1. what does REMI say? sm Medicaid Expansion; Are You In or Are You Out? Presented by Chris Brown Senior Economic Associate

2. what does REMI say? sm Today’s Outline Background -Law -Option to expand coverage Modeling Overview Sample Scenarios

3. what does REMI say? sm The Law Patient Protection and Affordable Care Act – Signed into law in March 23 rd, 2010 – Individual mandate to buy health insurance, the establishment of healthcare exchanges, and an expansion of Medicaid. – June 28 th 2012, Supreme Court upheld most, but not all provisions.

4. what does REMI say? sm Background Initially states required to expand coverage up to 133% of the federal poverty level or less or lose all current federal Medicare funding… …Late June SCOTUS rules states no longer face a penalty for not expanding Medicaid coverage, essentially, making it optional.

5. what does REMI say? sm CBO Analysis of Medicaid Expansion Congressional Budget Office has assessed the estimated cost of the program with each new budget since its enactment. Most recent analysis before the Supreme Court ruling put net costs at $1,252 billion. After SCOTUS ruling, revised down to $1168, or $84 billion less. So far, no CBO analysis on the impact to individual states.

6. what does REMI say? sm Leave it to the States Specific components that will impact states – State run vs federally run insurance exchange – “Woodwork Effect” means strains on state budget. – With the Medicaid expansion optional, concerns about a “donut hole” of people with an income too high to qualify for their State’s existing Medicaid program but too low to receive Exchange subsidies.

7. what does REMI say? sm Weighing on state’s decision - Budget Pressure -Uncertainty -Ideology -Huge amount of federal dollars -Individual Health Six states already declared they are out

8. what does REMI say? sm What We Can Provide REMI has worked extensively to answer difficult “what if?” questions concerning economic policy, including questions concerning healthcare and fiscal policy. What are the potential net fiscal and job impacts on my state?

9. what does REMI say? sm Healthcare Applications Economic Effects of Health Care Reform on Virginia University of Virginia The Potential Economic Impact of Cutting Funding to the Arizona Health Care Cost Containment Center Arizona State University Potential Effects on Job Dislocation As a Result of the Implementation of The Vermont Health Benefit Exchange and Green Mountain Care Vermont Agency of Administration The Economic Impact of Tobacco Use in Indiana Ball State University Health Care Reform Policy Analysis The Urban Institute Small Business Effects of a National Employer Healthcare Mandate National Federation of Independent Business The Economic Impact of Private Practice Physicians’ Offices in Florida Florida State University

10. Modeling PPACA Medicaid Expenditures from micro simulation State Budget Changes Potential Cost Changes Input Components Exogenous Final Demand in Healthcare Sectors Budget cuts or tax increases Consumer Price Changes for Healthcare Policy Variables Net Impact on State Jobs GDP Income Results

11. How Does it Fit Into Model Structure?

12. what does REMI say? sm Accounting for Uncertainty Need to have ability to test alternatives -High and low - Range of number of insured - Varying levels of coverage within exchange - Potential for cost containment or decreases -Budgeting assumptions?

13. what does REMI say? sm Health Care Industries IndustriesNAICS Ambulatory health care services621 Offices of health practitioners6211-6213 Outpatient, laboratory, and other ambulatory care services; Home health care services 6214-6216, 6219 Hospitals 622 Hospitals622 Nursing and residential care facilities 623 Nursing care facilities 6231 Residential care facilities6232, 6233, 6239 Social assistance 624 Individual, family, community, and vocational rehabilitation services6241-6243 Child day care services6244

14. what does REMI say? sm DEMO Scenarios What is impact if state opts-in? What is impact if state opts-out? -Example data however states have begun to compile this information already - Simulation still can allow for Variability

15. what does REMI say? sm Example Data Sheet Column120122013201420152016201720182019202020212022 Additional Enrollees00125000 Cost Per Enrollee (CBO Projection)$6,000 Annual Spending (M)00750 Estimated Proportion already eligible15% Estimated Proportion newly eligible85% Cost for Already Eligible00112.5 State Cost Share for already eligible43% State Cost Share for newly eligible0% 10% State Share0048.375 Federal Share0064.125 Cost for Newly Eligible00637.5 State Share0000063.75 Federal Share00637.5 573.75 Cost of Penalty000.000095 0.000695 "Donut Hole" Cost0010.09375 73.84375 Input data can come from micro simulation model or some other means. Each component will be varied based on state and existing health care structure

16. what does REMI say? sm Impact of Mandate Example Components – Estimated number of additional enrollees currently eligible 18,750 – Estimated Annual Cost = $6000 Total increase in expenditure = $112 Million annually Spread across health care sectors based on Medicaid expenditures

17. what does REMI say? sm If state opts in Column120122013201420152016201720182019202020212022 Additional Enrollees00125000 Cost Per Enrollee (CBO Projection)$6,000 Annual Spending (M)00750 Estimated Proportion already eligible15% Estimated Proportion newly eligible85% Cost for Already Eligible00112.5 State Cost Share for already eligible43% State Cost Share for newly eligible0% 10% State Share0048.375 Federal Share0064.125 Cost for Newly Eligible00637.5 State Share0000063.75 Federal Share00637.5 573.75 Cost of Penalty000.000095 0.000695 "Donut Hole" Cost0010.09375 73.84375 Red = State Costs Green = Increase in Healthcare expenditures Includes both the effects of the mandate along with the impacts of the expanded coverage

18. what does REMI say? sm If state opts in

19. what does REMI say? sm If state opts in

20. what does REMI say? sm If state opts in

21. what does REMI say? sm If state opts in

22. what does REMI say? sm If state opts out Column120122013201420152016201720182019202020212022 Additional Enrollees00125000 Cost Per Enrollee (CBO Projection)$6,000 Annual Spending (M)00750 Estimated Proportion already eligible15% Estimated Proportion newly eligible85% Cost for Already Eligible00112.5 State Cost Share for already eligible43% State Cost Share for newly eligible0% 10% State Share0048.375 Federal Share0064.125 Cost for Newly Eligible00637.5 State Share0000063.75 Federal Share00637.5 573.75 Cost of Penalty000.000095 0.000695 "Donut Hole" Cost0010.09375 73.84375 Red = State Costs Red/Green = Both cost and increase in expenditures

23. what does REMI say? sm If state opts out

24. what does REMI say? sm If state opts out

25. what does REMI say? sm If state opts out

26. what does REMI say? sm If state opts out

27. what does REMI say? sm Concluding Remarks We know there is great uncertainty Developing clear scenarios can allow you to test alternatives Key to decision to expand or not to expand rests on economic and fiscal impact

28. what does REMI say? sm If state opts-in Example components – Estimated number of new enrollees up to 133% FPL 106,250 – Cost of new enrollees = $637,500 State share = 0% for first 3 years Federal share = 100% then to 90% after year three

29. what does REMI say? sm If state opts-out Example components – Cost of penalty for not having insurance 95$ for first two years going to 695$ after year two – Estimated number of individuals state must now cover = same as under mandate 18,750 new enrollees for a total cost of $112.5 Million