Mission: To promote responsible and equitable fiscal policies through research and education Joy Smolnisky, Director 808 N. West Ave., Sioux Falls, SD

The Affordable Care Act (ACA) in South Dakota Concepts Coverage Costs Choices Consequences

How will ACA affect South Dakotans’ access to and cost of health insurance? Federal law includes: regardless of state decision to expand Medicaid 1.Coverage guarantees 2.Insurance exchanges 3.Federal tax credits to pay for insurance 4.Individual mandate 5.Funding provisions Medicaid Expansion

Coverage Guarantees Young adults can stay on parents plan until age 26 (2010) Eliminates life-time limits on coverage (2010) Guaranteed availability of insurance Minimum medical loss ratio for insurers

state-based American health benefits exchange 1.“essential health benefits” packages 2.Four categories of plans 3.Limited annual cost-sharing

How will affect South Dakotans’ access to and cost of health insurance? Federal law includes: regardless of state decision to expand Medicaid 1.Coverage guarantees 2.Insurance exchanges 3.Federal tax credits to pay for insurance

FEDERAL TAX CREDITS 92,800 South Dakotans* will be eligible for Premium Subsidies * Data Source: Research using Lewin Group economic models: credits/South-Dakota.pdf

FEDERAL TAX CREDITS – Cost Sharing 1/3 of out-of-pocket cap 1/2 of out-of-pocket cap 2/3 of out-of-pocket cap

Small Business Tax Credits 2010 to 2013: 35% credit / 25% NFP 2014 and after50% credit / 35% NFP Care-Tax-Credit-for-Small-Employers

Dollars (in millions) available to help South Dakotans pay health insurance premiums in 2014

Federal Spending on Exchange Subsidies in SD, Million $ in South Dakota Premium Subsidies Cost Sharing Subsidies Total 876$ 876$ 106$ 983 Source: Urban Institute

Funding mechanisms 2010 Penalty tax on hospitals without financial assistance policies 10% tax on indoor tanning services 2011 Changes to tax free savings accounts 2012 New annual fees on drug manufacturing sector

2013 New limits on itemized medical deductions & flexible spending accounts ($2,500/yr) Medicare Tax increase (individual incomes over $200,000/families over $250,000) Tax on Medical Devices (2.3%) Eliminates tax-deduction for employers receiving Medicaid retiree drug subsidy 2014 Employer requirements 2018 Excise tax on “cadillac” employer provided health plans

How will ACA affect South Dakotans’ access to and cost of health insurance? Federal law includes: regardless of state decision to expand Medicaid 1.Coverage guarantees 2.Insurance exchanges 3.Federal tax credits to pay for insurance 4.Individual mandate 5.Funding provisions Medicaid Expansion

How does this decision affect healthcare in South Dakota?

138% FPL 100% FPL

Medicaid Expansion Bridges the Gap 30,000 uninsured South Dakotans

49,000 uninsured South Dakotans below 138% federal poverty level

Medicaid Expansion FMAP (federal share) for newly eligible parents and childless adults

Another concern…. 1.Will Federal Government continue commitment to 90% FMAP rate after 2020 for Medicaid Expansion?

How much will Medicaid Expansion cost South Dakota?

Cost projections are based on assumptions Projected eligibles Participation rates Crowd-out rate woodwork effect Per enrollee cost

How much will Medicaid Expansion cost South Dakota - the first 6 years? Governor – $99.7 million 5.5% increase in state Medicaid costs ,564 new eligibles from expansion & 5,982 existing eligibles Urban Institute - $112 million Kaiser: 1.1% increased state spending Uncompensated care savings estimate change cost to a range of: $15 million total expense to $82 million in state government savings

after ballpark calculation: X 48,564 newly eligible $4,264 per person State share of cost X State cost for care: 48,564 x $4,264 x 10% = $20.7 million

Adding administrative costs: State cost for care*: 48,564 x $4,264 x 10% = $20.7 million State cost for administration: 48,564 x 2.5% = $ 5.2 million Annual SD cost* estimate after 2019 =$25.9 million *based on FY11 cost per eligible - calculations by SD B&PP

HOW MUCH IS $26 million*? 8.6% of FY12 state spending on Medicaid to increase coverage by 42% $533 per year per person newly enrolled $31.41 per year per SD resident in new state spending *based on FY11 cost per eligible - calculations by SD B&PP

138% FPL 100% FPL

138% FPL 100% FPL

Medicaid Expansion Bridges the Gap 30,000 uninsured South Dakotans 92,800