Medicaid - What’s Next? Opportunities and Crisis The Arc of Virginia August 13, 2011 Marty Ford Director, Public Policy Office The Arc of the United States 1

Affordable Care Act Health Care protections and expansions Long Term Services and Supports 2

Patient Protection and Affordable Care Act (P.L ) Health Care and Education Affordability Reconciliation Act (P.L ) “Affordable Care Act” – For health insurance information by state – Comprehensive ACA implementation Health Care Reform: 2 Laws 3

Groundbreaking Legislation Expand Coverage and Access to Care – 32 million uninsured will be covered New insurance exchange with premium sharing subsidies, and cost sharing caps Large expansion of Medicaid eligibility Significant Insurance Market Reforms – Fills gaps left by the Americans with Disabilities Act 4

Some Insurance Reforms In Effect by 2014 Eliminates pre-existing condition exclusions (in effect now for age 18 and under) Lifetime limits not allowed (now) Elimination of annual limits on coverage No consideration of health status when calculating premiums Guaranteed issue and renewability Much more – very important for people with disabilities who have found it impossible to get affordable health coverage 5

Two-pronged inclusion of LTSS in health reform: – National LTSS insurance program – avoid impoverishment – Improve Medicaid – eliminate institutional bias Inclusion of Long Term Services and Supports in Health Care Reform 6

 Accomplished: ◦ CLASS Act ◦ Improvements to Medicaid  Community First Choice Option;  Improving existing Section 1915(i) option;  New state balancing incentives;  Spousal impoverishment protections;  Extend Money Follows the Person demonstration;  Expand Aging and Disability Resource Centers Long Term Services and Supports in Health Care Reform 7

 New national LTSS insurance program  Based on voluntary payment of premiums  Vesting after 5 years of premium payments  Work requirement ◦ No exclusions based on pre-existing conditions  Benefits eligibility is based on functional need ◦ Need for assistance with activities of daily living or equivalent Community Living Assistance Services and Supports (CLASS) Act Plan 8

 Cash benefits for maximum consumer and family control  No “means-testing” – income is not considered ◦ No need for lifetime impoverishment ◦ Individual can continue to work  Plan can pay for itself AND take pressure off the Medicaid program  Important for future of Medicaid program CLASS Act Plan, cont. 9

Community First Choice Option Improvements to Section 1915(i) Option Improving Long Term Services and Supports in Medicaid 10

New state Medicaid plan option Comprehensive home and community based services for people eligible for an institutional level of care (nursing home, intermediate care facility (ICF), or IMD) States receive 6 percent additional federal match for CFC services Permanent provision in Medicaid program – does not “sunset” Community First Choice (CFC) Option 11

Included services and supports: – Assistance with activities of daily living (ADLs); instrumental activities of daily living; & health- related tasks – Acquisition, maintenance, and enhancement of skills – Back-up systems/mechanisms (beepers, electronic devices) – others Manner of service provision: – Hands-on assistance – Supervision – Cueing CFC Option, cont. 12

States must: – provide services in a home or community setting – provide consumer-controlled services, statewide, in the most integrated setting – establish a comprehensive quality assurance system using feedback from consumers, families, providers Available beginning October 1, 2011 – waiting for regulations CFC Option, cont. 13

14 Improved Home and Community Based Services (HCBS) State Plan Option (Section 1915(i)) Medicaid 1915(i) Option – States can provide home and community based services without a waiver – States must establish eligibility that is less strict than for institutional and HCBS waiver services – states serve people who are not eligible for the state’s HCBS waiver

15 Amendments to HCBS Option (Section 1915(i)) ACA improved Section 1915(i) HCBS Medicaid Option: States may offer all services that are allowed under the HCBS waiver Income eligibility criteria aligned with other HCBS programs States may target certain populations in need for 5 years Repeals authority to cap the number of eligible people; to keep waiting lists; and to limit services to certain geographic areas CMS letter to State Medicaid Directors: August 6, Effective Date: October1, 2010

CLASS Act Plan Department of Health and Human Services …………………. States have many choices – Community First Choice Option – Section 1915(i) option – Other new Medicaid provisions Work with Governors, State Legislatures Implementation 16

ACA Implementation Phased in over several years Regulations arriving at a steady pace Numerous threats to the ACA Must continue to be vigilant and advocate to protect these advances for people with disabilities 17

Implications of Budget Control Act of 2011 What impact will the newly enacted Budget Control Act of 2011 have on people with intellectual and developmental disabilities and their families? 18

Budget Control Act Basics Enacted August 2, Three step process to raise the debt ceiling by up to $2.8 trillion and reduce the deficit by $2.3 trillion over 10 years. At least $840 billion will be cut from discretionary programs Revenues are not explicitly included, although not prohibited. No details about which programs will be cut or by how much. 19

Budget Control Act Basics, cont. Specific program cuts to be determined in the upcoming months. Cuts will be made through the regular Appropriations Committee process and working with the new “super committee.” Disability-related programs are vulnerable or protected in different steps. Advocacy to protect the programs that are important to people with disabilities will need to continue through the end of the year. 20

Balanced Budget Amendment Legislation The Budget Control Act requires the House and Senate to vote by December 31 on a balanced budget amendment to the U.S. Constitution The amendment would require an annual balanced budget Balanced budget amendment requires approval by 2/3 of House and Senate and 3/5 of states Enactment/failure to enact would not affect increases in the debt ceiling or the 3 steps of debt reduction 21

The Three-Step Budget Control Process Step 1 The debt ceiling is raised immediately (8/2/11), with additional increases authorized thru early 2013 $1 Trillion in deficit reduction, including new discretionary program caps: – $840 billion in spending cuts from discretionary programs over a 10 year period ( ). (this amount, plus the net interest equals $1 trillion) – Cuts balanced between defense and non-defense spending (which could include important disability-related programs like housing, education, employment, and transportation) in FY 2012 and After that there is a single cap for all discretionary programs. – Entitlement programs (Medicare, Medicaid, Social Security, and Supplemental Security Income (SSI)) are protected from cuts in this step. Provides increases in spending for programs to save money: – new spending for SSA to do more Continuing Disability Reviews – more spending on stopping fraud and abuse in entitlement programs 22

23 Discretionary spending will be cut by at least $840 billion over 10 years Cuts will start at $44 billion (4%) in FY 2012 Cuts will reach $119 billion (9%) in FY 2021 The average 10 year cuts are 6.3% Step 1 - Discretionary Spending Caps

Step 2 Recommendations by a twelve-member bipartisan Congressional “Super Committee” - the Joint Select Committee on Deficit Reduction. Congress will cut an additional $1.2 to $1.5 trillion from the federal budget over 10 years: – By August 16 - Members to be appointed by Congressional leadership. DONE – By November 23 – Deadline for the Committee to propose specific spending cuts. – The Committee’s plan must get the support of at least 7 of its Members to be voted on by the full Congress. – By December 23 - Congress holds an up or down vote, with no amendments allowed. Drastic cuts to important disability-related entitlement and discretionary programs could be proposed by the Committee and enacted by Congress at this stage. No protections for Medicaid, SSI, Social Security, Medicare, or other programs serving low-income people. New revenues/taxes allowed. 24 The Three-Step Budget Control Process, cont.

Steps 1 and 2 will be taking place at the same time this fall. For Step 1, Congress will be working on the FY 2012 and 2013 Appropriations for discretionary funding cuts necessary for the first 2 fiscal years in the first phase of $1 trillion deficit reduction. For Step 2, the Joint Select Committee on Deficit Reduction will be working on all discretionary and entitlement programs to develop recommendations for an additional $1.2 to 1.5 trillion of cuts. Advocates will be working on both fronts at once. 25

Step 3 – Only IF the Joint Select Committee fails to obtain agreement from at least 7 of its Members to cut $1.2 trillion OR if Congress fails to enact its plan OR if President vetoes it Automatic, across-the-board, spending cuts will be triggered for FY sufficient to reach savings of $1.2 trillion. Most non-Defense discretionary programs are projected to be cut by 9 percent. Low-income entitlement programs, such as the Medicaid and SSI programs, are exempted from the automatic, across-the-board cuts (though 2 percent Medicare provider cuts are allowed). Cuts would take effect in January The Three-Step Budget Control Process, cont.

Joint Select Committee on Deficit Reduction 12 Members of Congress - 6 Democrats and 6 Republicans chosen by Congressional leadership – 3 each: – Senate Majority Leader Harry Reid (D-NV) – Senate Minority Leader Mitch McConnell (R-KY) – House Speaker John Boehner (R-OH) – House Minority Leader Nancy Pelosi (D-CA) 2 Co-Chairs appointed by Senator Reid and Speaker Boehner 27

Joint Select Committee on Deficit Reduction Appointments Senators Patty Murray (D-WA) Co-Chair Max Baucus (D-MT) John Kerry (D-MA) Jon Kyl (R-AZ) Rob Portman (R-OH) Pat Toomey (R-PA) Representatives Jeb Hensarling (R-TX) Co-Chair Xavier Becerra (D-CA) Dave Camp (R-MI) James Clyburn (D-SC) Fred Upton (R-MI) Chris Van Hollen (D-MD) 28

What are Some of the Existing Proposals to Cut Spending that the Committee Might Look To? Block grant Medicaid Program integrity savings of $26 billion from entitlement programs to curb waste, fraud, and abuse Reduce funding for Medicaid administrative costs Place dual eligibles in Medicaid managed care Eliminate certain state Medicaid taxes (“provider tax”) Reduce the Floor on Federal Matching Rates for Medicaid Services $112 billion from using chained CPI for cost of living adjustments Repeal of the CLASS program 29

Why is Congress so Concerned about Spending on Medicaid? 30 Long Term Trends

Why is Congress so Concerned about Spending on Medicaid? 31 Rapid growth in number of beneficiaries due primarily to recession and aging of the population Estimated federal spending on Medicaid in 2011: – Acute Care: $155 billion – Long Term Services and Supports: $71 billion

Non Defense $666 Defense $692 Social Security $701 Medicare $519 Medicaid $273 Interest $202 Mandatory Spending Discretionary Spending Includes all other disability-related programs such as: education, housing, employment, transportation, research TOTAL FEDERAL SPENDING IN FY 2010 = $3.5 Trillion (in Billions) Source: Congressional Budget Office, August 2010 Budget & Economic Outlook 32

Why Revenues Should Be Considered 1)Bush era tax cuts are a significant contributor to projected deficits (up to $3.8 trillion over the next decade). 2)Higher-income people can and should share in the sacrifices needed to reduce deficits. 3)Taxes are low both in historical terms and in comparison with other countries. 4)A large chunk of federal spending takes place through the tax code. The federal government spends more than $1 trillion a year on “tax expenditures” — credits, deductions, and other targeted tax breaks. This is more than is spent on Social Security each year or on Medicaid and Medicare combined. 5)Taking taxes off the table would force devastating cuts in entitlement programs. To achieve $1.2 trillion in savings over the next ten years (as the debt limit deal requires) from the spending side alone would require cutting an average of roughly $110 billion annually, starting in Adapted from Center on Budget and Policy Priorities 33

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And Things Could Get Worse $2.5 trillion cut called a “down payment” on the federal debt Some still calling for a total of $4 trillion spending cut over 10 years: Several Members of Congress President Obama’s Fiscal Commission Credit rating agencies A dangerous precedent has been set for raising the debt ceiling in the future applying a dollar-for-dollar standard would require trillions of dollars in additional cuts on top of the massive cuts already enacted 35

What Should The Arc Do? Advocate, advocate, advocate Personal contacts and stories, letters to editors Our messages: The budget cannot be balanced on the backs of people with disabilities Revenues must be part of the solution Deep cuts in Medicaid cannot be tolerated Our Campaign: See: 36

Virginia Congressional Delegation Senate Mark Warner (D) - Banking, Housing, and Urban Affairs; Budget; Commerce, Science & Transp; more Jim Webb (D) - Armed Services; Foreign Relations; Joint Economic; Veterans' Affairs House Rob Wittman (R-1st) - Armed Services; Natural Resources Scott Rigell (R-2nd) - Armed Services; Homeland Security; Science, Space and Technology Robert C. Scott (D-3rd) - Education and the Workforce; Judiciary J. Randy Forbes (R-4th) - Armed Services; Judiciary Robert Hurt (R-5th) - Financial Services Robert W. Goodlatte (R-6th) – Agriculture; Education and the Workforce; Judiciary Eric Cantor (R-7th) – Majority Leader James P. Moran (D-8th) - Appropriations Morgan Griffith (R-9th) - Energy and Commerce Frank R. Wolf (R-10th) - Appropriations Gerald E. Connolly (D-11th) - Foreign Affairs; Oversight and Government Reform 37