With an assist from the staff of the Medicaid Statistical Information System (MSIS), I’ve crunched down Medicaid beneficiary and spending data for FY 2007. The assist was required because the Datamart program only works with Internet Explorer, and my teenagers convinced me to shift over to Apple when my old computer wore out. Previously, I had found that the Regional Economic Information System disks from the Bureau of Economic Analysis could only be used on Windows machines, not I-Macs. I guess the federal government doesn’t do Apple, although I haven’t had a problem with the Census Bureau yet. Those who have read my past posts on this subject might as well just download the attached spreadsheets for the latest year, because not much changes. But for those who are interested in my analysis, details on beneficiaries, spending, spending per beneficiary and related information follows.
New York State’s overall spending per Medicaid beneficiary, at $8,392, was 72.6% above the national average of $4,862 and well above the average of the adjacent states ($6,426): New Jersey, Connecticut, Massachusetts, Pennsylvania and Vermont. This is a huge burden for New York State, because its per capita income is only 22% above average, not 72.6%, and because the federal government requires New York to fund a higher share of its Medicaid spending than most states with non-federal dollars. The usual non-federal share is 50% for New York (and the adjacent states), but the entire excess burden is shifted to local government here, primarily to New York City. (The federal share was temporarily increased by the stimulus package). With 6.4% of total U.S. population 7.4% of U.S. poor people, New York accounted for 8.4% of U.S. Medicaid beneficiaries and 14.5% of U.S Medicaid spending in FY 2007.
The adjacent states collectively also have a per capita income that is about 22% higher than the national average, but their Medicaid spending per beneficiary is just 32.2% above average. With 10.5% of U.S. population and 8.3% of U.S. poor people, the adjacent states accounted for 8.9% of Medicaid beneficiaries and 11.8% of Medicaid spending. Those adjacent states with lower Medicaid spending include Vermont, represented by a socialist, Massachusetts, with state-level near universal health care, and Pennsylvania, with all its teaching hospitals and the highest percentage of population age 65 or over among U.S. states.
The attached spreadsheets break the data down by age, type of service, and basis of eligibility, and include some additional data on population and income that attempt to explain (or fail to explain) the differences. The big spending in New York, continues to be on hospitals and senior citizens. The low spending, probably for reasons of relative political power in Albany rather than health care, is on physicians. Some of New York’s higher spending may be explained by the characteristics and preferences of its people – with most of its poor Medicaid recipients concentrated in the downstate region which also has its highest wages and living costs, and a historic preference for more support for the needy. But a large share of the difference is explained simply by the power and greed of public service producer interests and the politicians they support in Albany.
First, consider spending by age. In FY 2007, New York State’s Medicaid spending per beneficiary was 80.3% above the U.S. average on those age 65 to 74, 95.9% above average for those 75 to 84, and 89.5% above average for those age 85 and over. New York’s spending per beneficiary for those in younger age groups was also above average, but to a lesser extent. It’s spending per beneficiary on those age 6 to 12, for example, was 35.4% above the U.S. average. In adjacent states, meanwhile, spending per beneficiary on the young is above the U.S. averages by as much or more than spending on the old – by 48.6% for those age 6 to 12 compared with 21.4% for those age 65 to 74, for example.
New York State, with the possible (and possibly temporary) exception of New York City, has become a place that working young adults move away from, leaving senior citizens and their burdens and tax exemptions behind. It has 6.4% of the total U.S. population, but 6.8% of the U.S. population over 65 and just 5.9% of the population under age 18. In New York, as in the U.S., the old are much less likely to be poor than the young (today’s young will likely be poorer still when they themselves become old). The poverty rate is 13.9% for New York State’s seniors compared with 20.4% for the state’s children. Even so, New York’s aging population means that there were about 349,000 poor seniors in there in 2007 according to the Census Bureau, or about 9.8% of all poor seniors nationwide.
New York’s large share of U.S. poor seniors fully explains its large share of older Medicaid beneficiaries, which varies from 9.9% of the national total for those aged 65 to 74 to 9.3% for to those older. (New York’s share of the nation’s poor children, at 6.7%, is higher than its share of the nation’s child Medicaid beneficiaries, which varies from 6.0% to 6.3% depending on the specific age group). With much higher spending per beneficiary, however, New York accounted for about 18% of U.S. Medicaid spending on those aged 65 and over (and those aged 45 to 64). New York State accounted for 8 to 10% of U.S. Medicaid spending on children, depending on the specific age group.
There were a total of 448,000 people age 65 or older who were Medicaid beneficiaries in New York State in 2007, but just 343,300 persons whose main basis of eligibility for Medicaid was that they were 65 or over. The latter are, for the most part, moderate, middle- and upper-middle-income households that qualify for Medicaid specifically because they are 65 and over and their health care expenses are high, not because they are poor or disabled. (Also known as the “medically needy.”) Those who are poor or disabled were presumably on Medicaid for that reason before reaching age 65. New York State’s spending per beneficiary on those whose basis of eligibility was that they were over age 65 was 99% higher than the U.S. average in FY 2007; its spending on those eligible because they were Blind or otherwise Disabled was 93% above average.
Note the data on Medicaid spending per beneficiary by age group nationally. It starts out at $4,026 for infants, and then falls to $2,000 to $3,000, roundly speaking, until age 21. Spending per beneficiary is $5,105 for those age 21 to 44, and $11,593 for those age 45 to 64, but then it drops to $8,759 for those age 65 to 74. Why? Because of the addition of moderate and middle-income persons age 65 and over, with health care that is funded by Medicare as well as Medicaid, thus making them somewhat cheaper for Medicaid. In New York, however, there is no such drop. Those who haven’t worked the 40 quarters needed to qualify for Medicare by age 65, because they were disabled, off the books or on welfare for most of their lives, are much more expensive for the Medicaid program, and it would appear that New York State has more than its share of those.
Stunningly if my family, with two adults age 45 to 64 and two teenagers, were on Medicaid in New York with an average level of spending, our cost would be $37,500–not including administrative expenses. Of course many people are on Medicaid precisely because their health care costs are too high for private insurance. According to the type of service table, Medicaid spending per beneficiary for Capitated Care (Medicaid managed care payments to insurance companies) was just $2,147 in New York, or 34.3% higher than the national average. Medicaid managed care presumably includes many families without chronic health problems, such as the above-poverty families in the Family Health Plus program. Capitated Care accounted for 3.3 million of the 4.8 million Medicaid beneficiaries in New York in FY 2007, and is a big change from when I first started compiling data on the program.
Otherwise, spending by type of service shows the usual patterns. Getting back to the seniors, at home care, including home health care and personal care aides, are often touted as a way to save money by keeping people out of nursing homes, but New York spends more on those at-home services than just about any state and yet more than average on nursing homes as well. New York State accounted for 23.9% of U.S. Medicaid spending on Home Health Care and 16.8% on Personal Support services in FY 2007 (when I first started compiling this data New York accounted for 50% of the Personal Support Services spending on Medicaid). With other data, I have shown that the people who work in these fields in New York City (where most of them are) are not well paid. For Home Health Care, high spending is explained by a high number of recipients – 19% of the U.S. total. New York State, however, only accounted for 6.2% of U.S. beneficiaries of Medicaid-funded Personal Support Services – a smaller share than in the past, as these services become more common elsewhere. And yet, New York still accounted for 16.8% of U.S. Personal Support service Medicaid spending due to a cost per beneficiary that was nearly three times the national average ($9,652 vs. $3,534). Press reports indicate that New York provides seniors with more hours of free housekeeping services than other states, and that many of the non-profit organizations that provide personal care aides under the Medicaid program are owned by members of the state legislature and their families. In fact, a large share of the cost of many at-home workers does not go to the workers themselves, or so I’ve been told.
While a combination of Home Health Care Services plus Personnel Support Services at $16,340 per beneficiary in New York is still somewhat cheaper than Nursing Home Care at $36,345, there is little evidence that New Yorkers are receiving the former in place of the latter. That is because New York still accounted for 11.4% of U.S. Medicaid beneficiaries of Nursing Home spending, compared with 6.8% of the U.S. population age 65 and over and 9.8% of the poor U.S. population age 65 and over. New York State still accounted for 14.7% of U.S. Medicaid Nursing Home spending. The adjacent states also spent more than average on at-home Medicaid-financed Home Health Care with no Nursing Home savings, although their Personal Support Service spending was lower.
Moreover, the majority of New York State Nursing Home beneficiaries are outside New York City (with local governments picking up 10% of the bill) while most Home Health Care and Personal Support Services beneficiaries are inside New York City (with the City of New York paying 25% of the cost). Thus it appears that New York has more than its share Medicaid-financed spending on seniors in both places, with the more expensive and heavily state subsidized variety in the rest of the state and the cheaper and yet more locally expensive variety in New York City. The only good news here: New York’s nursing home spending per beneficiary was only 28.5% higher than the national average in FY 2007. When I first started compiling the data, it was nearly double.
Making the same trip, from Medicaid spending per beneficiary that was nearly double the national average to a more tolerable 23.9% above averages — is Inpatient Hospital services. On this basis, perhaps, the Greater New York Hospital Association and Local 1199, the union that represents hospital and nursing home workers, claim that their Medicaid spending has already been reduced to reasonable levels. In the case of the hospitals, however, less spending per beneficiary has been balanced by an added number of beneficiaries, as New York Medicaid recipients are more likely to receive in-hospital as opposed to out of hospital care, and anecdotal evidence suggests the industry is recruiting sick patients from out of state to become instant Medicaid-eligible New Yorkers. With New York City and New York State each picking up 25% of the bill.
One possible factor in soaring and then falling Medicaid spending per beneficiary on hospitals – the hospital building boom of the late 1980s and early 1990s. The hospitals turned to the state’s Medicaid program as a cash cow to pay for that building boom as managed care put their private income under pressure, but now the bonds are starting to be paid off and some of the excess hospital space has been closed.
Overall, New York State accounted for 13% of U.S. Medicaid beneficiaries of In Patient Hospital Services (compared with 8.4% of Medicaid beneficiaries overall), and 16.1% of Medicaid In Patient Hospital Spending (compared with 14.5% of total Medicaid spending). And what did we get for it? “Hospital 'apartheid'” according to a report by New York Lawyers for the Public Interest cited by the New York Post. “New York City's medical care is a mostly segregated, two-class system — with poor and uninsured minority patients crammed into municipal hospitals, and most everyone else treated in private institutions just blocks away, according to explosive new data obtained by The Post…’There are barriers put in place for the uninsured at private hospitals. They end up going to public hospitals.’” Medicaid patients, on the other hand, the tax-exempt non-profit “charity” private hospitals are happy to get, as they are often more profitable than private insurance.
On the other hand, New York State accounted for just 5.2% of U.S. beneficiaries of Medicaid-funded Physicians Services, and its spending per beneficiary was half the national average. New York spending per beneficiary on Clinic Services was nearly double the national average; it accounted for 8.5% of the beneficiaries of such services, which are often provided by hospitals.
Finally, as implied by the data on spending by basis of eligibility, New York spends more than average on a greater than pro-rata share of beneficiaries for the care of the mentally ill and retarded. It accounted for 15.5% of U.S. Medicaid beneficiaries of Mental Health Facility Services (compared with 6.4% if the U.S. population) and 20.6% of U.S. spending in the category, with spending per recipient that was 32.5% above the U.S. average (vs. per capita income that was 22% above average). In the adjacent states, spending per recipient was below the U.S. average in this category, although the number of recipients – at 16.7% of the U.S. total vs. 10.5% of the population, was also high. One wonders whether the Northeast provides mental health services that are unnecessary, the rest of the country fails to provide mental health services that are necessary, or residents of other states receive necessary services in the Northeast. Certainly there have been reports that in other states poor mentally ill people actually end up in jail.
New York accounted for 8.9% of U.S. Medicaid beneficiaries of Intermediate Care Facilities for the Mentally Retarded (compared with 6.4% if the U.S. population) and 23.1% of U.S. spending in the category, with spending per recipient that was 160.5% above the U.S. average ($296,268 per beneficiary vs. a U.S average of $113,735). While no one would begrudge these needy people the services they need, that cost per beneficiary is so high – and presumably does not include the federal SSI payments and food stamps they receive for their non-medical needs – that it is open to question.
Overall, as New York faces a budget crisis, do I agree that its health care industry is a victim? No, the evidence does not support that claim. What the evidence implies is that back in the early history there was a deal, in which excessive Medicaid spending in New York City was swapped for excessive public school spending in the rest of the state. In exchange, public school spending was low in New York City, and everyone paid higher taxes, with New York City paying the highest of all. In 1990, 70% of New York City residents age 65 or over where non-Hispanic Whites – often the parents and grandparents of those who had moved to the suburbs, and 70% of New York City children were NOT non-Hispanic Whites. Meanwhile, most state legislators were (and are) perpetual incumbents kept in place by public service producer interests, which are often contrary to the needs of everyone else. That, I believe, is what generated the patterns we see now. I certainly don't agree that the health care industry has the right to threaten to let our babies die every time the increase in Medicaid spending is proposed to be less than it wants.