Checking in with the Centers for Medicare and Medicaid datamart, I find that all the states have now reported Medicaid information for 2004. In fact a few, including New York State, have already reported data for 2005. Now I am at least able to fully tabulate Medicaid spending by type of service for 2004, and the overall bottom lines are these. New York State’s spending per Medicaid beneficiary was $7,910, 70.4% above the national average and 23.7% higher than the average of surrounding states (PA, NJ, CT, MA, VT). With 6.6% of the nation’s population, New York accounted for 8.5% of its Medicaid beneficiaries, a difference only partially explained by the state’s above average poverty and elderly population. New York State residents accounted for 7.6% of U.S. personal income in 2004, according the Bureau of Economic Analysis, and 8.6% of national earnings in the Health Care and Social Assistance industries. The state, however, accounted for 14.5% of national Medicaid expenditures that year. The details by type of service are in the attached spreadsheet, and are described following the break.
For the most part, the data is as it has been year after year, but there is one exception. When I started tabulating it, New York’s inpatient hospital Medicaid expenditures per beneficiary were nearly double the national average. In 2004, however, it was just 30.2% higher than the national average. Given that 86.2% of the state’s Medicaid hospital expenditures were in high-cost Downstate New York, where people earn on average one-third more than the national average overall, that is a reasonable figure. It is also possible that the surrounding states were a little low here; Massachusetts has subsequently increased its Medicaid hospital reimbursement rate under pressure from the business community, which was worried about Medicaid costs shifted to private insurance. The surrounding states were below the national average in Medicaid hospital expenditures per beneficiary in 2004.
On the other hand, in 2004 New York’s hospitals were getting lots of off-the-books money that doesn’t show here, such as physician training money and Health Care Reform Act money. And, too many people were receiving treatment in hospitals, as they tried to keep their excess beds filled. New York State accounted for 12.5% of national Medicaid in-patient hospital expenditures, double its share of the population. Therefore based on the data, the measures as they have emerged — giving the hospitals a cost of living increase but taking away back door financing and shutting down excess beds — may be reasonable, although I would have loved to see the hospital industry receive the treatment it has doled out to everyone else over the years. Just to see what it is like and perhaps gain some empathy for other needs. Perhaps in the next recession, when money is tight.
A shift to primary care, however, is unlikely as long as New York State’s Medicaid spending on physicians per beneficiary is half (yes half) the national average and one-third lower than the level in surrounding states. New York only accounts for 5.4% of the beneficiaries of such services, as fewer physicians accept Medicaid patients. New York, meanwhile, accounts for 8.6% of the Medicaid beneficiaries of clinic services, and pays more than double the national average per beneficiary, and nearly double the average of surrounding states, on such services. For outpatient hospital services, New York State’s spending per beneficiary was 33.4% higher than the national average and about the same as in surrounding states.
New York’s spending per beneficiary on Nursing Facility Services is also about one-third higher than the national average, but this is misleading for two reasons. First, only 53.6% of the state’s Medicaid nursing home expenditures are in New York City, where costs are higher. Second, New York State accounts for nearly a quarter of U.S. Medicaid nursing home beneficiaries with “unknown” as their basis of eligibility, and spends relatively little on each. This brought down the overall average by increasing the number of beneficiaries. For the aged, however, New York State’s expenditures per beneficiary were 56% above the national average and 27.9% above the average of surrounding states. That is despite the fact that a substantial share of those expenditures were in low-cost Upstate New York. Unless it can be shown that seniors in surrounding states are suffering due to inadequate care, the evidence suggests the nursing home industry continues to overcharge New York. At these prices, a rather harsh crackdown on anything less that perfect care at these institutions is called for.
Moreover, New York State has an excess number of aged beneficiaries of Medicaid nursing homes services, with 9.5% of the total compared with 6.5% of the population. This is surprising given that the state accounted for 19.3% of the beneficiaries of home health care services, which are generally advertised as a way to keep people out of nursing homes. Although New York City’s share of the state’s elderly population is shrinking, the city still accounted for 82% of its home health care beneficiaries in 2004, according to data from the state health department. New York’s Medicaid home health care spending per beneficiary was 19.0% above the national average that year, but half the average for surrounding states. As the occupational data shows, New York City’s home health care workers are paid no more than the national average despite the high cost of living here.
New York State also accounted for 6.5% of the nation’s Medicaid beneficiaries of Personal Support Services, at-home services such as cooking, cleaning, shopping, etc. to allow those with self-care limitations to live in their homes. Even so, the state accounted for 18.7% of national spending in this category, because the state’s spending was nearly triple the national average, and more than double the average of surrounding states. Why? As shown by the industry data I posted recently, New York’s employment in the Services for the Elderly and Disabled industry is sky-high relative to the national average despite the low share of beneficiaries above. And, as I showed using occupational employment data, New York City’s Personal and Home Care workers are not well paid. There must be far more personal care workers per beneficiary in New York State than elsewhere. The New York State reports 84% of its expenditures in this category were in New York City.
An attempt to reign in spending in this category was part of the original Governor Spitzer budget presentation, but was subsequently dropped from the Executive Budget. According to the Governor’s website, that budget was later praised by Mary Ann Ragona, CEO of the Long Island Chapter of the Alzheimer’s Association who said: “Among its key components are measures to assist families who want to safely care for an impacted loved one in their home. Ensuring that the necessary support and resources are available, enabling them to provide care in a manner that is ultimately more humane and cost effective.” Perhaps it is cost effective on Long Island. In New York City, something else is going on.
New York State also spends more in a variety of services for the disabled, mentally ill, and mentally retarded. The state accounts for 12.0% of blind and disabled people in nursing homes paid for by Medicaid, and spends 47.3% more than the national average (but a reasonable 12.7% more than the average of surrounding states) on them. New York State accounts for 9.7% of U.S Medicaid beneficiaries of intermediate care facilities for the mentally retarded, and spends 140% more than the national average and 62.6% more than the average of surrounding states on each. And, New York State accounts for 15.9% of Medicaid beneficiaries in Mental Health Facilities, and spending a 22.8% more than the national average on them.
Why so much and so many?
What I wish would be true, but am now too cynical to believe, is that New York is spending more on these vulnerable people to provide more humane care, while in other states the disabled, mentally ill and mentally retarded are suffering without assistance or neglected in substandard facilities. If this is the case, will someone please admit how burdened the rest of us are by this expense, and show us the positive results, so we may feel good about it. Alas, I don’t recall hearing much about the substandard treatment of such people in other states.
I’ve heard that New York uses Medicaid dollars, with a federal match, to pay for care that other states fund themselves, with no federal money. This is counterintuitive, and there is no evidence to support it in any data series I have seen. A more troubling explanation is that residents of other states with big, expensive problems come here, or are sent here, for care. That would explain New York’s large share of U.S. total beneficiaries. The most cynical explanation is that we are somehow getting ripped off.
Finally, New York State accounted for 9.6% of the Medicaid Capitated Care (ie. HMO) beneficiaries; state data shows 81% of the beneficiaries of that care were in high-cost Downstate New York. Thus, it may be reasonable that New York’s spending per beneficiary was 33.6% higher than the national average. The data was for 1997, which is a long time ago, but the last time I checked with an employee benefits consulting firm private health insurance cost one-third more than the national average in New York City as well.