NCPA - National Center for Policy Analysis


October 18, 2006

About 13 percent of Medicaid beneficiaries have private insurance that should pay their health care bills, but that isn't always the case, congressional auditors said Tuesday.

Medicaid, which is paid for by the states and the federal government, pays for health care for about 56 million poor people; the estimated tab for 2004 was $298 billion.  Officials suspect people turn to Medicaid because their out-of-pocket expenses are less than under private insurance.

  • In a survey of 39 states, the Government Accountability Office (GAO) found that 27 states had difficulty trying to verify whether their beneficiaries also had private coverage.
  • Some insurers, citing privacy law, do not grant states electronic access to their customer information.
  • Ten of those states estimated their total losses as at least $54 million annually.
  • In almost all the states, officials reported problems collecting payments from private insurers even after they or a contractor determined that Medicaid paid for a service it shouldn't have.
  • Fourteen of those states estimated their total losses as at least $184 million annually.

The GAO recommended that the Centers for Medicare and Medicaid Services, which administers both health care programs, give states guidance on when their new laws should take effect and which businesses would be required to provide them with coverage information. 

The percentage of people with both Medicaid and private insurance ranged from lows of 9 percent in Alabama, Arizona and California to highs of 22 percent and 23 percent for Iowa, South Dakota and Wyoming.

Source: Kevin Freking, "Audit: U.S. picks up health-care tab for private insurers," Associated Press/Cleveland Plain Dealer, October 18, 2006; based upon: "Medicaid Third-Party Liability: Federal Guidance Needed to Help States Address Continuing Problems," Government Accountability Office, GAO-06-862, September 15, 2006.

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