The States That Spend The Most (And Least) On Healthcare For The Poor

The federal and state governments spend approximately $5,296 a year on medical treatment for each poor and disabled person on Medicaid. Over 58 million Americans are enrolled in Medicaid. These average payments per patient swing widely from state to state, as does the federal government’s contribution to each state’s Medicaid fund.

The federal Medicaid system pays states a percentage of their Medicaid budgets based on per capita income. These federal funds can be as high as 77.1% of the state’s Medicaid spending, as is the case with Mississippi, the poorest state in the nation. The lowest federal contribution is 50%, as is the case for New York and nine other states.

24/7 Wall St. looked at each state Medicaid spending per recipient, and how it relates to the health outcomes in each. We also analyzed the largest individual costs that make up these payments. At the top of this list are hospital care, doctor check-ups, and prescription medications. What this analysis makes clear is how inefficient the system can be, particularly in states with low per capita incomes.

Oddly, the poorest states spend the least on each Medicaid recipient, even though they have the greatest financial access to federal assistance. The majority of these states also have the highest incidences of preventable diseases such as heart disease and diabetes, as well as high death rates from cancer. There are exceptions to this, particularly Washington State and Hawaii. They spend little per Medicaid recipient, get low rates of federal government assistance, and have relatively healthy populations. While it cannot be proved definitively, these two states have more efficient systems if cost and outcome are the two primary measurements.

Read: The States That Spend The Least On The Poor’s Health
Read: The States That Spend The Most On The Poor’s Health

States that spend a great deal per Medicaid recipient have above average outcomes in most cases compared to other states. This would indicate that money thrown at the problem can be effective, sometimes. Maine and New York have Medicaid payment rates at the highest end of the state scale but have a larger-than-average incidence of heart disease and cancer mortality. That make Washington’s results all the more impressive as it gets better outcomes from a most modest investment.

24/7 Wall St. examined a report released in the health policy journal Health Affairs to provide a profile of the Medicaid system in these states.  The report breaks down how much each state spent per beneficiary on Medicaid between 2000 and 2005. Data bearing on the efficiency of each state system, was taken from the Henry J. Kaiser Family Foundation’s statehealthfacts.org, the Centers for Disease Control and the National Cancer Institute.

The divergence of results makes it clear that when it comes to Medicaid efficiency, there is significant room for improvement in most states, at least as it relates to the health of the people in those states, which must be the primary goal of Medicaid. As the authors of the report explain, “A more in-depth, qualitative analysis of the Medicaid program in Washington State may provide valuable lessons for other states that are interested in increasing the quality of care while reducing costs.” While that is one expert’s judgment, his viewpoint is borne out by the 24/7 Wall St. analysis.

The Ten States Spending The Least On The Poor’s Health

10. Florida
> Medicaid spending per recipient: $4,352/yr
> Federal spending as pct. of total costs: 58.9% (30th most)
> Median income: $47,450 (19th least)
> Heart disease rate: 7.4% (tied for 7th highest)
> Annual cancer death rate (per 100,000): 174.1 (10th lowest)

Florida spends almost $1,000 less per Medicaid recipient than the national average. However, the state spends just under $400 more on acute care for disabled patients than the average. What makes these costs higher than the national average is primarily inpatient care, or medical services that require extended periods of time in a hospital. Although these services by themselves are less expensive in Florida, the rate at which they are administered is much higher than average.

9. Hawaii
> Medicaid spending per recipient: $4,312/yr
> Federal spending as pct. of total costs: 58.5% (31st most)
> Median income: $64,661 (4th most)
> Heart disease rate: 4.9% (2nd lowest)
> Annual cancer death rate (per 100,000): 150.8 (2nd lowest)

Despite the fact that the state has the fourth highest median household income in the country, Hawaii actually had a larger portion of its Medicaid bill covered by the government than poorer states like Illinois, Virginia and Nevada. Compared to most wealthy “blue” states, the group of islands spends very little on Medicaid. Per beneficiary, the Aloha State spends less than half the national average on long-term care, which includes nursing homes and in-home care. Despite spending nearly $1,000 less per beneficiary on Medicaid than the national average, the state has one of the healthiest populations in the country with the second-lowest rates of cancer mortality and heart disease in the country.

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8. Washington
> Medicaid spending per recipient: $4,291/yr
> Federal spending as pct. of total costs: 50% (tied for the least)
> Median income: $56,384 (12th most)
> Heart disease rate: 5.5% (tied for 10th lowest)
> Annual cancer death rate (per 100,000): 181.2 (19th lowest)

Washington receives the smallest Medicaid assistance package from the federal government. But this does not have substantial negative impact on the state’s health. Relative to the rest of the country, Washington has low rates of both cancer mortality and heart disease, despite greater than average hospital costs. Washington also provides much less Medicaid funding for disabled beneficiaries than the national average. Washington manages to have overall good health at low cost due to an exceptionally well run, highly integrated system, according to Todd Gilmer, one of the authors of the report.

7. Arizona
> Medicaid spending per recipient: $4,266/yr
> Federal spending as pct. of total costs: 67.5% (14th most)
> Median income: $50,296 (22nd most)
> Heart disease rate: 7% (tied for 10th highest)
> Annual cancer death rate (per 100,000): 159.6 (3rd lowest)

Arizona’s median income is average for the country, but the state receives 67.5% of its Medicaid costs from the government, 14th most in the country. The Grand Canyon state spends just $8 per recipient on dental care, hospice and care-based transportation. The national average is $624, and only one Michigan spends less at $7 per person. Arizona also spends less on long-term care per beneficiary than any state in the country, at just $92, compared to a national average of $2,573.

6. Oklahoma
> Medicaid spending per recipient: $4,000/yr
> Federal spending as pct. of total costs: 70.2% (10th most)
> Median income: $41,861 (6th least)
> Heart disease rate: 7.5% (tied for 6th most)
> Annual cancer death rate (per 100,000): 196.9 (13th highest)

Oklahoma spends an average of $5,666 on short term care per disabled Medicaid beneficiary — the smallest amount in the country. The state also spends only $643 on long term care, which is about one fourth of the national average. But the state has a number of health issues. Oklahoma has among the highest rates of cancer mortality in the country. Additionally, 7.5% of the state’s population suffer, or have suffered, from heart disease — the sixth highest rate in the U.S.

5. California
> Medicaid spending per recipient: $3,962/yr
> Federal spending as pct. of total costs: 50% (tied for least)
> Median income: $60,392 (8th most)
> Heart disease rate: 6% (23rd lowest)
> Annual cancer death rate (per 100,000): 166.9 (6th lowest)

While California has earned the reputation of having a generally bloated budget, Medicaid is one area where it spends less per recipient than nearly any other state. However, the state has well more recipients than any other, and so the total cost is higher. It also only receives the minimum federal contribution to costs at 50%. Most healthcare-related expenses, especially those that occur for in-hospital care, are lower. The one exception to the generally lower prices in the state is pharmaceutical costs, which drive up costs per patient. This is made up for by the fact that fewer prescriptions are given out to Medicaid patients. The state’s system appears to be relatively efficient as California has an on-par rate of heart disease and the sixth-lowest rate of deaths from cancer.

4. Michigan
> Medicaid spending per recipient: $3,865/yr
> Federal spending as pct. of total costs: 56.7% (35th most)
> Median income: $48,700 (25th least)
> Heart disease rate: 6.9% (14th highest)
> Annual cancer death rate (per 100,000): 191 (18th highest)

Michigan, despite having a median household income, receives a relatively small amount of Medicaid funding from the federal government. The state also spends over $1,300 less on Medicaid beneficiaries than the national average. The state does spend slightly more on short-term care for the disabled, yet spends less than one fifth of the national average on long-term care.

3. Tennessee
> Medicaid spending per recipient: $3,738/yr
> Federal spending as pct. of total costs: 64.8% (18th most)
> Median income: $42,943 (9th lowest)
> Heart disease rate: 7.6% (5th highest)
> Annual cancer death rate (per 100,000): 206 (5th highest)

The Tennessee health care system spends almost $1,500 less per patient than the U.S. average. Lower than average prescription drugs prices are a factor in this. But the biggest reason the state spends so little  is a low rate of hospitalization and checkups. Possibly as a result of less awareness and generally less care, the state’s population has some severe health issues, including the fifth highest rate of heart disease. The state also has the fifth most cancer deaths per capita each year.

2. South Carolina
> Medicaid spending per recipient: $3,443/yr
> Federal spending as pct. of total costs: 69.9% (12th most)
> Median income: $43,572 (11th lowest)
> Heart disease rate: 6.5% (19th highest)
> Annual cancer death rate (per 100,000): 194.2 (14th highest)

Although almost 70% of South Carolina’s Medicaid bill is federally-funded, the state still spends over $1,800 less on Medicaid recipients than the national average. The state’s expenditure is consistently below average for most categories of Medicaid funding, such as prescription drugs, hospital lab and x-ray work, and money to assist disabled persons. The state has one of the highest rates of diabetes in the country, at 11.4% of the adult population of the state. It is also within the top twenty for states for both the cancer mortality and heart disease rates.

1. Mississippi
> Medicaid spending per recipient: $3,413/yr
> Federal spending as pct. of total costs: 77.1% (the most)
> Median income: $36,796 (lowest)
> Heart disease rate: 8% (3rd highest)
> Annual cancer death rate (per 100,000): 207.7 (4th highest)

More than 77% of Mississippi’s health care bill is covered by the federal government. Even with this support, the poorest state in the country spends the least per Medicaid patient, roughly two thirds of the U.S. average and less than 30% of what Alaska spends. Mississippi spends less than nearly any other state in areas like mental health and x-rays. It also spends just $1,605 per disabled patient on prescription drugs, compared to a national average of $2,631. These costs are so low because, while pharmaceutical prices are in line with the U.S. average, the rate at which they are prescribed is very low. As is the case throughout most of the south, a low level of treatment corresponds with poor health for the state’s residents. Mississippi has the third highest rate of heart disease and the fourth highest rate of cancer deaths per capita.

The Ten States Spending The Most On The Poor’s Health

10. Montana
> Medicaid spending per recipient: $6,145/yr
> Federal spending as pct. of total costs: 71.9% (6th most)
> Median income: $43,089 (10th lowest)
> Heart disease rate: 5.1% (5th lowest)
> Annual cancer death rate (per 100,000): 179.3 (16th lowest)

Montana pays just 28.1% of its total Medicaid bill, but it spends approximately $1,000 more than the U.S. mean per Medicaid recipient. Costs are lower in certain areas, including long-term care and pharmaceuticals. However, the prices of in-hospital care and outpatient care, which includes things like checkups, cancer screening, and other tests, are higher than the mean. The state also spends nearly $400 more per Medicaid beneficiary than the U.S. average. The higher spending seems to be paying off, however, as the state has the sixteenth lowest rate of cancer mortality and the fifth lowest rate of heart disease.

9. Rhode Island
> Medicaid spending per recipient: $6,574/yr
> Federal spending as pct. of total costs: 55.4% (37th most)
> Median income: $55,569 (16th most)
> Heart disease rate: 5.6% (14th lowest)
> Annual cancer death rate (per 100,000): 187.5 (23rd lowest)

On average, Rhode Island spends about $1,300 more on each Medicaid patient than the national average. For certain recipients, such as those receiving long-term care, the amount spikes to almost $2,000 more than the national average. The state also spends approximately twice the average on mental health services. In some cases, lower prices offset higher use. For example, though the state prescribes a considerably higher amount of pharmaceuticals, this is offset by lower pharmaceutical prices. Somewhat similarly, higher prices for long-term care are offset by a reduced number of short-term care visits.

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8. North Dakota
> Medicaid spending per recipient: $6,989/yr
> Federal spending as pct. of total costs: 67.5% (14th most)
> Median income: $45,140 (14th least)
> Heart disease rate: 5.8% (17th lowest)
> Annual cancer death rate (per 100,000): 173.3 (9th lowest)

67.5% of North Dakota’s Medicaid costs are subsidized by the federal government, which is the 14th largest percentage in the country. The state’s hospital care, doctor visits, screening and pharmaceuticals don’t differ much from the norm. However, the state spends, on average, more than all but three states on long-term care. It also spends more than all but two states on things like dental care, hospice and private duty nursing. The state has the sixth lowest rate of deaths from cancer per capita, and a lower than average rate of heart disease.

7. New Mexico
> Medicaid spending per recipient: $7,225/yr
> Federal spending as pct. of total costs: 74.3% (4th most)
> Median income: $42,742 (8th least)
> Heart disease rate: 5.2% (6th lowest)
> Annual cancer death rate (per 100,000): 162.2 (5th lowest

New Mexico spends just under $2,000 more than the U.S. average per Medicaid recipient. The state, which has one of the lower median household incomes in the country, receives 74.3% of its Medicaid funding from the federal government. This is the fourth largest percentage among all the states. The state is, by many counts, very healthy. It has the fifth lowest rate of cancer mortality in the country and the sixth lowest rate of heart disease.

6. New Hampshire
> Medicaid spending per recipient: $7,719/yr
> Federal spending as pct. of total costs: 50% (tied for least)
> Median income: $63,033 (7th most)
> Heart disease rate: 6.2% (22nd highest)
> Annual cancer death rate (per 100,000): 187.8 (22nd highest)

Unlike many of the states that spend significantly more than average on Medicaid, New Hampshire only has the requisite minimum 50% funded by federal taxes. For disabled beneficiaries without HMOs the state spends $5,671 on dental care, hospice and private duty nursing — more than any other state and much higher than the national average of just $624. While the state saves money on in-hospital care, it spends more than $1000 extra per average beneficiary due to the high volume of prescription drugs covered each year.

5. Maine
> Medicaid spending per recipient: $7,779/yr
> Federal spending as pct. of total costs: 64.9% (17th most)
> Median income: $46,541 (17th least)
> Heart disease rate: 6.1% (25th lowest)
> Annual cancer death rate (per 100,000): 199.7 (9th highest)

Maine spends considerably more on all Medicaid beneficiaries. And when it comes to short-term care for disabled beneficiaries the state spends an even greater amount relative to the national average, outspending the rest of the country by about $6,000 per beneficiary. A leading cause of the state’s high rate of spending is the high prices of a number of Medicaid services. The costs of both short term and long term care for disabled recipients are significantly higher than the national average, for instance. Spending does not yield better results in all cases, however. Maine has one of the highest cancer mortality rates in the country.

4. Minnesota
> Medicaid spending per recipient: $7,973/yr
> Federal spending as pct. of total costs: 50% (tied for least)
> Median income: $57,007 (11th most)
> Heart disease rate: 5% (4th lowest)
> Annual cancer death rate (per 100,000): 173.7 (10th lowest)

Only half of Minnesota’s Medicaid costs, which are more than $2,600 higher than the national average, are subsidized by the federal government. The state spends the third-most per disabled beneficiary on long-term care, but most of the reason for the higher bill comes from higher hospital costs per patient on tests, screening and checkups. Minnesota’s population is less likely to have preventable diseases like heart disease and diabetes, with just a 5% rate for each. It also has one of the lowest rates of cancer mortality in the country.

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3. Delaware
> Medicaid spending per recipient: $8,178/yr
> Federal spending as pct. of total costs: 50.4% (39th most)
> Median income: $57,618 (10th most)
> Heart disease rate: 6.9% (12th highest)
> Annual cancer death rate (per 100,000): 198.4 (11th highest)

Although Delaware spends a significantly greater amount per Medicaid recipient than the national average, the state receives the second lowest percentage of funding from the federal government. Short-term medical care prices are lower in the state relative to the rest of the country. This has helped to offset an increasing number of short-term patients.

2. New York
> Medicaid spending per recipient: $8,589/yr
> Federal spending as pct. of total costs: 50% (tied for least)
> Median income: $55,233 (17th most)
> Heart disease rate: 5.8% (18th lowest)
> Annual cancer death rate (per 100,000): 171.9 (8th lowest)

New York has the most costly Medicaid system in the continental U.S., spending more than $8,500 per beneficiary. The biggest reasons for this are very high expenditure on long-term care, high costs for in-hospital care and pharmaceuticals. While the average price for drugs is not much higher in the state, doctors in New York generally prescribe more expensive combinations of medication. This, combined with a higher rate of coverage and prescription for patients, means that the state spends nearly $1,000 more than the U.S. average on drugs alone. Despite spending more across the board on patients, New York is only slightly better than average on heart disease. Cancer treatment appears to be somewhat effective, however, as the state has the sixth lowest mortality rate in this area.

1. Alaska
> Medicaid spending per recipient: $11,819/yr
> Federal spending as pct. of total costs: 57.6% (34th most)
> Median income: $64,635 (5th most)
> Heart disease rate: 5.5% (13th lowest)
> Annual cancer death rate (per 100,000): 180.9 (19th lowest)

Alaska spends over twice as much as the national average per Medicaid recipient and over $3,000 more than New York. Medicaid is more widely used in the state compared to the national average, specifically with regards to disabled recipients. This keeps Medicaid spending high, even when other prices are relatively low in the state, such as in the case with pharmaceuticals. In most cases, however, the state’s spending results from a combination of high prices and a high rate of Medicaid usage.

Michael Sauter, Douglas A. McIntyre and Charles Stockdale