Jeffrey Wade
Medicaid, a federal-state program, provides health and long-term services and financial support to low-income individuals. In 2022, 19% of all Medicare beneficiaries, or 11.6 million people, received supplemental coverage through Medicaid. This figure is expected to grow, with more Medicare beneficiaries purchasing supplemental insurance. In 2021, the share of individuals with supplemental coverage grew from 38% to 41%. Medicaid beneficiaries have better access to care than the uninsured, and key measures of access are comparable to private insurance. This is particularly important for racial and ethnic minority beneficiaries, who are less likely to have supplemental coverage than white beneficiaries.
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What You'll Learn
Racial and ethnic disparities in Medicaid enrollment
Racial and ethnic disparities in health care remain a persistent issue in the United States. Inequities in access to health care, as well as social and economic factors, contribute to these disparities, which are rooted in historic and ongoing racism and discrimination. Addressing these disparities is a key priority for the federal government and many states.
Medicaid, a federal-state program, provides health and long-term services to low-income individuals and is a significant source of coverage for people of colour. Gaps in employer-sponsored and other private coverage are filled by Medicaid, which is especially beneficial for children from marginalized communities. The Affordable Care Act's (ACA) Medicaid expansion has played a pivotal role in narrowing racial disparities in health coverage and improving health outcomes. As of 2014, the ACA expanded Medicaid eligibility to include adults with incomes up to 138% of the federal poverty level, translating to an annual income of $20,783 for an individual in 2024.
Evidence suggests that racial and ethnic disparities exist in Medicaid enrollment. Racial and ethnic minority beneficiaries are less likely to have supplemental coverage compared to White beneficiaries. Specifically, minority beneficiaries exhibit lower adjusted rates of enrollment in Medigap (a supplemental insurance plan) and higher enrollment in Medicaid. However, overall trends indicate increasing enrollment among Medicaid beneficiaries without supplemental insurance coverage, regardless of race or ethnicity.
The continuous enrollment provision during the COVID-19 pandemic contributed to a significant increase in Medicaid enrollment, further reducing racial disparities in coverage. However, the subsequent unwinding of this provision led to millions of people being disenrolled from Medicaid, with Hispanic, Black, AIAN, and NHPI individuals being disproportionately impacted. This reversal of the continuous enrollment provision may have detrimental effects on health coverage for people of colour, exacerbating existing disparities.
Despite these challenges, the expansion of Medicaid under the ACA has yielded notable improvements in health outcomes for marginalized communities. For instance, a 2018 JAMA study revealed a decrease in mortality from end-stage renal disease in expansion states, with particularly significant gains for Black individuals who are at higher risk for kidney failure. Furthermore, in Michigan's Medicaid expansion survey, Black respondents reported the greatest reduction in days of poor physical health among all racial and ethnic groups. These advancements in coverage and access to healthcare are crucial in mitigating the disproportionate impact of the COVID-19 pandemic on Black and Hispanic communities.
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Medicaid beneficiaries' access to care
Ensuring beneficiaries can access covered services is a critical function of the Medicaid program. The Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS) has sought to improve access to care and services for Medicaid enrollees. However, outdated regulations have limited the effectiveness of these efforts.
Executive Order 14009, established in 2021, set the policy objective to protect and strengthen Medicaid and the Affordable Care Act (ACA). The goal was to make high-quality healthcare accessible and affordable for all Americans. This was furthered by Executive Order 14070 in 2022, which directed agencies to identify ways to expand the availability of affordable health coverage, improve the quality of coverage, strengthen benefits, and help more Americans enroll in quality health coverage.
The Ensuring Access to Medicaid Services (Access rule) final rule, effective July 9, 2024, aims to improve access to care and quality of care, and enhance health outcomes for Medicaid beneficiaries. This rule takes a comprehensive approach to improving access to care, quality, and health outcomes, and addressing health equity issues across fee-for-service (FFS), managed care delivery systems, and home and community-based services (HCBS) programs. The rule seeks to increase transparency and accountability, standardize data and monitoring, and promote active beneficiary engagement in their Medicaid programs.
Medicaid beneficiaries access their healthcare services using a variety of care delivery systems, including FFS, fully-capitated managed care, and partially capitated managed care. The volume of Medicaid beneficiaries enrolled in a managed care program has increased from 81% in 2016 to 85% in 2021, with 74.6% enrolled in comprehensive managed care organizations. Strategies to enhance access to healthcare services should consider how people interact with the healthcare system, including enrollment in coverage, maintenance of coverage, and access to services and supports.
In terms of supplemental insurance coverage, racial and ethnic disparities have been observed, with minority beneficiaries less likely to have supplemental coverage than White beneficiaries. Medicaid serves as a source of supplemental coverage for low-income individuals, with 19% of all Medicare beneficiaries, or 11.6 million people, utilizing it in 2022. Among traditional Medicare beneficiaries, 89% had some type of additional coverage, with 42% covered by Medigap, 31% by employer coverage, 16% by Medicaid, and 1% by another source.
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Medicaid and Medicare Supplement Insurance enrollment growth
Medicare Supplement Insurance, also known as Medigap, covered 12.5 million beneficiaries in 2022, accounting for 42% of those in traditional Medicare. This represents a significant proportion of Medicare beneficiaries who have opted for supplemental coverage to enhance their health insurance protection.
Medigap plans are offered by private insurers and cover some out-of-pocket costs that traditional Medicare may not include. These plans are particularly attractive to those in traditional Medicare who want to mitigate the financial risks associated with high medical expenses.
In terms of enrollment growth, there has been a notable increase in MA (Medicare Advantage) beneficiaries with Medicaid as their supplemental insurance. This trend is observed across all racial and ethnic groups, with racial/ethnic minority beneficiaries having higher enrollment in Medicaid. The growth in MA enrollment from 2005 to 2019 corresponded with a decline in TM (traditional Medicare) usage, especially when TM was not bundled with any supplemental insurance.
Medicaid, being a federal-state program, provides supplemental coverage for low-income and disabled individuals. In 2022, it served as a source of supplemental coverage for 11.6 million Medicare beneficiaries with low incomes and modest assets, accounting for 19% of all Medicare beneficiaries. This figure demonstrates the significant role Medicaid plays in providing additional support for those with financial constraints.
Additionally, more than 40% of all Medicare Advantage enrollees in 2022 also had some form of coverage from Medicaid (23%) or an employer-sponsored retiree health plan (18%). This highlights the importance of supplemental insurance in enhancing the health coverage of Medicare beneficiaries, ensuring they have more comprehensive protection against medical expenses.
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Types of supplemental insurance
Medicaid beneficiaries have better healthcare access than uninsured people, and they are less likely to postpone or go without necessary care due to costs. Medicaid is a federal-state program that provides health and long-term services and support coverage to low-income individuals. It covers enrollees who are low-income or disabled, and it covers most out-of-pocket spending for dually enrolled beneficiaries.
Medicaid is a key source of coverage for specific populations, including children, adults in poverty, and those with special healthcare needs. It also covers births, nursing home residents, and non-elderly adults with mental illnesses or HIV. In 2023, Medicaid covered nearly 4 in 10 children, over 8 in 10 children in poverty, 1 in 6 adults, and almost half of adults in poverty.
Medicaid is also a source of supplemental coverage for Medicare beneficiaries. In 2022, 19% of all Medicare beneficiaries, or 11.6 million people, received supplemental coverage from Medicaid. Medicare beneficiaries can also receive supplemental coverage through Medigap, employer coverage, or other sources.
Medigap, or Medicare Supplement Insurance, is an extra insurance policy that can be purchased from a private health insurance company to help pay for out-of-pocket costs in Original Medicare. It helps shield beneficiaries from sudden expenses, allows for better budgeting of healthcare expenses, and reduces the paperwork burden associated with medical claims. While Medigap policies can vary in cost, they provide the same benefits within the same letter category.
Employer-sponsored coverage is another source of supplemental insurance for Medicare beneficiaries. However, access to retiree health benefits is declining, with only 25% of large firms offering these benefits in 2014, down from two-thirds in 1988. Employer plans can provide additional benefits, such as prescription drug coverage and limits on out-of-pocket expenses.
Overall, supplemental insurance coverage among Medicare beneficiaries varies by race and ethnicity, with racial and ethnic minority beneficiaries less likely to have supplemental coverage than White beneficiaries.
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Gaps in Medicare and Medicaid coverage
Medicaid, a federal-state program, provides health and long-term services to low-income individuals. However, there is a significant "coverage gap" affecting millions of people in the United States. This gap is caused by certain states' decisions not to expand Medicaid eligibility under the Affordable Care Act (ACA). As of late 2024, ten states have not expanded Medicaid, resulting in a coverage gap in nine of them. This leaves approximately 1.6 to 1.9 million people with incomes below the poverty level ineligible for either Medicaid or premium subsidies under the ACA.
The coverage gap disproportionately affects people of colour, with 65% of those impacted being from racially and ethnically diverse backgrounds. It also affects working families, parents with children, and individuals with disabilities. Closing the coverage gap is crucial for reducing racial and ethnic disparities in healthcare access and improving health outcomes for low-income adults.
Regarding Medicare, supplemental insurance, also known as Medigap, is available to cover out-of-pocket costs. However, racial and ethnic minority beneficiaries tend to have lower enrolment rates in Medigap and higher enrolment in Medicaid. Additionally, Medicare Advantage enrollees with Medicaid coverage tend to have lower incomes, more health issues, and are more likely to be under 65 with disabilities. These disparities highlight the gaps in Medicare coverage, particularly for vulnerable populations.
While Medicare and Medicaid aim to provide essential healthcare coverage, gaps in eligibility and enrolment impact vulnerable populations, including low-income individuals, people of colour, and those with disabilities. Addressing these gaps is essential to ensure equitable access to healthcare for all Americans.
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Frequently asked questions
In 2022, 19% of all Medicare beneficiaries—approximately 11.6 million people—had Medicaid as a source of supplemental coverage.
Supplemental insurance covers costs that aren't covered by Medicare, such as long-term care services, dental, vision, and hearing services.
Medicare supplement insurance, also known as Medigap, is a type of supplemental insurance. In 2022, 42% of those in traditional Medicare had Medigap coverage. Other types of supplemental insurance include employer-sponsored insurance and Medicaid.
Supplemental insurance helps to cover out-of-pocket costs. Medicaid beneficiaries, for example, have better access to care and are less likely to postpone or go without needed care due to cost.
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