rainbow" model showing?

A model showing how the social determinants of health are layered from individual factors (age, sex, genetics) at the center, outward through lifestyle, social networks, living and working conditions (housing, education, work, water, sanitation, food, health care), to the broad social, economic, and cultural environment

The core insight: health disparities reflect fundamental decisions about how society is structured

What is "Health in All Policies"?

An approach that builds health considerations into decision-making across every sector, not just health care

It recognizes that policies in housing, transportation, education, agriculture, and the environment all shape health.

The goal: more Americans healthy at every stage of life

Health STATUS disparities vs. health CARE disparities

Health STATUS disparities: differences in disease incidence, prevalence, mortality, and burden across population groups (by race, ethnicity, income, education, disability, geography, sexual orientation)

Health CARE disparities: differences in access to, quality of, and outcomes of care that are NOT explained by clinical need, patient preferences, or appropriate clinical factors

Institute of Medicine definition of health care disparities

Racial or ethnic differences in the quality of health care that are NOT due to access-related factors, clinical needs, patient preferences, or the appropriateness of an intervention

The key conceptual move: once you account for legitimate medical factors, the differences that remain reflect bias, stereotyping, and system factors, not patient behavior

What is the STEEEP framework for high-quality care?

Safe

Timely

Efficient

Effective

Equitable

Patient-centered

Why does the Schulman study matter?

A landmark 1999 study: 720 physicians recorded interviews with hypothetical patients and recommended care. Men and White patients were more likely to be referred for cardiac catheterization than women and Black patients; Black women were significantly less likely to be referred than White men.

It became foundational evidence that clinical bias affects medical decisions and pushed disparities research into mainstream policy

What is the CMS framework for Health Equity (2022-2023)?

The decade-long strategy from the Centers for Medicare and Medicaid Services to build equity into Medicare, Medicaid, CHIP, and the marketplaces. Its first priority is improving data collection, because you can't measure disparities without good demographic data, and COVID-19 exposed how fragmented that data is.

Other priorities: provider capacity, language access, accessibility, and screening for social risk

What is public health emergency preparedness?

The ability to prevent, prepare for, protect against, respond to, and recover from health emergencies

Public health emergencies are events whose scale, timing, or unpredictability threaten to overwhelm routine health care capacity, including natural disasters, terrorism, and large infectious-disease outbreaks

What events catalyzed modern U.S. public health preparedness funding?

The 2001 anthrax attacks and 9/11. Before then, bioterrorism was seen as a remote threat and was underfunded. Afterword Congress put $1 billion into rebuilding the depleted public health infrastructure, creating the Public Health Emergency Preparedness Program and the Hospital Preparedness Program

3 categories of public health threats?

- Biological: infectious disease outbreaks, bioterrorism

- Natural disasters: hurricanes, earthquakes, floods, wildfires

- Chemical and radiological: accidents or attacks involving hazardous materials

4 modes of state-local public health governance?

- Centralized: the state runs local units (e.g., Rhode Island)

- Shared: local units led by state or local staff, with split authority (e.g., Florida)

- Mixed: no single arrangement predominates (e.g., PA)

- Decentralized: local units run by local staff with most authority (e.g., MA)

This variation makes a coordinated national response hard

4 pre-pandemic challenge areas in PH?

- Workforce: recruitment, limited bandwidth, training needs

- Technology: outdated infrastructure, systems that don't talk to each other

- Foundations: underfunded core capabilities, weak cross-sector partnerships

- Emergency: customer preparedness programs, a 'boom and bust' funding cycle

What is the legal basis for public health emergency response?

Police powers: the constitutional authority of state governments to regulate to protect public health, safety, and welfare. This includes isolation and quarantine laws. Emergency preparedness law is fundamentally an exercise of these police powers.

Examples of how the government uses police powers in emergencies?

- Emergency management assistance, compact: a mutual aid agreement among states

- Emergency use authorization: the FDA can authorize unapproved products during an emergency

- Quarantine and isolation: restricting the movement of exposed or infected people

- Legal preparedness: planning legal authorities in advance

Major policy changes revealed by COVID-19?

- Delayed responses

- Misinformation and misleading information

- Lack of uniform guidance across jurisdictions

- Unclear lines between federal and state authority

- Growing public distrust in institutions

- Equity gaps in response and outcomes

Key policy options for strengthening preparedness?

- Stable funding: break the 'boom and bust' cycle

- Clarify authority: between federal, state, and local levels

- Workforce deployment

- Data collection and exchange: interoperability and common standards

- Partnerships: across sectors and jurisdictions

Medicare vs. Medicaid: structural comparison

- Authority: Medicare = federal (Title XVII); Medicaid = joint federal-state (Title XIX)

- Eligibility: Medicare = age/disability-based; Medicaid = means-tested + categorical

- Funding: Medicare = payroll tax + premiums + general revenue; Medicaid = federal match + state revenue

- Type: both are entitlements, but Medicaid's safety-net role is broader

- Long-term care: Medicare doesn't cover it; Medicaid is the largest payer of it

Why is the ACA Medicaid expansion central to U.S. coverage policy?

It was meant to be a uniform federal expansion, closing the coverage gap for low-income adults nationwide. Because the Supreme Court made it optional, the US now has a patchwork: in expansion states, adults up to 138% of the poverty level get Medicaid, and in non-expansion states, poor adults can fall into the coverage gap with no affordable option.

The politics of which state expanded drives much of the variation in US uninsured rates

How does Medicaid's safety net role connect to disparities and the social determinants of health?

Medicaid disproportionately serves people facing structural disadvantage: low-income families, communities of color, people with disabilities, and rural residents. So its design choices (eligibility, benefits, delivery, model, and the federal match) directly shaped health disparities. Decisions like extending postpartum coverage, the children's EPSDT benefit, and behavioral health benefits are upstream prevention tools as much as they are insurance policy