Medicaid Matters

Medicaid Covers Kids --
That Matters to Children’s Hospitals

Medicaid is the nation’s largest payer of health care for children.  It covers 26-million American children – one in four under the age of 19.  At All Children’s, 58% of in-patient hospital days are billed to Medicaid.  But on average, Medicaid reimburses only 80% of the cost of providing that care. The remaining 20% must simply be written off as a loss by hospitals like All Children’s.

There are over 50 million Medicaid beneficiaries of all ages nationwide. Although children make up more than half the program’s enrollees, they account for less than 25% of Medicaid spending. For children, Medicaid is an extremely cost effective public program.

A Complex Issue…

Funding for Medicaid is somewhat complex. It’s a joint federal/state program. Each state designs and administers its own Medicaid program according to federal rules. Each state sets a budget for its Medicaid program –and those state budget dollars are partially matched by federal dollars. In effect, Medicaid is an item of both the Florida budget and the federal budget –a very sizable item. And lawmakers in Tallahassee and in Washington are trying to tighten their respective budget belts. That’s one reason why Medicaid has become an increasingly popular target for reforms and cuts on both the state and federal level.

An Impact on Kids…

The problem for kids enrolled in Medicaid is that there are no separate spending accounts (or what lawmakers call “lockboxes”) for each category of Medicaid beneficiary. Any reduction in federal Medicaid dollars affects all Medicaid beneficiaries.

Similarly, any change in Medicaid on a state level has a tremendous potential impact on children’s healthcare providers. Children’s hospitals are very complicated organizations- and All Children’s Hospital is no different.  Many factors can affect our financial health – how well private insurance pays, how well Medicaid pays, how controllable or uncontrollable the costs of our patients are, how substantial philanthropic support is, how large investment income is and more.  But because Medicaid is by far the single biggest payer at All Children’s, Medicaid alone can make or break us – regardless of how well the rest of our financial picture is doing.

Changes Underway…

Changes to Florida’s Medicaid system are already underway. Florida is one of several states that have been granted a federal waiver from existing program rules to fundamentally restructure its Medicaid program.  How these plans will deal with medically complex children or those with chronic illnesses such as cancer or cystic fibrosis is yet to be seen. But the potential impact on regional pediatric referral centers such as All Children’s is huge.