Since the inception of Medicaid in 1965, the program has seen extraordinary growth in expenditures and enrollment. From 1989 to 1992, the increases in Medicaid spending were the largest since the program began in. Enrollment in Medicaid by AFDC families grew from 3.8 million in 1990 to 4.4 million in 1992, almost a nine percent annual increase (Coughlin et al. 1994). During this period, states were also experiencing the effects of a nationwide recession. Rapidly rising expenditure levels stretched revenue streams to their limits.
In efforts to save money, states looked primarily at the benefits of managed care, which was becoming a successful delivery and financing system (Ruggie 1996). Medicaid patients had a history of using emergency rooms for problems such as colds, flues, and other minor illnesses. Medicaid paid $75 for an emergency room visit in 1995, but only $29 for a physician’s office visit (Lutz 1995). Medicaid officials hoped that placing the patient in contact with a primary care physician would encourage the use of preventative medicine, thereby holding down costs.
States began Medicaid managed care programs using the AFDC population as guinea pigs. With waivers allowed under Section 1115 of the Social Security Act, states restructured their Medicaid programs (Rotwein et al. 1995). This was the single largest Medicaid innovation of the 1990s (Couglin et al. 1999). Between 1991 and 1996, enrollment of Medicaid clients in managed care increased by a factor of six (Thompson and DiIulio 1998). Many reasons accompanied the assertion that the AFDC population would benefit the most from managed care. The women and children of AFDC could take advantage of the ...
... middle of paper ...
...cience Review 67: 1174-1185.
Key, V.O., Jr. 1999, reprinted. Southern Politics in State and Nation. Knoxville: University of Tennessee Press.
Lutz, Sandy. 1995. “For Real Reform, Watch the States.” Modern Healthcare 25: 31-
Rotwein, Suzanne, Maria Boulmetis and Paul J. Boben. 1995. “Medicaid and State
Health Care Reform: Process, Programs, and Policy Options.” Health Care
Financing Review 16: 105-120.
Ruggie, Mary. 1996. Realignments in the Welfare State: Health Policy in the United States, Britain, and Canada. New York: Columbia University Press.
Thompson, Frank J., and John J. DiIulio Jr., eds. 1998. Medicaid and Devolution: A View
from the States. Washington, D.C.: Brookings Institution Press.
Walker, Jack. 1969. “The Diffusion of Innovations Among the American States.”
American Political Science Review 63: 880-899.
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