Medicaid and Health Reform: A Cautionary View Barbara Coulter Edwards Principal September 15, 2008

Medicaid’s History Covering the Uninsured April 16, 2019 Medicaid’s History Covering the Uninsured 58 Million Beneficiaries Millions of Medicaid Beneficiaries Section 1115 Waivers Expand Medicaid Eligibility (1991-1993) Recession and State Fiscal Crisis (2001-2004) AFDC Repealed (1996) Medicaid Eligibility Expanded to Women and Children (1984-1990) Already serves low income populations, including above poverty Existing networks, managed care arrangements Low administrative overhead, good value FMAP! Many uninsured children already potentially eligible – and childless adults under poverty – a natural match! Make up has changed since TANF reforms – less than 25% now receive cash Medicaid Enacted (1965) SSI Enacted (1972) SCHIP Enacted (1997) SOURCE: Kaiser Commission on Medicaid and the Uninsured analysis of data from the Centers for Medicare and Medicaid Services, 2004. CBO March 2005 Medicaid baseline.

Many Already Potentially Eligible April 16, 2019 Many Already Potentially Eligible Percent of Uninsured Children by Income* 41% <100% FPL 28% 100-200% FPL *12% of U.S. Children Uninsured

“Pesky Little Problem” April 16, 2019 “Pesky Little Problem” Current federal Administration is “cool” to state financing proposals; federal funds may not materialize! SCHIP expansion veto Limits on IGTs, provider taxes, CPEs, waiver refinancing CMS limits to SCHIP over 250% HHShas rejected new state efforts to creatively match previously “unmatched” state/local dollars through 1115 waivers CMS limited use of Inter-Governmental Transfers (IGTs), Certified Public Expenditures (CPEs), provider taxes, and Medicaid administrative claiming Don’t know where next administration will land on this – and if thru 1115 waivers, each Secretary has discretion to “change its mind” – can be a less than reliable source of funding

Can States Commit to Uninsured… April 16, 2019 Can States Commit to Uninsured… …if states can’t sustain current Medicaid commitments? Short term – economic downturns require immediate state response States must balance budgets annually Medicaid is countercyclical – demand is greatest when states can least afford it 35-40 states expected to have shortfall in FY 2009 During last recession, some states had to reduce eligibility for optional expansion groups Provider rate freezes and inadequate provider rates threaten access to care Medicaid’s rate of growth over time is higher than rate of state revenue growth, even without dramatic expansions (Kronick and Rousseau, Health Affairs 2007 revenue will grow to meet Medicaid growth, but!)

Medicaid Annual Growth by Category of Eligibility April 16, 2019 Medicaid’s Future Medicaid Annual Growth by Category of Eligibility 2007-2017 Anticipate continued upward spending pressure, especially as caseload grows in Aged, Blind, Disabled ABD drives 70% of spending! (40% of spending driven by Medicare duals) Source: Calculations by HMA based on CMS historical data and CBO Projections through 2017, March 2007 Medicaid Baseline.

What About Long Term Care? April 16, 2019 What About Long Term Care? “Universal coverage” proposals don’t address long term care… …or deal explicitly with people with chronic, high cost needs

Medicaid Financing Needs Attention April 16, 2019 Medicaid Financing Needs Attention Reformers see Medicaid as a vehicle for covering more working adults And, appear to presume Medicaid will continue as the safety net for high costs groups, especially long term care The “sustainability” of Medicaid for states needs to be assured! States have recommended fmap reforms as one option to help sustain the program during downturns NGA has recommended that Medicare become fully responsible for dual eligibles Nation needs a new, “baby boom reality” LTC financing strategy

April 16, 2019 Basic Question Is it actually helpful for states to pursue strategies they may not be able to sustain? Or does it take pressure off Congress to act? Should states keep trying to cover the uninsured… …or is this a federal responsibility? For many states, covering the uninsured will remain a priority If a new Administration makes federal money available to help, even more states will launch initiatives Sustaining current Medicaid will compete with any expansion efforts Without larger Medicaid financing reforms, state efforts will fall short of the goal