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ACA Medicaid Expansion: State Implementation Issues & Update Joy Johnson Wilson, Health Policy Director National Conference of State Legislatures 2012.

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Presentation on theme: "ACA Medicaid Expansion: State Implementation Issues & Update Joy Johnson Wilson, Health Policy Director National Conference of State Legislatures 2012."— Presentation transcript:

1 ACA Medicaid Expansion: State Implementation Issues & Update Joy Johnson Wilson, Health Policy Director National Conference of State Legislatures 2012 Montana Healthcare Forum Conference Helena, Montana November 28, 2012

2 Medicaid Historic Snapshot o1965 – Medicaid law was enacted Medicaid is an individual entitlement program for low-income individuals as specified in the law (and as the law is amended) o1996 – Personal Responsibility and Work Opportunity Act Changed the Aid to Families with Dependent Children (AFDC) to the Temporary Assistance for Needy Families (TANF), a block grant to states Participation in AFDC provided categorical eligibility for Medicaid, this connection does not apply to TANF

3 Medicaid Historic Snapshot cont. o1997 – Balanced Budget Act of 1997 State Children’s Health Insurance Program (SCHIP) enacted Block grant to states to cover children with income up to 200% of the federal poverty level (FPL) o2009 - Children’s Health Insurance Program Reauthorization Act (CHIPRA) Changed name of the program from State Children’s Health Insurance Program (SCHIP) to Children’s Health Insurance Program (CHIP) Reauthorized program through September 30, 2013

4 Medicaid Historic Snapshot cont. o2010 – Patient Protection and Affordable Care Act Mandatory Medicaid Expansion CHIP became a grant condition for Medicaid participation Extends CHIP authorization extended through September 30, 2015 Maintenance of Effort (MOE) oMedicaid until 2014 and CHIP until 2019 o2012 - U.S. Supreme Court Decision (June 28, 2012), National Federation of Independent Business et al. v. Sebelius, Secretary of Health and Human Services, et al. Made a PORTION of the Medicaid expansion OPTIONAL

5 ACA Key Medicaid Eligibility Provisions oEstablishes standard minimum eligibility level at 133% of FPL and applies a 5% income disregard which sets the actual minimum eligibility level at 138% of FPL Eliminates the use of other income disregards Eliminates assets test oAdds new mandatory eligibility categories Able-bodied, single, childless adults under age 65; parents; and former foster care children under age 26 years of age oChanges the methodology for determining income-eligibility to Modified Adjusted Gross Income (MAGI), effective July 1, 2013 oProvides Enhanced Federal Match for “New Medicaid Eligibles”

6 Enhanced Match/New Eligibles oEnhanced Federal Match (FMAP) Schedule 2014 – 2016 - 100% (3 years); 2017 – 95%; 2018 – 94% 2019 – 93% 2020 and thereafter – 90% oDefinition of Newly Eligible – Non-elderly, non-pregnant individual with family income below 133% of FPL who were as of December 1, 2009: (1) a child as defined by the state; (2) not eligible for full Medicaid benefits, Medicaid benchmark benefits or benchmark equivalent coverage; or (3) eligible, but not enrolled, due to a capped waiver or were on a waiting list on the date of enactment

7 What is MAGI? oModified Adjusted Gross Income – An individual’s (or couple’s) total income plus tax exempt interest and foreign-earned income, which is excluded from the calculation of adjusted gross income (AGI) oMAGI Exceptions – Groups eligible for Medicaid through other federal programs (e.g. foster care, Supplemental Security Income (SSI), Medicare Savings Programs) oApplication of MAGI – The change to MAGI will not apply to Medicaid beneficiaries who were enrolled in Medicaid on January 1, 2014 until the later of March 31, 2014 or their next redetermination date.

8 Medicaid Expansion Post SCOTUS Decision oSCOTUS Game-Changer Decision No penalty……No deadline ….States can go in and out of the expansion at will If a state decides not to implement the Medicaid expansion, what happens? oIndividuals with income above 100% of FPL are eligible to enroll in the state’s health insurance exchange oIndividuals with income below 100% of FPL are not eligible for Medicaid and are not eligible to enroll in the state’s exchange oThese individuals will not be subject to the non-coverage penalty provided for under the ACA individual mandate provisions (affordability or hardship exemption)

9 Medicaid Important Element of ACA Financing oCoverage provisions work in concert: Individual Mandate (almost everybody is required to obtain coverage) American Health Insurance Exchange oIndividual Market – premium and cost-sharing subsidies to individuals with income between 133% FPL – 400% FPL oSmall Business Opportunity Program (SHOP) – tax credits to small businesses Large Employers “Employer Responsibility Provisions” encourage large employers to continue to provide coverage at a reasonable cost. Assesses a penalty if an employer has employees participating in the health insurance exchange because their premiums were more than 9.5 % of the employee’s income and the employee was not eligible for Medicaid Medicaid Expansion (cost estimates based on mandatory expansion)

10 Medicaid Expansion Post SCOTUS Decision oPotential Impacts if a State Opts Not to Adopt the Expansion Could add more low-income and potentially less healthy people into the exchanges, resulting in higher overall premiums and higher subsidy costs Large employers may be more vulnerable to the “Employer Responsibility” penalty Continued uncompensated care costs for hospitals May spread reinsurance subsidies (fixed amount) over a larger population Difficult Road to Universal Coverage

11 The Fiscal Cliff…….

12 Deficit Reduction/Medicaid Reform oLooming fiscal cliff hangs over all Medicaid decisions…. oKey Issues: Deficit Reduction Proposals that Impact Medicaid oReductions in Provider Taxes and other financing options oDisproportionate Share Hospital (DHS) Reductions oBlended Matching Rate (Medicaid, CHIP) oMedicaid Block Grants/Caps/Other Major Reforms Reductions in Federal Discretionary Health Programs/Other Programs Recession/Economic Downturn

13 Other Uncertainties oContinued court challenges to various ACA provisions oCongressional attempts to end/reduce funding for various provisions of the ACA oSo many moving parts……so little time…… oWhile the picture regarding exchanges is coming into focus (state-based, Partnership or Federally-facilitated), the Medicaid expansion picture is hazy oWill states receive expanded options with respect to the Medicaid expansion or will it be all or nothing???? Phase-in expansion Waivers Other options


15 RWJ TOP SIX FACTORS TO CONSIDER oCost of Newly Eligibles oCost of Current Eligibles, Not Enrolled oAdministrative Costs oSavings from Transitioning Current Medicaid Populations to Newly Eligible Group oSavings from Reducing Support from State Programs to Assist the Uninsured oOther Revenue Gains/Savings & the Multiplier Effect Source: Medicaid Expansion: Framing and Planning a Financial Analysis, Issue Brief, September 2012. Prepared by: Manatt Health Solutions, Center for Health Care Strategies (CHCS), and State Health Access Data Assistance Center (SHADAC) for the State Health Reform Assistance Network a Robert Wood Johnson Foundation Program.

16 Cost of Newly Eligibles oTotal Cost (Apply FMAP for each year 2014-2020) Total Number of Newly Eligibles Take Up Rate (Percentage) Newly Eligibles Who Enroll Per Member Per Year Cost oWho Are the Newly Eligibles? Are they currently receiving care? Are you paying for their care? Do they have behavior health or substance abuse issues? Do they have a chronic condition? Are they incarcerated?

17 Cost of Individuals Eligible, Not Enrolled oTotal Costs (Apply FMAP for each year 2014-2020) Total Number of Individuals Eligible, Not Enrolled (“Woodwork effect”) Take Up Rate (Percentage) Currently Eligible Who Enroll Per Member/Per Year Costs oWho are the Currently, Not Enrolled Individuals? Young Invincibles Not so Young Invincibles Healthy people Transients Others???

18 Administrative Costs oThe enhanced FMAP applies to benefits, not program administration HOWEVER……. oThe ACA does provide for enhanced administrative match (90% federal/10% state) for Medicaid systems development activities related to eligibility oThere will not be a charge to receive information from the federal hub oAll states will have to coordinate with the federal government on a variety of eligibility-related activities

19 Transition Savings oExamples of Possible Medicaid Cost Reductions as Individuals Transition into the Exchange Adults Enrolled Through Waivers Disease-Specific Coverage Family Planning Services Medically-Needy Spend-Down Special State and/or local programs

20 Savings from Reducing State Programs oWhat are you paying for now that you could substantially reduce if the Medicaid expansion is adopted? oWould it enable you to repurpose some assets? oExamples: State-Only Funded Coverage Programs Uncompensated Care Pools/Funds State Behavioral Health/Substance –Use Spending State Public Health Spending State Spending for Inpatient Hospital Care for Prisoners Other Special State/Local Programs

21 Other Revenue Gains/Savings & the Multiplier Effect oRevenue Examples…… Provider Taxes/Assessments Insurer Taxes/Assessments General Business Taxes Other Tax Impacts oMultiplier Effect Very “Fluffy” part of the financial assessment Speculative, but real It is easier to estimate costs than to estimate future revenue attributable to: (1) growth in employment the healthcare sector; (2) potentially a growing workforce due to improved health status; and similar hard to measure effects

22 State Response to Medicaid Expansion oDive In – Water’s Great! Only a few states (California, Connecticut, Massachusetts, Maryland, Oregon, Rhode Island and Vermont) have taken the dive and many of them had substantially expanded their Medicaid programs prior to the enactment of the ACA.

23 State Response to Medicaid Expansion oJust Wetting My Feet – Most states are studying their options, weighing costs and benefits and seeking the counsel of a variety of experts.

24 State Response to Medicaid Expansion What’s So Great about the Water? I Like the Feel of Sand on My Feet! – A few states (Alabama, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, Texas and Virginia) are planted firmly on the beach for now

25 Joy Johnson Wilson Health Policy Director, NCSL

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