Medicare & Medicaid – Concise Exam Notes

Theories of Government Intervention

• Public Interest Theory: aims at $\text{wealth redistribution}$ to low-income groups and $\text{efficiency improvement}$ (e.g., antitrust).
• Economic Theory of Regulation: redistribution favors politically influential groups; efficiency often secondary, monopoly tolerated.

Government Roles in Health Care

• Provider (e.g., VA, NIH)
• Purchaser (e.g., $\text{Medicare}$, $\text{Medicaid}$)
• Subsidizer (e.g., tax-free employer insurance, state exchanges)
• Regulator (multiple federal/state agencies; Medicare sets market standards).

Key Federal Health Agencies (FY $2021$ budgets)

• CMS $\approx$ $\$1.2\,\text{trillion}$ – administers Medicare & Medicaid.
• NIH $\$41.7\,\text{B}$ – research.
• CDC $\$6.6\,\text{B}$ – disease control.
• FDA $\$6.2\,\text{B}$ – product safety.
• Others: ACF, HRSA, IHS, SAMHSA.

Medicare Essentials

• Social insurance begun $1965$ for elderly with $\ge 40$ quarters payroll tax; buy-in permitted with fewer quarters.
• Disabled added $1972$ (strict SSA criteria, $2$-yr SSDI wait).
• Waived wait: ESRD (dialysis $4^{\text{th}}$ month), ALS (coverage $1^{\text{st}}$ month).

Part A – Hospital Insurance

Institutional care with cost-sharing:
• Inpatient hospital $90$ days/illness $+60$ lifetime reserve.
• SNF $100$ days post $\ge 3$-day stay.
• Home health $100$ visits post-stay.
• Lifetime mental health inpatient limit $190$ days; hospice covered.

Part B – Supplementary Medical Insurance

Optional (>$95\%$ enroll). Covers physician, OPD, DME, labs, select preventive & non-post-acute home health.

Not Covered by Medicare

Routine physicals/vision/hearing/dental, most LTC, many preventive tests.

Supplemental Coverage (circa $1999$)

ESI $33\%$, Medigap $27\%$, Medicaid $11\%$, Medicare Managed Care $18\%$, none $9\%$.

Part C – Medicare Advantage

Risk-adjusted capitated plans (HMO, PPO, PFFS, MSA) offering Parts A & B; often include Part D.

Part D – Prescription Drugs

Standard benefit with deductible and cost-sharing; IRA $2022$ introduces annual out-of-pocket cap.

Spending Snapshot

LTC ≈ $10\%$ of Medicare ($2004$).

ACA Effects on Medicare

No-cost preventive services, annual exam, smoking cessation; donut hole phased to $25\%$ coinsurance by $2020$.

Medicaid Essentials

• Roles: insure low-income, cover disabled lacking other insurance, supplement Medicare (LTC & cost-sharing), fund safety-net providers.
• Joint federal–state finance (FMAP $\le 83\%$; NY $50\%$).
• ACA expansion: all with income <133\% FPL (state-optional; fed $100\%$ funding $3$ yrs then $90\%$).

New York Highlights

• >$4$ M covered; $\approx25\%$ of $\$180\,\text{B}$ state health economy.
• Children & adults = $75\%$ of enrollees, $25\%$ of spend.
• LTC = $41\%$ of NY Medicaid spending; community-based now > nursing homes.
• Managed-care penetration high for adults/children, low for elderly/disabled.

Recent Policy Trends

• Work requirements, beneficiary cost-sharing, behavior incentives.
• Cost-reduction initiatives (e.g., NY DSRIP), push to managed-care.

Current Challenges (as of 03\/2025)

Medicare: discuss raising eligibility age, service reductions, fewer field offices, constrained SSA enrollment.
Medicaid: proposals to roll back ACA expansion, shift to block grants, lower federal match, impose work mandates.