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Medicaid in Kentucky: How Well Is It Working?

by Heidi Bright Parales

One Kentuckian put it this way: "I am altogether satisfied with Medicaid. Not only that, but I am very grateful to have it for another six months. Most average working single mothers cannot afford medical insurance." Another Medicaid recipient made an even stronger statement: "I think Medicaid is wonderful. If it had not been for Medicaid, I could never have made it, because I can't afford any kind of insurance. Medicaid is the only thing that made it possible to pay my bills; without Medicaid, I would be dead."

These were two of the 5,000 responses from Medicaid recipients in Kentucky who returned a survey on their level of satisfaction with this program. The survey was developed by the University of Kentucky's Martin School of Public Policy and Administration and sent to 10,000 randomly selected Medicaid recipients in 1997. The Martin School was asked by officials at the Kentucky Department for Medicaid Services to develop and administer the survey, and to evaluate the results. The Martin School's history of policy analysis made it an obvious choice for conducting the Medicaid research, says Greg Hager, assistant professor of political science and co-principal investigator in this project.

The typical reaction to the survey, according to co-principal investigator Jeff Talbert, was satisfaction. "The results of the baseline survey revealed an overall satisfaction with Medicaid across the state, which for purposes of the study was divided into eight regions, each sent 1,250 surveys," says Talbert, an assistant professor in the Martin School. "In fact, more than 60 percent of Medicaid recipients reported being very satisfied with Medicaid."

This baseline survey was important, the researchers say, to get an accurate idea of how people liked the "old" system of Medicaid in order to compare these findings with those from future surveys on Medicaid satisfaction. The new system is already in place in some areas of Kentucky. What makes the system new isn't so much its philosophy of care, but is the result of one of the oldest conflicts in the nation: federal versus state responsibility and control.

"It's not a dramatically different program, but what's different in Kentucky and a lot of other states is that the states have demanded more control of how medical care is to be supplied for those who qualify for Medicaid," Hager explains. Previously in Kentucky, Medicaid operated as a federal-state partnership, each supplying money to keep the system going. But it's been an unequal partnership: the federal government laid down all the ground rules for the system, dictating, for example, eligibility requirements for Medicaid.

"So the federal government could expand the pool of people eligible, the states had to, in effect, just cough up the additional money," Hager says. As the price tag for Medicaid rose like an unchecked fever in most state budgets-Medicaid is now the largest item in Kentucky's state budget, with an annual price tag of about $2.5 billion-governors began to insist that they have more say in how these considerable state funds were being spent. So the governors challenged the state legislators to work toward this end. The result has been that many states have applied for and received waivers from many of the federal guidelines, resulting in a lot more local control.

Photo of Greg Hager and Jeff TalbertGreg Hager (right) and Jeff Talbert say that this important baseline study revealed an overall satisfaction with Medicaid in Kentucky.

"The impetus for these changes was that both the federal government and the states wanted to save money, and the states wanted to show that they could run the Medicaid system in their state and that they could provide health care better and cheaper than the federal government could," Hager says.

One significant change in parts of Kentucky is the move away from a standard "fee-for-service" system. Under the old rules, any hospital in the state that accepted Medicaid patients charged the same fee for a particular service.

"What we're seeing now is more of an HMO-like situation," Hager says, "where companies bid, agreeing to provide a long list of doctors and types of medical care for Medicaid patients. The HMO gets paid so much per month per patient to do that. If the HMO can provide care for less than in the fee-for-service system, the HMO makes a profit."

But what about patient care? How would Medicaid patients in Kentucky benefit from an HMO-like system?

"The HMOs have an incentive to emphasize more preventive care since it's obviously cheaper for them to work on preventive health care with someone than pay thousands of dollars for a heart-bypass surgery later on," Hager says. "Clearly, an HMO is interested in doing what they can to encourage people to come in for regular checkups, which would result in a healthier population of Medicaid users."

Other results of the survey also indicate that more than 60 percent of adult Medicaid recipients rate themselves in poor or fair health, and 53 percent said they had been on Medicaid five years or more. Among adults, 28 percent reported seeing a medical provider at least 10 times during the past year. And perhaps not unrelated to that statistic is the report that 35 percent of adults on Medicaid are regular smokers, and 42 percent live with at least one smoker.

Among Kentucky children covered by Medicaid, 46 percent were reported to have seen a physician at least five times during the past year, and 65 percent live in a household with at least one smoker. As part of the evaluation process to be completed this year, researchers will also be analyzing actual Medicaid utilization records and surveying health-care providers in the state.

By comparing survey data and information available from Medicaid claims, the project offers a rare opportunity to study Medicaid using two distinct and complementary data sources. According to Talbert, "We are among a handful of researchers in the country to have access to such high-quality data on utilization of services and public opinion about those services." Survey and claims data work best together, Hager says, making the research much more effective. For example, the survey can show how far recipients travel to get to a Medicaid provider, information not available from claims records.

This research project is funded by a $166,000 grant provided this year by the Kentucky Department for Medicaid Services, an office of the Kentucky Health Services Cabinet.

The James W. Martin School of Public Policy and Administration offers applied research and training services to public and not-for-profit organizations. The Martin School is administratively located in UK's Graduate School.

For more information on medicaid call 1-800-635-2570.