Health Care Reform

To obtain basic health care, more than 30 million people depended on Medicare in fiscal year 1992. Federal and state governments spent nearly $120 billion to provide services to these people. However, millions of people with income below the poverty line are not now covered by Medicaid. Many of these who are potentially eligible do not apply and many who apply are denied enrollment and remain uninsured. Because health care reform may expand coverage to many of the uninsured, some form of means testing may be required to determine eligibility. This report identifies the (1) reasons why people who may be potentially eligible for Medicaid are not being enrolled, (2) incentives hospitals have to facilitate enrollment of their patients in Medicaid, and (3) implications for eligibility determinations if health care reform is enacted.

GAO found that: (1) many people who are potentially eligible for Medicaid never complete the application process; (2) nearly half of the applicants in the three states reviewed were denied Medicaid because they did not or could not provide the basic eligibility documentation or did not appear for eligibility interviews; (3) states lack the resources necessary to routinely assist Medicaid applicants; (4) states do not know why applicants do not complete Medicaid applications or how many of those who are initially denied eventually reapply for Medicaid; (5) hospitals rely on private enrollment vendor firms to enroll eligible Medicaid patients because they require a payment source to cover the costs of care to uninsured patients; (6) in return for ensuring that patients meet all of application requirements, vendor firms receive a portion of the Medicaid revenues they generate; (7) some hospitals have established internal units to help eligible applicants enroll in Medicaid; (8) health care reform may increase the administrative burden of determining eligibility and number of people who will have to demonstrate eligibility before receiving assistance; and (9) as health care reform is implemented, Congress will need to determine the appropriate balance between increasing access to health care and maintaining program integrity.