medicaid expansion in sc

today’s talk  Background  Politics of expansion  Impact on People  Impact on Business  Impact on the Economy  Final Thoughts

patient protection & affordable care act On March, 23, 2010, the Patient Protection and Affordable Care Act (ACA) was signed into law

expanding coverage under aca  Medicaid Expansion:  Will cover 250,000 uninsured in SC  By 2014 states can extend Medicaid eligibility to all legal residents up to 138% of poverty and under 65 years old  138% FPL is about $16,000 for individual and $32,500 for family of 4  From the federal government will cover 100% of state costs

supreme court  Ruled 5-4 on June 28, 2012 to uphold law  Individual mandate, exchanges, insurance rules and other programs still stand  Medicaid expansion is now optional for each state

the political question: what will states do?

who will benefit?

who’s participating? 25 states and DC moving toward Expansion 4 considering 21 states not expanding Many southern states including South Carolina Most also not participating in a state-run insurance marketplace

how much will the medicaid expansion cost sc?

the new coverage gap  Families of four making as much as $94,000 a year will receive subsidies to help buy health insurance  Many poor, uninsured South Carolinians would receive no coverage assistance through ACA if SC opts out of the Medicaid expansion  Parents in low income families of four making between $11,800 and $23,500 a year  Childless adults making under $11,000 a year  13,000 veterans and their spouses  51,500 uninsured citizens age 50-64

the new coverage gap

the business of hospitals  Among largest employers in the state  Two of the top five employers in SC are hospitals  Nearly 86,500 employees  $3.8 billion in wages and salaries  $1.5 billion in total capital expenditures  SC ranked by the federal government as one of the top five states making the most improvements in the quality and safety of health care.

statewide impact $11,706,700,000 The total amount our state would receive in federal funding from 2014 to 2020 if South Carolina decides to expand Medicaid.

impact on state and local government “We estimate that 3.6 million fewer people would be insured, federal transfer payments to those states could fall by $8.4 billion, and state spending on uncompensated care could increase by $1 billion in 2016… In terms of coverage, cost, and federal payments, states would do best to expand Medicaid.” RAND Corporation, “For States That Opt Out Of Medicaid Expansion: 3.6 Million Fewer Insured And $8.4 Billion Less In Federal Payments,” June 2013

impact on business “Pressures will be greatest in states that opt out of Medicaid expansion, but have a relatively high proportion of uninsured residents” Moody's, "Reduction of Medicaid & Medicare Disproportionate Share Hospital Payments a Looming Challenge for States and Hospitals.” March 14, 2013

impact on business “Hospitals and healthcare systems operating in states that do not expand Medicaid coverage under the ACA will face greater financial challenges and rating pressure compared to hospitals and health systems in states that expand Medicaid coverage” Fitch Ratings “Adverse Expansion: Hospitals, States, and Medicaid” October 28, 2013

impact on business “Premium increases would be even higher among those states that do not expand Medicaid. Premium increases would be borne by nonsubsidized purchasers and by the federal government… Exchange premiums also may increase…” American Academy of Actuaries, “Implications of Medicaid Expansion Decisions on Private Coverage” September 2012

impact on business The average individual market and exchange premium will be $120 higher annually if SC does not expand Medicaid. The Society of Actuaries, “Exposure Draft: Cost of the Future Newly Insured under the Affordable Care Act” December 2012

impact on business Not expanding Medicaid could expose SC employers to $30 to $46 million in annual ACA shared responsibility payments. Jackson Hewitt, “The Supreme Court’s ACA Decision and Its Hidden Surprise for Employers: Without Medicaid Expansion, Employers Face Higher Tax Penalties Under ACA” March 2013

economic impact in sc

usc economic impact report  SCDHHS estimates $11.2 billion in new federal funding will be generated between 2014 and 2020 due to newly eligible enrollees.  By 2020, the annual economic impact will total $3.3 billion in annual economic output, nearly 44,000 jobs, and approximately $1.5 billion in labor income.  This will translate into additional spending, leading to increases in SC general funds totaling $105.6 million by 2020.

usc economic impact report  This increased tax revenue will completely offset the required state costs over the first seven years and generate a $9 million net surplus.  From 2020 forward after the federal match rate caps at $9 federal to every $1 state, new tax dollars will generate enough to cover 53% of the state required Medicaid match.

medicaid expansion: a good roi  SC has invested millions to attract BMW and Boeing.  SC has invested countless state dollars to draw down federal highway funds and funds to deepen the Port of Charleston.  Why is it any different for healthcare?  An investment in Medicaid will:  improve access to health care for low-income workers  make businesses more competitive  and generate a 9-1 match over the long haul

key messages on medicaid expansion  If we don’t act now and expand Medicaid, South Carolinians‘ dollars will be sent to other states that are expanding Medicaid. This plan keeps your dollars at home.  An additional 250,000 uninsured South Carolinians will gain insurance coverage under this expansion, easing the burden on rural hospitals.  Refusing Medicaid expansion means that South Carolina businesses and insured accept a higher burden of cost for caring for the uninsured.  Medicaid expansion will help pay for itself.

despite concerns, these facts remain:  SC hospitals will continue to care for uninsured patients; federal law requires them to do so.  The cost of that care must be paid by someone, and there are two options:  We can let the other states help pay 90% of it (they are offering to do so through Medicaid), or  We can absorb 100% of the costs within our borders. Which strategy will make SC more competitive?