Association for Public Policy Analysis & Management

Purpose. States finance Medicaid benefits to individuals either by paying for services directly (fee-for-service) or through private health plans in various arrangements that are collectively referred to as Medicaid managed care (MMC). Over time, MMC enrollment has grown rapidly and the Centers for Medicare & Medicaid Services (CMS) reports that almost 80 percent of Medicaid beneficiaries were enrolled in managed care in 2014, suggesting limited potential for future growth. However, that enrollment figure masks significant heterogeneity in MMC scope and may provide a biased perspective on MMC spending. In this paper, we examine that heterogeneity and compare estimates of MMC growth using measures based on both enrollment and spending for various Medicaid populations. We also demonstrate how using a blend of quantitative and qualitative administrative data enhances our understanding of how MMC has grown over time and may continue to grow.

Design. We first analyze CMS descriptions of state MMC programs to determine the types of MMC programs states had in place in 1997 and 2012 and to show how state use of MMC has changed over time. Second, we analyze beneficiary-level data from 1999 through 2011 using the Medicaid Analytic eXtract person summary files. That quantitative data analysis allows for analyses of MMC enrollment and spending that account for beneficiaries’ eligibility and type of MMC participation. [Exact years of data could change subject to data availability.]

Findings. We find that fewer states had comprehensive MMC programs in 2012 than in 1997 but more states had service-specific programs and states with managed care covered broader populations in those programs. Between 1999 and 2011, the percent of beneficiaries enrolled in either comprehensive or service-specific MMC increased from 53 percent to 77 percent and the percent of Medicaid spending for MMC increased from 15 percent to 30 percent. Although all populations were more likely to be enrolled in MMC in 2011 than in 1999, the shares of enrollment and spending that were in MMC were much higher for adults and children than for other types of beneficiaries. Among dual eligibles and Medicaid-only aged/disabled beneficiaries, managed care enrollees had lower total spending than FFS beneficiaries. However, that difference should not be interpreted to suggest that MMC saves money; the qualitative analysis of state MMC programs highlights some characteristics of MMC that might indicate increased enrollment of healthy individuals in MMC, particularly among dual eligibles and Medicaid-only aged/disabled beneficiaries.

Discussion. This paper illustrates how qualitative data can enhance our understanding of quantitative statistics and the importance of using multiple measures to understand a single phenomenon. Moreover, that type of analysis improves our ability to develop expectations of how states’ choices may affect MMC growth in the future. Such choices include expanding MMC to cover new eligibility groups, changing MMC enrollment from voluntary to mandatory, increasing the geographic coverage of existing MMC programs, and increasing the scope of benefits covered under the premiums paid to MMC organizations.