The federal government is the largest single payer of health care in the United States, accounting for more than a quarter of all U.S. spending on health care. Government agencies and their mandates play a powerful role in guiding the provision of health benefits and the overall construct of the market.
In recent years, a number of health policy trends have highlighted the significant role the federal government plays as a payer of health care:
- The federal government's role as both regulator and payer in the health care market has great influence in the country's health insurance market
- The government encourages purchasers (employers and carriers) to serve as test cases for government preferred payment models such as bundled payments and ACOs
- The federal government's role as the dominant health care payer has a variety of powerful effects on payment to providers—most notably through Medicare, but also in terms of the potential cost shifting that occurs and is borne by private payers
- The federal government's ACA exchange plans serve as a benchmark for private plans, which has a ripple effect in setting prices for other insurance plans, as well as for employers determining levels of coverage
- The Federal Employee Health Benefit Plan (FEHBP), influences not only the shape of health plans provided, but also who is providing them
- The government's dominant payer role shapes the face of innovation adoption. For example, when it comes to telehealth, Medicare payment models are determining how new technology will be integrated in the practice of medicine
- The government's Agency for Healthcare Research and Quality (AHRQ) sets national health care quality standards, which play a role in payment models.
Medicaid is a vital safety net for children that must be maintained. It is the largest single insurer of children, yet millions of children who are eligible remain unenrolled. Every effort should be made to implement expanded eligibility and streamlined enrollment procedures. Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefits should be maintained for all eligible children.
Medicaid benefits vary by state as well as payments. Inadequate payment affects children's access to care. The AAP recommends that states should increase reimbursement to at least parity with Medicare and that Medicaid continue to offer all eligible children the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit and all other mandatory and optional benefits. In addition:
- Clearly specify the full scope of pediatric Medicaid benefits, including EPSDT, in consumer brochures, state plan documents, and managed care contracts. States should also inform families about Medicaid benefits excluded from managed care contracts and educate them on how to access these carved-out but covered services.
- Encourage states to ensure that EPSDT, in combination with other mandatory and optional benefits, covers the benefits outlined in the AAP policy statement "Scope of Health Care Benefits for Newborns, Infants, Children, Adolescents, and Young Adults Through Age 21 Years."
- Ensure that states' EPSDT periodicity schedules are consistent with the AAP periodicity schedule in "Recommendations for Preventive Pediatric Health Care" and Bright Futures and that immunization schedules are consistent with the recommended childhood and adolescent immunization schedule published annually by the AAP, the Advisory Committee on Immunization Practices, and the American Academy of Family Physicians.
- Ensure that states' medical necessity definitions, consistent with EPSDT policy, are included in all consumer brochures, state plan documents, and managed care contracts. When making medical necessity determinations, state Medicaid agencies should consider whether health interventions for children assist in achieving, maintaining, or restoring health and functional capacity; are appropriate for age and developmental status; and will take into account the specific needs of the child.
- Encourage states to offer the full scope of pediatric Medicaid benefits, including EPSDT, for children under Section 1115 demonstration waivers and Health Insurance Flexibility and Accountability waivers.
- Promote parity of behavioral health benefits with medical benefits in insurance plans.
- Maintain the policy prohibiting cost sharing on all Medicaid benefits for children, particularly preventive services.
The AAP has developed additional resources:
Children's Health Insurance Program (CHIP): Accomplishments, Challenges, and Policy Recommendations
Every child, regardless of health status, requires health insurance. Medicaid is a vital component of the American health and social safety net, particularly for low-income children and children with special health care needs.
Medicaid Policy Statement
Medicaid is a vital safety net for children that must be maintained. It is the largest single insurer of children, yet millions of children who are eligible remain unenrolled. Every effort should be made to implement expanded eligibility and streamlined enrollment procedures.
Medicaid and State Public Payer Advocacy
The AAP Division of State Government Affairs provides consultation and technical assistance to chapters seeking to influence state government policy.
Federal Advocacy Related to Access and Payment
The American Academy of Pediatrics (AAP) supports the Affordable Care Act (ACA) because the law provides children with the ABCs: Access to health care services, age-appropriate Benefits and health care Coverage to meet their needs.
State Health Care System Transformation
Practice transformation increasingly takes place in the context of larger state payment and delivery system transformations. Learn more at the AAP State Health Care System Transformation page.