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Promises Unfulfilled: Implementation of Expanded Coverage for the Elderly Poor.

Objective. To examine implementation of the Qualified Medicare Beneficiary (QMB) and Specified Low-Income Medicare Beneficiary (SLMB) programs, enacted in 1988. The article summarizes the origin of the QMB and SLMB programs, describes what we have learned about QMB and SLMB enrollment in state Medicaid programs and, despite some encouraging news on the federal front, identifies policy issues that remain in assuring access to health care for the low-income elderly.

Source. Based in part on research that assessed state variations in Medicaid QMB and SLMB enrollment of low-income Medicare beneficiaries and identified best practices among states in administration of the QMB and SLMB programs.

Study Design. Telephone interviews were conducted with officials in ten states to elicit qualitative information about how state Medicaid programs have implemented federal protections for low-income Medicare beneficiaries.

Principal Findings. The QMB and SLMB programs fail to reach a sizable proportion of potentially eligible individuals in most states. Fragmentation of Medicare and Medicaid benefits, complex Medicaid eligibility and income verification processes, and rigid federal and state administrative and data systems, impede efforts to achieve promised protection for low-income elderly persons.

Conclusions. For low-income Medicare beneficiaries, obtaining financial protection against their high out-of-pocket health care costs remains an important issue. The complexities associated with aligning Medicare and Medicaid to deliver health benefits to low-income older persons makes improved coordination across federal and state agencies uncertain.

Key Words. Low-income elderly, Medicare, Medicaid, Qualified Medicare Beneficiary (QMB) program, Specified Low-Income Medicare Beneficiary (SLMB) program

Because of the near universality of Medicare and the widespread availability of supplemental health coverage, many Americans assume that older persons are well protected against high out-of-pocket health care costs. In fact, high and increasing out-of-pocket health care costs are a burden for older Americans. Average out-of-pocket health care spending per person exceeded $2,430 for the elderly in 1999 (Gross and Brangan 1999). [1] Persons age 65 years and older living in poverty (up to 100 percent federal poverty line [FPL] have out-of-pocket health costs that consume one-third of their annual income (Gross and Brangan 1999). Even though Medicare's social insurance design assures health coverage for the vast majority of older Americans, its protection falls short for many low-income older persons.

For many reasons, health care costs remain a significant problem for older Americans: (1) far more than any other age group, persons 65 and older need and seek medical services; (2) they have medical expenses, such as the cost of prescription drugs, that are not covered by traditional Medicare; (3) supplemental insurance is costly; and (4) other public protections, such as Medicaid coverage, are limited in many states.

Low-income persons make up a large proportion of the elderly population. In every region of the country, about 20 percent of seniors are considered low-income (less than 135 percent FPL). [2] Using a less restrictive definition of low-income, nearly 40 percent of the elderly are poor, living on incomes of less than 200 percent FPL, according to a recent report of the Kaiser Commission on Medicaid and the Uninsured (Schneider, Fennel, and Keenan 1999). These numbers are large--too large to dismiss as insignificant--for those who recognize the importance of adequate income and affordable health coverage in assuring access to care for all Americans.

Whose responsibility is it to protect low-income elderly persons who are dually eligible for both Medicare and Medicaid? Congress established a federal responsibility in the provision of health insurance to the elderly and disabled through Medicare in 1965, while states were to provide medical assistance to the poor via Medicaid. This joint responsibility for low-income elderly persons has created ongoing policy confusion and fiscal conflict between federal and state governments (Feder 1997) and creates challenges in providing effective health care access to economically vulnerable older persons living in communities throughout the United States.

Many states have devoted considerable attention during the past decade to leading demonstration efforts that test the integration of acute and long-term care, modify Medicaid eligibility and long-term care benefits, and devise other cost-savings approaches for certain dually eligible populations. At the same time, other low-income and elderly persons, as a group, have been virtually ignored--until recently--by state and federal governments. Their need for protection against high out-of-pocket health care costs remains an important (and growing) concern and reflects an unfulfilled 1988 national promise made to them.

The purpose of this article is to examine federal and state implementation of the Qualified Medicare Beneficiary (QMB) and Specified Low-Income Medicare Beneficiary (SLMB) programs, enacted in 1988. The article summarizes the origin of the QMB and SLMB programs within the context of Medicare and Medicaid, describes what we have learned about QMB and SLMB enrollment in state Medicaid programs and, despite some encouraging news on the federal front, identifies policy issues that remain in assuring access to health care for the low-income elderly.


For Medicare beneficiaries, and others, Medicaid can extend the continuum of essential health care protection and reduce the economic vulnerability associated with advanced age and lower income. Low-income older persons with Medicare coverage may become eligible for Medicaid through many complex pathways. (Younger groups may qualify for Medicaid, too, but they are not the subject of this article.) Those who receive Supplemental Security Income (SSI) usually enroll in Medicaid and receive full Medicaid benefits. In some states, SSI eligibility automatically results in Medicaid eligibility, whereas in other states (known as 209(b) states) SSI enrollees apply separately for Medicaid. Thirty-five states offer "medically needy" coverage for those who qualify for Medicaid because of high medical costs rather than limited income and assets. Both categories of eligibility often exclude many poor and near-poor Medicare beneficiaries (Moon, Kuntz, and Pounder 1996).

States have the option, under federal law, of extending Medicaid coverage to certain additional groups. Eleven states have expanded Medicaid eligibility for elderly and disabled individuals with incomes at or below 100 percent FPL. Nearly all states have secured Section 1915 waiver authority to provide home- and community-based services covered by Medicaid to those who otherwise would require institutionalization.

Other low-income Medicare beneficiaries, also considered "dual eligibles" by the Health Care Financing Administration, may qualify under federal law for partial Medicaid coverage. The QMB and SLMB programs provide limited Medicaid coverage to low-income Medicare beneficiaries. The QMB program serves individuals with incomes at or below 100 percent FPL; the state Medicaid program pays their Medicare Part A and Part B premiums and Medicare deductibles and coinsurance. The SLMB program pays only the Part B premium for people with incomes between 100 and 120 percent of poverty.

The Medicaid program does not pay for Medicare premiums and cost sharing for all dual eligibles. Although some individuals receiving QMB benefits may qualify for full Medicaid benefits (at a state's option, and depending on their level of personal assets), not all older or disabled persons who receive full Medicaid coverage qualify for QMB benefits.


The QMB program was enacted by Congress as part of Medicaid program amendments in the Medicare Catastrophic Coverage Act (MCCA) of 1988 to protect low-income Medicare beneficiaries from the serious burdens of Medicare's cost-sharing requirements and premium liabilities. The MCCA required states to phase in buy-in coverage for Medicare beneficiaries with incomes below the poverty line and assets less than $4,000 ($6,000 for a couple). Although the MCCA was repealed in 1989, Medicaid provisions remained. This Medicare buy-in program was implemented through each state's Medicaid program, with shared funding by states and the federal government. It was the intent of Congress to finance MCCA Medicaid provisions through a combination of Medicaid savings attributable to new Medicare expansions, plus some general revenue financing (Congressional Research Service 1989). Because the controversial Medicare expansions were not implemented, anticipated state Medicaid savings did not occur.

Additional buy-in legislation followed. In 1993 Congress required state Medicaid agencies to pay the Medicare Part B premiums (but no other Medicare costs) for SLMBs with incomes between 100 and 110 percent FPL. In 1995, SLMB eligibility was expanded to 120 percent FPL. Under the Balanced Budget Act of 1997, Congress created a five-year block grant that provides funds for states to pay all or part of the Part B premium for two additional groups of qualifying individuals (QIs): (1) Medicaid pays the full premium for those with incomes up to 135 percent FPL (known as QI-is); and (2) Medicaid pays a portion of the premium for those up to 175 percent FPL (QI-2s). [3]

Studies conducted during the past decade have concluded repeatedly that national participation rates in the QMB and SLMB programs are low. Early reports referred to the program as a "secret benefit" and "a promise unfulfilled" (Families USA 1991, 1993). Families USA estimated in 1998 that between 3.3 and 3.9 million people eligible for QMB and SLMB buy-in protection were not receiving these benefits. A 1999 report by the General Accounting Office estimated that 43 percent of low-income Medicare beneficiaries (2.2 million eligible individuals) were not participating in the QMB and SLMB programs. Lack of knowledge about the program, barriers in the application process, lengthy enrollment delays, and administration through 50 different state Medicaid programs are the major reasons that have been recognized by advocacy groups and government agencies for low enrollment (Families USA 1993, 1998; General Accounting Office 1994, 1999; Neumann et al. 1994; Nemore 1997).


Last year, we conducted a study to provide insights, from different state perspectives, into barriers that should be overcome to achieve improved financial protection for low-income older Americans. We assessed state variations in Medicaid QMB and SLMB enrollment and we sought to identify sources of these variations. Telephone interviews were conducted in 1998 with officials in ten states to elicit qualitative information about how state Medicaid programs have implemented the QMB and SLMB programs.

The ten states that participated in this study were California, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Mexico, New York, Tennessee, and Texas. States were selected based on population characteristics, range of state Medicaid program characteristics affecting enrollment of dual Medicare/Medicaid eligibles, geographic distribution, and variation in QMB and SLMB enrollment. We overrepresented states with large Medicare populations as well as states with substantial low-income populations.

As of July 1997, 2.7 million Medicare beneficiaries were enrolled in Medicaid as QMBs or SLMBs, according to HCFA's Third Party Premium Billing File. This represented an estimated 7.5 percent of total Medicare Part B beneficiaries and about half of low-income Medicare beneficiaries (up to 120 percent FPL). Wide variation existed across the states: enrollment ranged from a high of 20 percent of all Medicare beneficiaries in Mississippi to less than one percent in New Hampshire, Nebraska, and Alaska.

These interviews revealed wide variation among states in how the QMB/SLMB programs have been implemented. Our research indicated that many state officials recognize the value of the QMB and SLMB programs, despite the programs' complexity and uneven implementation. Our telephone interviews with Medicaid staff show little evidence that states are viewing the programs as an unfunded mandate, a residual provision of the Medicare Catastrophic Coverage Act. Indeed, among those we interviewed, state Medicaid officials have come to view the QMB and SLMB programs as an essential part of the patchwork of programs and services offered to low-income older persons. Nevertheless, fragmentation of Medicare and Medicaid benefits, complex Medicaid eligibility and income verification processes, and rigid federal and state administrative and data systems impede efforts to achieve maximum participation in the QMB and SLMB programs.

We found that efforts to achieve high QMB and SLMB enrollment in a state often are accompanied by more generous financial eligibility standards for older persons. Eleven states have expanded Medicaid eligibility for poverty-level aged and disabled Medicare beneficiaries to provide full Medicaid benefits to 100 percent FPL. QMB and SLMB enrollment is likely to be higher in states where the Medicaid benefits are more generous--in other words, where beneficiaries are more likely to receive full Medicaid benefits in addition to Medicare premium and cost-sharing protections. We do not know whether this is a function of greater beneficiary awareness of the more comprehensive benefits, a higher perceived value placed on the benefits, or some other factor.

The study reinforced the value of the QMB and SLMB programs to low-income Medicare beneficiaries as benefits that cover some of health care costs that otherwise would have to be paid out-of-pocket. Yet QMB and SLMB programs fail to reach a sizable proportion of potentially eligible individuals in most states. Because of data limitations, however, we found that it was impossible to determine, with any precision, state-by-state participation in the QMB and SLMB programs.

We believe the lack of accurate national and state-level data on QMB/SLMB enrollment is a significant barrier to the assessment of individual states' performance in reaching those who are potentially eligible for the programs, and to the assessment of QMB/SLMB program effectiveness nationally.


The federal government has begun to respond to concerns expressed by Congress and advocacy organizations. For the first time in the life of these programs, it is demonstrating its commitment to improving program leadership and coordination and to reducing program barriers across federal and state agencies in administering the QMB and SLMB programs. During 1999, the Social Security Administration (SSA) launched in several states a multifaceted demonstration effort, funded at $6 million, to assess new program models for SSA to publicize, screen, and take applications for QMB/SLMB benefits. It is anticipated that much can be learned from this effort.

As part of the 1999 Government Performance Results Act (known as GPRA), the Health Care Financing Administration (HCFA) committed itself to "improving access to care for elderly and disabled Medicare beneficiaries who do not have supplemental insurance." It initiated a series of activities related to funding and improving enrollment of all beneficiaries in all programs designed to assist low-income persons. Working with state governments and advocacy organizations, HCFA is cataloging effective outreach and educational programs; identifying new, simplified enrollment strategies; and training Medicaid workers. It is developing, with the states, a method to calculate the potential and enrolled populations. From this baseline, a national target increase of 4 percent has been set for September 2000.

HCFA officials are beginning to understand the enrollment process itself as a barrier to enrollment of dual-eligible beneficiaries. Using the tools of social marketing, HCFA and the states are learning to consider the application process, and indeed the whole QMB and SLMB programs, through the eyes of low-income elderly Medicare beneficiaries. To be receptive to QMB and SLMB outreach and education efforts through Medicaid, elderly Medicare beneficiaries are forced to consider themselves as members of a group--the poor--to which they do not want to belong. They have raised families, educated their children, and worked hard for a long time. They do not experience themselves as poor and will resist considering membership in this group until some terrible event (usually sickness or high medical bills) pushes them over the edge.

As important as federal leadership is in the efforts described here, health care costs can be expected to remain a significant burden for the elderly, especially those of modest means, in the years ahead. Several issues remain.

Adequacy of the Medicare Benefit Package for Low-income Elderly Persons

The single biggest gap in medical care coverage for Medicare beneficiaries, in general, and for low-income individuals, in particular, is the lack of outpatient prescription drug coverage through Medicare. Prescription drug coverage, not surprisingly, is related to income. Nearly one-half of low-income Medicare beneficiaries lack prescription drug coverage from any source. Low-income Medicare beneficiaries do not receive outpatient prescription drug coverage through the QMB/SLMB programs. Fourteen states do offer pharmaceutical coverage for low-income elders and, in other states, assistance may be available from pharmaceutical manufacturers through physicians (Gross and Bee 1999). However, these arrangements present unnecessary beneficiary uncertainty and inequitable protection across the country. The Clinton administration and Congress began considering a prescription drug benefit for Medicare beneficiaries in 1999. At this time, the proposal's fate in Congress is uncertain.

Significant gaps in coverage remain also due to restrictions on eligibility designed to limit the fiscal impact of QMB/SLMB programs. These gaps include:

1. Lack of coverage for deductibles and coinsurance for SLMBs. Benefits for SLMBs should be expanded to the level of QMB benefits, because these populations have similar health care needs and financial difficulties in paying out-of-pocket medical costs. Making the programs more uniform, and thus understandable to consumers and caseworkers alike, is an important objective.

2. Income eligibility for full premium payment limited to 120 percent FPL. Even though the Balanced Budget Act of 1997 extends full premium payments up to 135 percent FPL (known as QI-1), this program is funded under a federal block grant on a first-come, first-served basis. Both anecdotal and empirical evidence suggest that persons with incomes up to 200 percent FPL have out-of-pocket outlays for health care costs equivalent to those currently eligible for the SLMB program.

Competing Priorities and Limited State Administrative Capacity

A decentralized and voluntary health insurance system creates administrative nightmares for those trying to fill in the gaps. During the past few years, national health policy attention has focused on the Health Insurance Portability and Accountability Act of 1996 (HIPAA); reducing the federal budget deficit; implementing provisions of the Balanced Budget Act, including Medicare+Choice; and the Children's Health Insurance Program (CHIP). States currently are faced with several competing priorities in the management of their Medicaid programs, including welfare reform and the design and implementation of CHIP, as a result of federal legislation passed in the mid-1990s. Many states continue to concentrate significant resources on restructuring their Medicaid and long-term care delivery systems within a managed care framework rather than on improving program participation. These efforts draw agency attention away from the plight of low-income Medicare beneficiaries living in communities who are not eligible for full Medicaid benefits.

National and State Coordination

The QMB/SLMB programs are implemented within the context of each state's Medicaid program, a nuance that is difficult for national policymakers to grasp. Whether one is considered a QMB or SLMB, or is eligible for full or partial Medicaid protection, depends on the generosity of a state's eligibility threshold for elderly individuals; categories of eligible individuals are not mutually exclusive. Washington often has a hard time understanding state Medicaid activity and grasping the complexity of Medicaid program implementation at the front lines.

In addition, there is a lack of clear responsibility for these programs both at the national and the state levels. National policy implementation today takes place in the context of "partnership" with the states. The challenge in this environment of increasing QMB/SLMB enrollment was described by Families USA: "Social Security says, 'We don't run these programs. They're run by the Health Care Financing Administration.' HCFA says, 'We have oversight, but they're administered by the states.'"

The Cost of Low-income Protections for the Elderly

Because of their oftentimes significant medical needs and diminished functional status, the elderly population can be an expensive population to serve. Those who are dually eligible for both Medicare and Medicaid benefits account for roughly one-third of all Medicare and Medicaid expenditures. The rising costs of Medicare and Medicaid have left federal and state policymakers wary of actions that commit the public sector to further underwriting health entitlements, even for modest Medicare cost-sharing protections.

Limited research findings suggest that elderly Medicare beneficiaries with QMB coverage do use more Medicare services and have higher Medicare expenditures than those who are eligible for but not enrolled in the QMB program. Some research has indicated that the health status of QMB enrollees is worse than that of eligible nonenrollees (Parente, Evans, and Bayer 1995). Higher medical use by QMBs could be a function, therefore, of higher need, or of deferred medical care and serious unmet need attributable to insufficient resources, rather than a demand response to lower out-of-pocket costs. It is possible that QMB and SLMB coverage could curtail Medicare and state Medicaid expenditures over time because (1) as QMB and SLMB coverage removes financial barriers to care, Medicare beneficiaries' access to timely primary and preventive care is improved; and (2) reducing barriers to Medicare acute care for the elderly may delay demand for Medicaid-funded long-term care.


Public programs to assure health coverage for the poor are complex, and they are fraught with tensions that result from the lack of a coherent national policy about ways to protect low-income older persons against high out-of-pocket health care costs. Current efforts to reform Medicare provide an ideal opportunity to consider how best to protect low-income Medicare beneficiaries from burdensome out-of-pocket medical costs. We must grasp the opportunity now to improve the Medicare and Medicaid programs, and the bridges between them, to serve low-income older Americans in the years ahead.

This article is based in part on research supported by AARP, which is gratefully acknowledged. An earlier version of the article, "Health Care for the Elderly Poor: Are We Going Forward or Backward?" was presented as part of a roundtable discussion during the 16th Annual AHSR meeting in Chicago, June 1999.

Address correspondence to Jo Ann Lamphere, Dr. P.H., Senior Policy Advisor, Public Policy Institute, AARP, 601 E Street, N. W., Washington, DC 20049. Margo L. Rosenbach, Ph.D. is Vice President, Mathematica Policy Research, Inc., Cambridge, MA 02138. This article, submitted to Health Services Research on August 2, 1999, was revised and accepted for publication on October 18, 1999.


(1.) This estimate does not include the cost of nursing facility or home care costs.

(2.) The federal poverty level (or 100 percent FPL) is $11,060 for a two-person family in 1999.

(3.) Ibid.


Congressional Research Service. 1989. "Medicare Catastrophic Coverage Act of 1988." CRS Report to Congress. Washington, DC: Congressional Research Service, March.

Families USA. 1998. Shortchanged: Billions Withheld from Medicare Beneficiaries. Washington, DC: Families USA.

-----. 1992. The Medicare Buy-In: A Promise Unfulfilled. Washington, DC: Families USA.

-----. 1991. The Secret Benefit: The Failure to Provide Medicare Buy-In to Poor Seniors. Washington, DC: Families USA.

Feder, J. 1997. Medicare/Medicaid Dual Eligibles: Fiscal and Social Responsibility for Vulnerable Populations. Washington, DC: The Kaiser Commission on the Future of Medicaid.

Gross, D., and N. Brangan. 1999. Out-of-Pocket Spending on Health Care by Medicare Beneficiaries Age 65 and Older: 1999 Projections. Issue Brief. Washington, DC: AARP, December.

Gross, D., and S. Bee. 1999. State Pharmaey Assistance Programs. Washington, DC: AARR

Moon, M., C. Kuntz, and L. Pounder. 1996. Protecting Low-Income Medicare Beneficiaries. New York: The Commonwealth Fund, December.

Nemore, P. B. 1997. Variations in State Medicaid Buy-in Practices for Low-Income Medicare Beneficiaries. Washington, DC: National Senior Citizens Law Center.

Neumann, P. J., M. D. Bernardin, E. J. Bayer, and W. N. Evans. 1994. Identifying Barriers to Elderly Participation in the Qualified Medicare Beneficiary Program. Final Report submitted to Health Care Financing Administration.

Parente, S., W. Evans, and E. Bayer. 1995. The Impact of QMB Enrollment on Medicare Costs and Service Utilization. Report Submitted by Project Hope Center for Health Affairs to Health Care Financing Administration.

Rosenbach, M., and J. Lamphere. 1999. Bridging the Gaps Between Medicare and Medicaid: The Case of QMBs and SLMBs. Washington, DC: AARP.

Schneider, A., K. Fennel, and P. Keenan. 1999. "Medicaid Eligibility for the Elderly." Issue Paper. Washington, DC: Kaiser Commission on Medicaid and the Uninsured, May.

U.S. General Accounting Office. 1999. Low-Income Medicare Beneficiaries: Further Outreach and Administrative Simplification Could Increase Enrollment. Washington, DC: Government Printing Office.

-----. 1994. Many Eligible People Not Enrolled in Qualified Medicare Beneficiary Program. Washington, DC: Government Printing Office.
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Author:Lamphere, Jo Ann; Rosenbach, Margo L.
Publication:Health Services Research
Geographic Code:1USA
Date:Apr 1, 2000
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