Patterns of Medicaid Eligibility: A Sample of 408 Medi-Cal Eligibles in San Francisco, California

Medicaid expenditures per recipient have increased substantially in the past decade, even after controlling for medical care price inflation. In response to this Medicaid expenditure growth, various policies to encourage Medicaid enrollment in cost-effective health maintenance organizations (HMOs) are being considered, including guaranteed Medicaid eligibility for Medicaid eligibles enrolled in HMOs. This paper addresses several important questions about Medicaid eligibility that are essential to an analysis of guaranteed eligibility—the length of eligibility, turnover rates, and reasons individuals lose their Medicaid eligibility. We selected a stratified random sample of 408 eligibility case files for individuals eligible for Medicaid in San Francisco County during December 1977. Six aid categories are represented in this study: (1) Cash Grant AFDC; (2) Medically Needy Families; (3) Medically Needy Aged; (4) Medically Needy Disabled; (5) Medically Indigent Adults; and (6) Medically Indigent Children. We found that the majority of individuals remain eligibile for Medicaid for long, uninterrupted spells, ranging from a median of 15 months (Medically Indigent Adults) to 40 months (Medically Needy Aged). A much smaller subset of eligible persons had relatively short spells and higher turnover; some of that turnover was due to failure to comply with income reporting requirements. We used data on length of eligibility to estimate the cost impact of 6 months' guaranteed eligibility (for months during which individuals would otherwise not have been eligible for Medicaid benefits). We also estimated the potential benefits (savings of HMOs relative to average fee-for-service expenditures) and the benefits of guaranteed eligibility appear to be greater than the costs.