Comparing the medical expenses of children with medicaid and commercial insurance in an HMO

Background: In recent years, growing numbers of children with Medicaid have been enrolled in managed care plans nationwide. Yet, large, commercial man aged care plans are increasingly discontinuing their participation in Medic aid because of low Medicaid payment rates. Objective: To compare the healthcare utilization and costs of children with Medicaid and children with commercial insurance within the same health mai ntenance organization (HMO). Study Design: Retrospective study using electronically captured cost and ut ilization data. Patients and Methods: We compared the healthcare utilization and costs of c hildren with Medicaid (n=42,636) and children with commercial insurance (n= 159,651) who were members of the same large, nonprofit HMO at any time betw een January ii 1995, and December 31, 1997. Medicaid children were grouped as income eligible, medically needy, and blind or disabled. Results: The unadjusted costs of income-eligible, Medicaid-insured children were not significantly different from those of commercially insured childr en. The medically needy were $25 per month more expensive than commercially insured children (P =.02), and the blind or disabled were $213 per month m ore expensive (P <.01). After adjusting for age and sex, income-eligible ch ildren were $5 per month more expensive than children with commercial insur ance (P =.07), the medically needy were $20 per month more expensive (P =.0 2), and the blind or disabled were $216 per month more expensive (P <.01). Conclusions: The costs of income-eligible, Medicaid-insured children in thi s HMO were similar to those of commercially insured children, but the costs for the medically needy and the blind and disabled were substantially high er.