Medicaid Expansion

Middle Atlantic Actuarial Club2013 Annual Meeting

Christopher Truffer, FSA, MAAAKathryn Rennie

September 12, 2013

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• Started in 1965• Provides assistance for health care

for certain low-income persons• Jointly administered and funded for

by Federal and State governments– Federal government pays about 57

percent of costs (50-74 percent across states)

Brief Overview of Medicaid

• $432.0 billion for Medicaid in 2012– 1.1% increase from 2011

• Benefits: 0.3% increase from 2011– Slowdown from last several years

• Administration: 17.5% increase from 2011– Health IT bonus payments

2012 Medicaid Expenditures

• 56.7 million enrolled in Medicaid in 2012– 1.9% increase from 2011– Slowdown in enrollment growth for

children, adults• 1 in 5 persons in U.S. enrolled at

some time during 2012

2012 Medicaid Enrollment

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• Part of the Affordable Care Act (ACA)• Medicaid eligibility extended to

persons under age 65 with household income less than 138 percent of Federal poverty level (FPL)

• Eligibility based on income only, no categorical eligibility requirements

Medicaid Expansion

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Mandatory Populations• Children• Parents below state’s AFDC cutoffs from July 1996• Pregnant Women• Elderly and Disabled SSI beneficiaries• Certain Working Disabled• Medicare Buy-in Groups (QMB, SLMB, QI)

Optional Populations• Adult without children• Medically needy

Categorical Eligibility

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Basis of Eligibility US Minimum

Children 0-18 Children 0-5 133% FPL Children 6-18 100% FPLAdults 19-64 Pregnant 133% FPL Disabled 75% FPL Parents 11%-68% FPL* Childless Adults n/aAged 65+ 75% FPL

Pre-ACA Minimum Eligibility Standards, 2009

*Eligibility relates to 1996 Aid to Families with Dependent Children (AFDC)rules in effect in each stateSource: 2012 Brief Summaries of Medicare and Medicaid, OACT

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Post-ACA Medicaid Expansion Eligibility

StandardsBasis of Eligibility US Minimum

Children 0-18 Children 0-5 138% FPL Children 6-18 138% FPLAdults 19-64 Pregnant 138% FPL Disabled 138% FPL Parents 138% FPL Childless Adults 138% FPLAged 65+ 75% FPL

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Current Income Standards• Varies state by state• Asset tests may be required

Post-ACA• Income standards based on Modified

Adjusted Gross Income (MAGI)• No asset test requirements• Applies to all under 65 except foster care

children and disabled persons

Income Definition

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• Alternative benefit plans– Provide minimum essential health

benefits (EHB) provided through the Health Insurance Exchanges

– Requires prescription drug and mental health coverage

• Plans either based on or actuarially equivalent to 1 of 3 benchmark plans

Expansion Benefits

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• Standard Blue Cross/Blue Shield PPO – FEHBP

• State Employee Coverage• Commercial HMO• Secretary Approved Coverage

Source: http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-12-003.pdf

Approved Benchmark Plans

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• Federal government pays 100% of costs for newly eligible enrollees from 2014-2016

• Federal government share decreases starting in 2017– 2017: 95%– 2018: 94%– 2019: 93%– 2020: 90%

Federal and State Costs

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• Income eligibility– States must expand to 138% FPL

• Maintenance of effort– States cannot enforce stricter enrollment

policies than those in place prior to March 2010

• For adults through January 1, 2014• For children under 19 through September 30, 2019

• Cost sharing and premiums– Must follow current Medicaid regulations

State Requirements for Expansion

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• Lawsuit challenging the ACA filed by 26 States

• Medicaid expansion was ruled “unconstitutionally coercive”

• Conclusion: Medicaid expansion is not optional, however only penalty is withholding of ACA expansion funds

Supreme Court Decision

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Expanding States• Flexibility to start, stop expansion at any time

starting January 1, 2014

Non-expanding States• Coverage “doughnut hole”• Health Insurance Exchanges can provide

subsidies for those with income over 100% FPL• Childless adults most affected

Effect of Supreme Court Decision on States

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• Initially created fall 2012• Few States had made public decisions• For those that did, evaluated those to

determine most relevant factors• Most predictive factors

– Governor and State legislature party affiliation

– Lawsuit participant

How We Created Our Projections

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Percentage of States projected to expand eligibility (weighted by population)• 2014: 45%• 2015 and after: 65%

Increased participation among currently-eligible persons (“woodwork” effect)• Expanding States: 70%• Non-expanding States: 56%

Note: 55% 2014 expansion rate in figures/tables

State Expansion Projections

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• Office of the Actuary Health Reform Model (OHRM)– Models Medicaid expansion, Health

Insurance Exchanges, other ACA changes

– Based on Medical Expenditure Panel Survey (MEPS), National Health Expenditure (NHE) Accounts and Projections

Expansion Estimates

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Kaiser Predicted State Decisions 2014

Source: http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/#map

• All Medicaid ACA Expenditures– $514 billion (2012-2021), 9% increase– $468 billion Federal Share (91%), 15% increase

• Expansion Expenditures– $448 billion (2012-2021), 87% of total ACA

impact– $388 billion Federal share (87%), 83% of

Federal ACA impact• Enrollment

– 18.3 million (2021), 31% increase

Medicaid Expansion Impacts

Source: 2012 Actuarial Report on the Financial Outlook for Medicaid

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• Expanding States generally had higher eligibility levels prior to 2014 than non-expanding States

• California estimated to account for about ¼ of all newly eligible enrollees in 2014

Medicaid Expansion Impacts

Medicaid Enrollment by Category, 2000-2021

Aged

AdultsExpansion Children

Territories

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20210

10

20

30

40

50

60

70

80

90

TerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritoriesTerritories

AgedAged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged Aged

Blind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/DisabledBlind/Disabled

Children

ChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenChildrenAdultsAdultsAdults

Adults Adults Adults Adults Adults AdultsAdults

AdultsAdults Adults Adults

Adults Adults Adults Adults Adults Adults Adults Adults

Fiscal Year

Enro

llmen

t (m

illio

ns)

Actual Projected

Expansion Adult

Expansion Children

Medicaid Enrollment under Different Expansion Scenarios, 2000-2021

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20210

10

20

30

40

50

60

70

80

90

Fiscal Year

Enro

llmen

t (in

mill

ions

)

Actual Projected

Full Expansion

Baseline

No Expansion

Medicaid Expenditures under Different Expansion Scenarios, 2000-2021

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

Fiscal Year

Expe

nditu

res (

in b

illio

ns)

Actual Projected

Full Expansion

Baseline

No Expansion

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• 2021 Statistics– 3.2% GDP1

– 8.8% Federal Budget2

– Medicaid would be 20th largest country (Germany 19th)3

– Medicaid would be 22nd largest economy (Sweden 21st, Norway 22nd)4

Medicaid Projections in Context

Sources: 1 CMS, 2012 Actuarial Report on the Financial Outlook for Medicaid; 2 President’s FY 2014 Budget; 3 United States Census Bureau, International Data Base; 4 PwC, The World in 2050.

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• Per enrollee costs estimated to be less than current enrollees’ costs– Age, gender, health status

• Health care utilization– Greater share of costs for physician services,

prescription drugs– Lower share of costs for hospital services, long-

term care• Most newly eligible enrollees expected to be

covered under managed care

Newly Eligible Enrollees

Medicaid Expenditures per Enrollee by Category, 2000-2021

2000

2001

2002

2003

2004

2005

2006

2006

.01 2007

2008

2009

2010

2011

2012

2013

2014

2014

.01 2015

2016

2017

2018

2019

2020

2021

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Fiscal Year

Actual Projected

Children

Adults

Expansion Adults

Expansion Children

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1. Move Medicaid enrollees to Exchanges (Arkansas, Iowa, others)2. Require higher cost sharing or premiums (Michigan, others)3. Expand only to 100% FPL (Indiana, Ohio, others)

State Proposals for Expansion

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• State expansion decisions• Enrollment and participation rate• Health care utilization and costs• Costs to Federal government and

States

Future of Medicaid Expansion

• http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Financing-and-Reimbursement/Downloads/medicaid-actuarial-report-2012.pdf

2012 Actuarial Report

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2012 Brief Summaries of Medicare and Medicaid:http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/downloads/MedicareMedicaidSummaries2012.pdf

Benchmark Plan Information:http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-12-003.pdf

Kaiser Medicaid Expansion Map:http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/#map

Other Sources