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Medicaid Expansion in Louisiana

United Way of Southeast Louisiana Policy Forum New Orleans, LA

February 16, 2016

2 Governor’s Executive Order - JBE 16-01

Signed by Governor John Bel Edwards on January 12, 2016

Directs DHH to adopt Rules and submit State Plan Amendments to expand Medicaid with effective date no later than 7/1/16

Directs DHH and all other executive branch departments to take actions within delegated authority necessary to implement

3 Why Expand Medicaid in Louisiana? Why Now?

Medicaid expansion primarily benefits working people who would otherwise be uninsured

Expansion 7/1 allows us to capitalize on the best federal match rate (100%) immediately; features that would require a Medicaid waiver can be added

Money from expansion helps our urban and rural hospitals and our providers; brings billions of dollars of new income into the state.

Louisiana is the unhealthiest state in the nation and Louisianans can benefit from access to care and improvements in population health

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Overall access: More individuals will receive all medically necessary care in a given year.

Primary care: More individuals will gain a usual source of care.

Preventive care: Thousands of additional cholesterol screenings and mammograms will be completed annually.

Office visits: Additional physician office visits will be completed each year.

Medicaid Expansion Increases Access to Care

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Sources: Council of Economic Advisers, “Missed Opportunities: The Consequences of State Decisions Not To Expand Medicaid” (July 2014); Deloitte, “Commonwealth of Kentucky: Medicaid Expansion Report” (February 2015)

5 Expansion Advances Coverage

21.6%

14.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Q4 2013 Q1 2015

Uninsurance Rate in Non-Expansion States

14.8%

7.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Q4 2013 Q1 2015

Uninsurance Rate in Expansion States

Decline of 33%

Decline of 49%

Source: Urban Institute Health Reform Monitoring Survey: http://hrms.urban.org/quicktakes/Trends-in-Uninsurance-and-State-Marketplace-and-Medicaid-Expansion-Decisions.html

6 Expansion Economics: Impact on State Budgets

State Costs

• Coverage for newly eligible adults • Increased administration costs

State Savings • Enhanced federal matching funds for some previously enrolled Medicaid

beneficiaries now eligible • Some services historically funded with State or local funds could be refinanced

with Medicaid funds (such as spending on inpatient hospital costs of inmates) • Redirecting spending on disproportionate share hospital payments (regular

match) to new adult spending (with enhanced match)

Revenue Gains • Expansion will result in State revenue gains related to existing health plan

and/or provider taxes as health plan and provider revenues increase

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2

ACA Newly Eligible FMAP

Calendar Year FMAP

2016 100%

2017 95%

2018 94%

2019 93%

2020 and thereafter 90%

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7 Expansion Economics: Job Creation

Expansion will result in an estimated $1.1 billion gross state product increase, resulting in:

– Approximately 15,600 new jobs (70% healthcare, 25% retail, leisure, hospitality and personal services, 5% other)

– $1.8 billion in increased economic activity

New jobs equate to new state and local tax revenue of approximately $120 million per year

8 Expansion Economics: Workers and Employees

Coverage will be available for working people in important industries like tourism and construction:

– 30,000 restaurant and 15,500 construction workers currently uninsured will be covered by expansion.

– Supports small business and their employees when the business cannot provide insurance due to high costs.

Untreated health problems cost Louisiana employers $380 million a year

– Lower out of pocket cost allow consumers to spend elsewhere.

A healthy, productive workforce benefits the employee, employer and the state

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Hospitals in Louisiana must pay for “uncompensated” care for uninsured individuals. Since implementation of the ACA, hospitals in states that expanded have experienced

decreases in their uncompensated care costs. These reductions alleviate strain on hospitals and help ensure their sustainability.

Numerous studies document reductions in uncompensated care costs in expansion states:

In Connecticut, hospital uncompensated care was 1/3 lower than what it would have been without Medicaid expansion (2011 – 2013)

The Iowa Hospital Association reported uncompensated care cases declined by 18.5%, saving hospitals approximately $32.5 million (January – June 2014)

Arkansas projects a $1.1 billion reduction in hospital uncompensated care costs from 2017-2021

Reductions in Uncompensated Care

Sources: State Health Reform Assistance Network Issue Brief, The Impact of Medicaid Expansion on Uncompensated Care Costs: Early Results and Policy Implications for States, June 2015. Health Affairs, Early Medicaid Expansion in Connecticut Stemmed the Growth in Hospital Uncompensated Care, July 2015; Deloitte Kentucky Expansion One Year Report, February 2015

10 2010 Affordable Care Act & Medicaid for Adults

Mandatory changes in eligibility for Medicaid program created in 1974

– No longer a requirement to fit into a “category”, meaning adults with and without dependent child(ren) could qualify

– Standardized for all states calculation of countable income; established national income standard of 138% gross income

Effective date of changes was intended to be January 1, 2014

June 2012 Supreme Court decision made Medicaid expansion optional rather than mandatory for states

Changes in method for calculating income for Medicaid eligibility remained mandatory and Louisiana implemented 1/1/14

Current La income limit for parents is 24% of poverty level; most adults with no dependent child in home are ineligible

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Louisiana is 32nd State to Adopt Expansion

12 Louisiana Medicaid Current Timeline and Key Tasks

Jan. 12, 2016 – Gov. signs Executive Order JBE 16-01 to expand Medicaid

Feb. 20, 2016 – Notice of Intent published in Louisiana Register

March 2016 – State Plan amendments submitted to CMS

April 2016 – Direct mail, community outreach efforts to new adults begin

May 2016 – DHH accepting applications with expansion criteria

June 2016 – Enrollment in Bayou Health Plans, ID cards mailed

July 1, 2016 – Earliest effective date of coverage (“go live”)

13 Who Will Be Eligible for Medicaid Expansion?

Parents with dependent children and other adults (19-64 years old) with incomes below 138% of the federal poverty line – Maximum eligibility would be $16,242 for a single adult and $27,724 for parents

in a three-person household

Cannot be eligible for or enrolled in Medicare Part A or B

Cannot be eligible for full coverage Medicaid

– They do not have to be working

– They do not have to have children

– They do have to meet citizenship requirement

14 How Many Louisianans Might be Eligible for Expansion?

Based on best available data, 300,000 – 450,000 people could qualify (not all will enroll). – U.S. Census Bureau: ~ 300,000 Louisianans uninsured & income below 138% FPL

expansion limits. Census data is the best national data available but some states have found it understated eligible population

– Louisiana Administrative Data: ~ 450,000 people might be eligible. This data also has limitations. For example, it includes people who already have insurance.

DHH’s goal is to be transparent about numbers and costs, using the best data available. We will regularly monitor and report on enrollment trends.

15 Louisiana Medicaid: Expansion Impact on Eligibility

0%

20%

40%

60%

80%

100%

120%

140%

160%

Pregnant Women Aged, Blind andDisabled (SSI)

Parents Childless Adults(Except GNOCHC)

Inco

me

as %

of t

he F

eder

al P

over

ty L

evel

LA Medicaid with Expansion

LA Medicaid Today

138% FPL

Individuals above the

current eligibility

level for ABD would qualify as adults or

parents under expansion

16 Streamlined Enrollment and Application

Enrollees with limited Medicaid coverage - GNOCHC and Take Charge Plus - “flipped” to full coverage. No need to apply

All other adults wanting Medicaid will need to apply unless they have:

– a pending Medicaid application

– active enrollment in full Medicaid coverage.

DHH will use data from SNAP to target new adults eligible for Medicaid (over 99% of people getting SNAP are below 138% FPL)

17 Medicaid Coverage and Service Delivery for New Adults

Expansion population will be eligible for same benefits and services as current full-coverage Medicaid adults

Enrollees will receive services through one of five Bayou Health Plans – Auto enrollment to a Plan when no active choice is made on the application

– Option to change plans in the first 90 days

– Same provider network and care management as other Bayou Health enrollees

– Provider reimbursement will be same as other Bayou Health enrollees

More information on the Health Plans can be found at www.BayouHealth.com or by calling 1-855-BAYOU-4U (1-855-229-6848).

18 Paying for Medicaid Expansion in Louisiana

Medicaid jointly financed by the state and the federal government

The federal government’s share is determined by the “match rate” (FMAP) which varies by state

− For the Non-expansion Population, the match rate in Louisiana is 62%, meaning that the federal government pays 62 cents of every $1 in Medicaid coverage costs

− For the Expansion Population, the match rate is 100% in CY2016, 95% in CY2017, 94% in CY 2018, 93% in CY2019, and 90% in 2020 and beyond

Administrative match is 50%, or 75% for many eligibility-related functions and 90% for systems changes

− Need for additional SGF can be offset through donations to Baton Rouge Area Foundation (BRAF) and entities paying state match for cost of on-site eligibility workers

19 Medicaid Expansion Reflective of Louisiana Values

Design features that encourage personal responsibility

Straight Medicaid expansion—no waiver necessary

– Copays for using ED as primary care or non-generic drugs when generic equivalent is available (requires legislative approval)

– Incentives for healthy behaviors, getting annual wellness exam

– Work referral and assistance in registering with HIRE

Medicaid Section 1115 Waiver post- July 1st

– Premiums, for those in upper level FPL

– Premium assistance for purchase of either Employer-Sponsored Insurance (ESI) or Qualified Health Plan (QHP)

20 For More Information or Questions About Expansion

J. Ruth Kennedy Medicaid Expansion Project Director Bureau of Health Services Financing (BHSF) LOUISIANA DEPARTMENT OF HEALTH AND HOSPITALS Ruth.Kennedy@la.gov (225) 241-1437 www.MakingMedicaidBetter.com