Publications by Brian K. Bruen for Health Policy Center

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This analysis uses Medicaid administrative data to estimate the share of current Medicaid enrollment and spending attributable to dual eligibles and the fiscal effects of hypothetical reforms where the federal government takes up some or all of the states’ expenditures for dual eligibles. In the paper we find that the 7.2 million dual eligibles account for about 14 percent of Medicaid enrollees and for over 42 percent of Medicaid expenditures for medical services. Most of these expenditures are for long-term care services or prescription drugs. In the paper we present six hypothetical restructuring options where the federal government assumes a larger role in the financing of dual eligibles. The largest benefits would accrue to states if the federal government absorbed long term care spending for the dual eligibles, which currently accounts for about two-thirds of all spending on dual eligibles. But savings would be significant if the federal government absorbed responsibility for paying for Medicare premiums and cost sharing on Medicare covered services, which would provide a savings of $6.5 billion (2002 dollars). Taking over responsibility for prescription drugs would increase state savings to $5.6 billion. (Kaiser Commission on Medicaid and the Uninsured brief, September 1, 2003.)

This brief explores the factors behind the 25% increase in Medicaid spending that occurred between fiscal years 2000 and 2002. It concludes that the spending increases have been driven by enrollment increases resulting from the loss of income and private insurance during the current economic downturn together with rising health care costs, particularly prescription drugs, which have affected the entire health care sector. Despite slower enrollment growth for the aged and disabled and for children and non-disabled adults, the aged and disabled accounted for almost 60% of the spending growth. Although current growth rates are clearly high relative to state fiscal capacity, per enrollee spending growth is below levels seen in the private health care market.

Using data from a 2002 survey, the authors look at the design and operation of Medicaid disproportionate share hospital (DSH) and upper payment limit (UPL) programs in thirty-four states. The authors find that more available DSH gains were paid to hospitals in 2001 than occurred in the late 1990s. By contrast, survey data suggest that the bulk of available UPL gains in 2001 were kept by states and not by providers. Using simulation analyses, the authors estimate that because of DSH and UPL practices, the effective 2001 federal Medicaid match rate in the survey states was about three percentage points higher on average than it would have been otherwise.

The Medicare and Medicaid programs distribute extra payments to hospitals that treat a disproportionate share of indigent patients. The disproportionate share hospital (DSH) payment program under Medicare and Medicaid represent an important source of hospital revenues with DSH payments totaled nearly $20 billion in 1998. Yet relatively little is know about the distribution of these payments and how well they are targeted toward safety net hospitals. In a first time national examination of the joint distribution of Medicaid and Medicare DSH funds, we find that the current allocation targets financially vulnerable safety net hospitals at least as well as the alternatives that we examined.

This issue paper examines several factors behind the recent acceleration of Medicaid spending, many of which also underlie a more general rise in health care costs and private health insurance premiums. The authors also discuss reasons why Medicaid spending growth appears likely to remain at higher levels for the foreseeable future. Factors identified as contributing to current and/or projected growth include rising Medicaid enrollment, rapid growth of pharmacy costs, escalating costs for providers—including hospitals, managed care plans, and nursing facilities—and states’ mounting use of upper payment limit financing arrangements. The authors conclude that acceleration of Medicaid spending growth is a serious concern for states and the federal government given current economic and budget circumstances, and suggest that a restructuring of Medicaid financing may be necessary if Medicaid is to continue to provide for low-income populations as well as to expand to reach more of the uninsured. (Published by the Kaiser Commission on Medicaid and the Uninsured; 2002 May.)

With spending totaling more than $15 billion a year, one of the largest public subsidy programs to help pay for health care services for the uninsured is the Medicaid disproportionate share hospital (DSH) program. Although the DSH program sometimes has been highly controversial, this study provides some insights on the experiences of five community programs that have used DSH funds in a positive way: To provide health care services to the uninsured. While each program is unique and faces it own set of circumstances, several lessons are drawn to guide other communities as they search for local solutions to the growing problem of caring for the uninsured.

Analysis of Medicaid data for 1998 showed declining enrollment and moderate expenditure growth for a third successive year, but evidence suggests that enrollment started to grow after 1998 and expenditure growth also accelerated. This paper starts with a brief review of Medicaid spending and enrollment trends throughout the 1990s, looks more closely at Medicaid administrative data for 1998, and discusses several factors that appear to be causing both reported increases in spending after 1998 and predictions of higher growth rates for the near future. The main conclusion drawn by this analysis is that Medicaid spending is likely to grow more rapidly, and that higher growth rates have potentially serious fiscal implications for both federal and state governments. (Published by the Kaiser Commission on Medicaid and the Uninsured; 2001 February.)

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