A reality check on aging and Medicaid

by Bill Hammond |  | NY Torch

In the face of New York’s rapidly rising Medicaid spending, both the Cuomo administration and some of its critics have pointed to demographics as a driving factor.

The state’s population is aging, they have said, so long-term care costs should be expected to increase.

There are two main reasons to doubt this narrative.

First, Medicaid’s long-term care enrollment is surging too quickly to be explained by demographics alone.

As seen in the chart below, New York’s 65-plus population grew by 16 percent between 2012 and 2018. The older cohorts – who are more likely to need long-term care – grew by 9 percent.

 

By contrast, enrollment in Medicaid managed long-term care plans soared by 279 percent. That’s 17 times the growth rate of the 65-plus population, and 30 times larger than the rate for the 75-plus population. (See clarification below.)

Second, New York’s Medicaid spending on certain long-term care services is dramatically out of line with that of other states – and has been since before the recent enrollment surge.

A prime example is the benefit known as personal assistance or personal care – which refers to non-medical services, such as bathing, dressing and housekeeping, provided for Medicaid recipients who are too disabled to handle these tasks.

Although this optional benefit is available in 32 other states, the scale of New York’s personal care program is an outlier. As of 2016, its per capita spending was 6.5 times higher than the national average and 65 percent higher than the No. 2 state, which was Massachusetts.

Source: U.S. Centers for Medicare & Medicaid Services (Click to enlarge)

 

When Cuomo took office in 2011, New York accounted for 23 percent of nationwide spending on personal care. By 2016, that figure was up to 40 percent – and has undoubtedly continued to rise in the four years since.

So it’s true that New York is older than the national average, and that its elderly cohort is growing faster than the population as a whole (which is stagnant or declining). But demographics alone do not explain why long-term care spending has risen so fast.

CLARIFICATION: It should be pointed out that the initial increase in managed long-term care enrollment, from 2012 to 2015, reflected a change in policy. The state had required many long-term care recipients to switch from “fee for service” coverage, in which the state directly compensates providers, to managed care, in which payment is funneled through private insurance plans.  Thus many if not most enrollees in those first three years were not new to Medicaid.

After that transition was complete in 2015, however, enrollment in continued trending upward at double-digit rates. From 2015 to 2018, enrollment increased 62 percent, compared to 7 percent for the over-65 population.

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