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MedicaidTo Expand Or Not Expand That Is The QuestionTo Expand Or Not Expand, That Is The Question

NCSL WebinarDecember 12, 2012

Today’s webinar will cover:

Possible costs and cost savings associated with the Medicaid

expansion & issues for legislatures to consider as they make decisions

b t th f t f th i M di idabout the future of their Medicaid program.

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Panelist:Elizabeth Lukanen, Senior Research Fellow abet u a e , Se o esea c e oState Health Access Data Assistance Center

Carolyn Ingram, Senior Vice President Center for Health Care Strategies

Moderator:Michael Hely, Staff AttorneyNew Mexico Legislative Council Service and NCSL Health committeeNew Mexico Legislative Council Service and NCSL Health committee Staff Co-Chair

California Gov Jerry Brown (D) “removes the lastCalifornia Gov. Jerry Brown (D) removes the last roadblock to fulfilling President Obama’s historic plan to bring health care to millions of uninsured citizens.” in response to the Supreme Court’s ruling.

Georgia Gov. Nathan Deal (R), "No, I do not have any g ( ), , yintentions of expanding Medicaid," adding, "I think that is something our state cannot afford." in response to the Supreme Court’s ruling.

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DISPROPORTIONATE SHARE HOSPITAL REDUCTIONS

YEAR AGGREGATE REDUCTION

2014 500 MILLION

2015 600 MILLION

2016 600 MILLION

2017 1.8 BILLION

2018 5.0 BILLION

2019 5.6 BILLION

2020 4.0 BILLION

Law aligns components that define income under MAGI.

The federal Affordable Care Act (ACA) introduces a new income definition—Modified Adjusted Gross Income or “MAGI”—for determining Medicaid income eligibility across the country. Today, rules for counting income for Medicaid vary from state tocounting income for Medicaid vary from state to state, with some states allowing disregards and deductions that are not allowed in others. The adoption of MAGI, will standardize the calculation of income across the nation.

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Panelist:Elizabeth Lukanen, Senior Research Fellow abet u a e , Se o esea c e oState Health Access Data Assistance Center

Carolyn Ingram, Senior Vice President Center for Health Care Strategies

Moderator:Michael Hely, Staff AttorneyNew Mexico Legislative Council Service and NCSL Health committeeNew Mexico Legislative Council Service and NCSL Health committee Staff Co-Chair

Overview

• About the State Network

• Process for developing tools to support state analysis

El f ifi l i• Elements of state‐specific analysisNewly eligible costs

Welcome mat costs

Administrative costs

Potential savings

• Q&A

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State Health Reform Assistance Network

• RWJF‐funded program providing technical assistance to states to maximize coverage expansions under the ACA

• Theory of change: focus on a diverse group of 10 states to y f g g pdevelop successful implementation models and share lessons learned

• Technical assistance strategiesMulti‐disciplinary teamOperational‐level technical assistanceMeet each state where they areyDeploy a team of technical experts outside state procurementFacilitate peer‐to‐peer learningInform federal policymaking

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Medicaid Expansion Under the ACA

• The ACA expands Medicaid to adults aged 19 64 with incomes at or below 138% FPL

• States will receive 100% FMAP rates for the newly eligible population from 2014 through 2016  

• FMAP rates decline gradually, reaching 90 percent in 2020 

• The Supreme Court’s ruling on the constitutionality p g yof the ACA did not change the Medicaid expansion provisions, but effectively allows states to opt out of the expansion

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Medicaid Expansion Decision –Considerations for Financial Analysis • State Network tool designed to guide states though a 

financial impact analysis of the Medicaid expansion

• Produced in collaboration by SHADAC, CHCS, and Manatt

• Table shell outlining key elements of a financial analysis (costs vs. savings)

• Considerations, guidance and potential data sources for each elements

• Limited to the financial considerations of a state’s decision to expand Medicaid

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Elements of Financial Analyses(As Arranged in tool)

• CostsCost of newly eligiblesCost of currently eligible but not enrolledAdministrative costs

• SavingsPotential savings from transitioning current Medicaid populations to newly eligible groupPotential savings from reduction in state programs for the uninsuredPotential other revenue gains and savings 

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Considerations for the Analysis• Analysis relies on:

DataResearch‐based estimates Assumptions

• Sensitivity analysis can help identify the driving  assumptions

• Given uncertainty in key assumptions, consider developing an estimate rangedeveloping an estimate range

• Be mindful of projections and assumptions being used by other state agencies or programs

Considerations for Analysis – Cont.

• In most cases, state data are best

• In some cases, national data are available and b difi d t b tt fit t tcan be modified to better fit state 

circumstances

• Pay close attention to the baseline data – what is your starting point? 

• Transparency andTransparency and 

documentation is important

• Clearly define the scope of the analysis

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Cost of Newly Eligibles 

2014 2015 2016 2017 2018 2019 2020 Cumulative

1. Cost of Newly Eligibles

Total number of newly eligibles

Take up rate (percentage)

Newly eligibles who enroll

PMPY cost

Total cost

FMAP 100% 100% 100% 95% 94% 93% 90%

Subtotal  ‐ State Cost

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Cost of Currently Eligible But Not Enrolled2014 2015 2016 2017 2018 2019 2020 Cumulative

2. Cost of Currently Eligible But Not Enrolled

Total number currently eligible but y gnot enrolled

Take‐up rate (percentage)

Currently eligible who enroll (not previously enrolled)

PMPY cost

Total costTotal cost

FMAP (regular)

Subtotal  ‐ State Cost

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Administrative Costs

2014 2015 2016 2017 2018 2019 2020 Cumulative

3.        Administrative Costs

PMPM administrative costs

Subtotal  ‐ State Cost

TOTAL– STATE COST 

Annual totals from cost Annual totals from cost of newly of newly eligibleseligibles; cost ; cost yy gg ;;of currently eligible, but of currently eligible, but 

not enrolled; and not enrolled; and administrative costsadministrative costs

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Savings from Transitioning Current Medicaid Populations to Newly Eligible Group

2014 2015 2016 2017 2018 2019 2020 Cumulative

4.        Savings from Transitioning Current Medicaid Populations to Newly Eligible Group

Adults enrolled through waivers (select groups e.g., limited benefits)

Disease specific coverage (e.g. Breast and Cervical Cancer Treatment Program)

Family planning services

Medically needy spend‐downMedically needy spend down

Other?

Subtotal  ‐ State Savings

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Savings from Reduction in State Programs for the Uninsured

2014 2015 2016 2017 2018 2019 2020 Cumulative

5.        Savings from Reduction in State Programs for Uninsured

State‐only funded coverage programs

Uncompensated care pool/fund (e.g., support for public hospitals)

State mental health spending

State substance abuse spending

State high‐risk pool spending

State spending on public health services

State spending on hospital inpatient costs of prisoners

Other?

Subtotal  ‐ State Savings

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Other Revenue Gains and Savings 2014 2015 2016 2017 2018 2019 2020 Cumulative

6.     Other Revenue Gains and Savings

Provider taxes/assessments

Insurer taxes/assessmentsInsurer taxes/assessments

General business taxes

Other tax impacts

Subtotal  ‐ State Gains/Savings

TOTAL – STATE SAVINGS/REVENUE GAINS

NET of TOTAL STATE SAVINGS/REVENUE GAINS & TOTALSAVINGS/REVENUE GAINS & TOTAL 

STATE COST  

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Summation of costs Summation of costs and savingsand savings

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Other Financial Impacts

• Large disproportionate share hospital (DSH) payments

• General economic effects from the increase in health spending on the newly insured 

• Potential tax penalties for employers if (in the absence of a Medicaid expansion) employees qualify for premium tax credits

• Crowd‐out of existing private insurance into newly d d bliexpanded public programs

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State Network Resources

www.statenetwork.org

• Medicaid Expansion: Framing and Planning a Financial Impact Analysis

• Assessment of Current Coverage Programs and Future Options

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State Analyses• Arkansas analysis and summary• Florida analysis (slide presentation)• Idaho report on newly eligibles• Indiana analysis• Indiana analysis• Iowa analysis• Maryland broader reform simulation• Mississippi analysis• Nebraska analysis• New Mexico analysis• Ohio analysis

S h C li l i ( lid i )• South Carolina analysis (slide presentation)• Washington analysis• Wyoming analysis

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Additional Resources • State Network Assessment of Current Programs and Future Options• KKF state specific estimates  on cost and coverage impacts• Urban Institute Expansion Considerations Brief

b d d l f• Urban Institute Uninsured Adults Brief• KFF report on Uninsured Population• GAO Report on Medicaid Expansion• NGA letter to HHS• NAMD letter with Medicaid Expansion Questions• Secretary Sebelius letter on State Flexibility• Kip Piper post on Medicaid Expansion• Health Affairs post on Maryland Medicaid Expansion 

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Questions

For more information http://www.ncsl.org/issues‐h/h lth/ di id hresearch/health/medicaid‐home‐page.aspx

ContactHealth‐info@ncsl.org