A State’s Eye View of Medicaid Alan Weil Executive Director National Academy for State Health Policy Medicaid Leadership Group November 3, 2005

2 Two Views of Medicaid –Medicaid costs are growing and getting in the way of other state and federal priorities and the top priority is to control those costs. –The number of people without health insurance is growing and Medicaid is an essential tool for addressing this major problem.

3 The Unavoidable Mathematics of Medicaid Total Cost = # Served * Cost per person Cost per person = Services used * Cost per service Thus, the only ways to reduce total cost are: –Reduce number served –Reduce cost per service –Reduce services used

4 State Responses to the Medicaid Cost Problem –Most states are searching for savings through delivery system reforms (CA, NY), but these efforts are still largely unproven –Some states are imposing new burdens on Medicaid enrollees (MO, TN); but some are reversing past actions in light of improved budget conditions (WA)

5 State Responses to the Growing Number of Uninsured –Some states are expanding Medicaid (IL, CO) –Some states are trying to spread their Medicaid $ across a larger population (OR) –Some states are trying to build more coverage from the existing base of Medicaid (RI, MA)

6 Key Characteristics of Some Proposed Medicaid Reforms –Substantial flexibility on benefit design and cost- sharing features (limited to some populations)  Elimination of many federal eligibility categories  Elimination of statewideness and comparability requirements  Ability to define narrow benefits for specific populations  Flexibility on premiums, copayments & deductibles –Fixed contribution consumer accounts

7 Opportunities Created by Reforms –Flexibility on benefits and cost sharing could make states more comfortable with coverage expansions –Closer integration with employer-sponsored coverage could yield more continuity –Consumer direction elements may enable families to obtain needed services

8 Risks Created by Reforms –Cost sharing could create barriers to receiving services –Scaled down benefits could yield unmet needs –Underfunded social service systems could lose critical Medicaid support –Protected populations could lose coverage –Unregulated private plans could market inadequate products –Some families will be on the losing side of “risk”

9 There Have Been Other Visions of What Medicaid Reform Might Mean –Eligibility simplification –Raising the federal floor of coverage –Family coverage –Reconsidering the allocation of cost between the federal government and the states

10 The Hidden Aspect of Reform by Waiver: Negotiated Budgets –Create unhealthy incentives –Are highly arbitrary –Pose serious risks for states and enrollees –Reduce federal oversight, interest and accountability