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March 2013 Policy Study, Number 13-3


Just Say NO – and Keep Saying NO – to Federal Health Care Exchanges and Medicaid Expansion


Iowa Medicaid Facts



Currently Medicaid serves over 680,000 Iowans or 22.4 percent of the state population. Medicaid is the second largest payor of health-care costs, after Wellmark Blue Cross/Blue Shield, and processes almost 33 million claims a year.[42] Included in the population served are people with incomes over 133 percent of the FPL through a waiver program (IowaCare and Family Planning) and some Medicare-eligible people. “Regular” Medicaid has just over 420,000 participants.[43]


On average, Medicaid currently spends about $3,300 per person on recipients in Iowa.[44] Most recent growth in enrollees has been in the child category, which is also the least expensive care to provide – typically well-child check-ups, vaccinations, dental checkups, and occasional illness visits. The number of children enrolled is expected to increase from just under 65,000 to almost 69,500 in FY2015 alone.[45]


The highest expense category is for the elderly, typically a 72-year-old female in long-term care who needs assistance with at least one activity of daily living.[46] This care costs approximately $45,700 per year.
The typical enrollee with a physical and/or intellectual disability is a 28-year-old male with an intellectual disability who lacks life skills. The cost for this individual to live in an intermediate care facility is approximately $141,000 per year.


If both the elderly and the disabled can remain in their family homes and receive care there, the costs drop dramatically, to less than $10,000 for the elderly and $35,000 for the intellectually disabled.[47]


The highest cost patients have an average of 4.2 chronic conditions and five different doctors, with prescriptions from all five. They account for three-fourths of all in-patient hospital costs and 50 percent of drug costs.[48]


The Iowa Medicaid program recently ranked 6th best nationally for long-term care system performance. Additionally, an innovative “joint individual conference” program, where the patient and their family members/caregivers work together to determine the best treatment plan, has been credited with reducing in-patient hospitalizations.


The total FY2015 Medicaid budget is almost $4 billion ($3.98 billion), currently 34.4 percent state funded and 53 percent federal funded, with the remainder coming from a variety of sources. The state budget amount has been growing at a rate of 15.6 percent per year recently, but the proposed FY2015 budget has a 7.5 percent increase ($95 million) from FY2014.


The vast majority of the cost increases are driven by new federal requirements, irrespective of PPACA expanded Medicaid.[49]


Additionally, the taxpayers of Iowa support a demonstration waiver program called IowaCare. This serves low-income adults who do not qualify for Medicaid. These are the core group which would convert to a straight Medicaid enrollment under the PPACA. The population is adults 19-64 who have incomes below 200 percent of the FPL, no other insurance, and who pay an income-based premium if their income is over 150 percent of the FPL. This requirement may be waived.[50] Approximately 69,000 adults are enrolled in this program.


The typical enrollee is a single adult or couple with a chronic condition who is in generally poor health, aged 41, with an income of less than 150 percent of the FPL. Chronic medical conditions include oral health, orthopedic needs, and hypertension. Enrollment has grown from just over 30,000 in FY2010 to an estimated 85,000 in FY2015. Most people who leave the program do so by going on Medicaid disability, not improving either their health or income.[51]


One criticism of this program is that services are provided only at limited facilities – primarily the University of Iowa Hospitals and Clinics (UIHC) in Iowa City and Broadmore Health Care in Des Moines. A new “Medical Home Model” with expanded UIHC locations is working to improve this access and reduce costs. The total cost is $162 million, with $8.6 million coming from the state General Fund.[52]


When reviewing the February 2011 UIHC report on services utilized by the IowaCare patients (predominantly single adults), the largest category of medical services provided was that of Emergency or Specialty Care, consistently about 83 percent. This is not expected to decrease under the Medical Home Model as primary providers will continue to refer patients to UIHC for specialty care.


The highest category was DRG Code 897 – people admitted for “Alcohol/drug abuse or other dependence issues, without rehabilitation services.” Next highest was “circulatory disorders.” Number five was code 918 – “poisoning and toxic effects of drugs.” Other admissions were for major joint replacements, esophageal and digestive disorders, cellulitis, and diabetes.


Prescriptions filled most often included drugs for acid reflux, pain, asthma, hypertension, and diabetes.[53]
Under Medicaid Expansion some individuals would be moved into the insurance exchange pool, primarily pregnant women, breast and cervical cancer patients, IowaCare, and Family Planning Waiver users who make more than 138 percent of the FPL.


One of the options being discussed as part of Medicaid reform is the Basic Health Program (BHP) option. The November 2012 subcontractor report – presumably the same report which recommended engaging stakeholders for more input and then doing another report – determined that the BHP would cost the state taxpayers more money unless fees paid to providers were reduced to the same amount paid by current Medicaid reimbursement levels, instead of being increased to the Medicare levels.[54]


Historically Iowa Medicaid reimbursement levels, as determined by the federal government, have been below the fees paid by other insurance companies, resulting in many doctors refusing to accept Medicaid patients. This is even though Medicaid is the second largest payor of health insurance claims in the state, after Wellmark.[55]


Nevertheless, if Medicaid is expanded the benchmark services offered must be the same as those in the exchange pool and must include “mental health parity” and both rehabilitative and habilitative services, irrespective of actual cost or of payment received. And fees paid to providers will still be controlled by the federal government.


In considering the overall Department of Human Services budget, it is important to note that the people being served by Medicaid are also utilizing a wide variety of other government entitlements and subsidies. This includes child support, child care and child welfare programs, food assistance, and the family investment program, to name a few.


The total number of Iowans receiving government assistance through these programs is almost 950,000 or a third of our total population.[56] This costs a total of $5.3 billion in both state and federal taxpayer funds.




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