FY ’06 Medicaid Budget FY ’06 Medicaid Budget Cuts:Cuts:

And the Fight Goes On…And the Fight Goes On…Health Action 2006

Saturday January 28, 2006

Rachel KleinFamilies USA

www.familiesusa.org

How Far Have We Come?How Far Have We Come?

• Advocates kept some of the worst cuts from the federal budget

• $4.75 billion over five years ($6.9 billion without hurricane relief) instead of $10 billion or $15 billion

• Battle to “reform” Medicaid continues…

Priority #1: Defeat Priority #1: Defeat reconciliationreconciliation

• House votes February 1• To defeat the bill

– Retain original 9 Rs and 197 Ds who voted no first time

– Gain the 6 Ds who were absent the first time

– Gain at least 5 additional Rs

• Must educate members on what is at stake, what will happen if this passes

$43.6 Billion Cut over 10 years$43.6 Billion Cut over 10 years

Rx Drugs29%

Asset Transfer15%

Fraud and Waste

7%

Other13%

Cost sharing and Benefits

36%

So What Got Cut?So What Got Cut?

Two kinds of cuts:

1.Cuts that make it harder to get Medicaid

2.Cuts that make it harder to get health care

Making it harder to Making it harder to get Medicaidget Medicaid

PremiumsPremiums

• Any person with income below poverty, or over 150% of poverty may be charged premiums

• Groups exempt:– Mandatory and foster

children– Pregnant women– Hospice patients– Institutionalized populations– Women in breast or cervical

cancer programs

Documentation Documentation requirementrequirement

• New requirement that Medicaid applicants provide proof of citizenship (birth certificate or passport)

• Those who can’t can be kicked off or denied Medicaid

• Mandatory change for states

Asset Transfer RulesAsset Transfer Rules

1. “look back” period for asset transfers increased to 5 years instead of 3

2. Moves start of penalty period from date of transfer to date of Medicaid eligibility; an asset transfer does not begin to “count” until the person needs Medicaid

3. Mandatory change for states

Making it harder to get Making it harder to get carecare

Higher Cost SharingHigher Cost Sharing

• Below poverty: No limits specified in the bill

• 100-150% of poverty: cost sharing up to 10% of cost of service

• Over 150% of poverty: cost sharing up to 20% of cost of service

• Definition of ‘Nominal’ for those who still have ‘nominal’ copays increases annually with medical inflation

Higher Cost Sharing Higher Cost Sharing (continued)(continued)

• Services exempt from cost sharing:

– Required services to mandatory and foster children (mandatory children include ages 0-6: family income under 133% of poverty; 6-18: family income under 100% of poverty)

– Preventive services to any child under age 18– Pregnancy-related services– Services to hospice patients– Services to institutionalized populations– Secretary-defined emergency services– Family planning services– Services for women in breast or cervical cancer programs

Limits on premiums & cost Limits on premiums & cost sharingsharing

• > 100% poverty: Out-of-pocket costs up to 5% of the family’s quarterly or monthly income

• no upper limit on cost sharing or premiums for those with incomes below poverty in current bill

• Cost sharing and premiums are enforceable

New Medicaid Cost Sharing New Medicaid Cost Sharing and Premium Annual Limitsand Premium Annual Limits

$1,209

$1,451

$1,693

$1,935

(Currently no limit)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

100 125 150 175 200

Family income as a percent of poverty (based on a family of four)

An

nu

al o

ut

of

po

ck

et

limit

Benefits ChangesBenefits Changes

• Allows states to cut benefits packages to resemble:– Federal Employees Health

Benefits Plan or equivalent

– State Employees Health Benefits Plan or equivalent

– The HMO in the state with the largest non-Medicaid enrollment

– The actuarial equivalent of any of the above

– Secretary-approved coverage

Benefits Changes Benefits Changes (continued)(continued)

• Exempt from benefits changes:– Pregnant women– Dual eligibles (people who get both Medicaid and Medicare)

– Hospice patients– Institutionalized populations– Medically frail and special needs populations– Long term care eligibles– Blind and disabled– Foster children– Mandatory parents (eligible for cash assistance under state rules as

of July 16, 1996)

– Women in breast or cervical cancer programs

• Notably NOT exempt: mandatory children (although EPSDT must technically be maintained)

Health Opportunity AccountsHealth Opportunity Accounts

Health Opportunity AccountsHealth Opportunity Accounts (continued)(continued)

• Up to 10 state demonstration projects with Secretary option to extend further after first 5 years

• Personal account for each person/family in Medicaid

• Deductible up to 110% of amount in account• Up to $2,500/adult or $1,000/child to spend

on ‘medically necessary’ services. Participants pay their providers Medicaid rates.

Health Opportunity Accounts Health Opportunity Accounts (continued)(continued)

• Once initial allotment is spent, must pay all medical expenses out of pocket until the deductible is reached

• Then go into “regular” Medicaid• Exempt from HOAs:

– Over age 65– Eligible for medical assistance because of

pregnancy– Eligible for medical assistance for 3 months

or less

If the bill passes…If the bill passes…

• States must implement citizenship & asset transfer changes in 2006

• Cost-sharing & benefits fights coming to a legislature near you

• Lots of work for state advocates in educating state legislators on how the optional provisions will affect people on Medicaid

Coming Attractions Coming Attractions

• Medicaid Commission meeting this year; report due December 2006

• President’s 2007 budget comes out early February

• Federal fiscal outlook remains dim• We live to fight another day