Florida's Medicaid Choice: What Does the Supreme Court Ruling Mean? Joan Alker and Jack Hoadley Georgetown University Health Policy Institute November 15, 2012

Quick review of ACA structure o Two principal means to achieve near universal coverage o Federal premium tax credits from % FPL to be used in state or federal exchange; CBO = million persons covered o Medicaid expansion to 133% FPL for parents and childless adults; CBO = million persons covered 2

Current Medicaid eligibility levels in Florida

What did the Supreme Court decision say? o The entire law was upheld with one exception – the mandatory nature of the Medicaid expansion o Language of decision was clear that existing Medicaid was not touched – the decision only touched the “newly eligible” group 4

What does the Supreme Court decision mean? o Other parts of the ACA which relate to Medicaid remain intact o There are many but one worth noting is the “maintenance of effort” which prohibits states from rolling back eligibility for adults until 2014; children This includes proposals to make it harder for people to enroll such as premiums or other ways in which a state might add “red tape.” 5

What does the Supreme Court decision mean? o Important outcome is that extension of Medicaid is optional – states must make a choice. o Fed government has made clear that state can come in or out at any time simply by submitting a state plan amendment. o FL legislature has key role to play o Might states pursue waivers? 6

Who will remain uncovered without broader Medicaid coverage?

WHAT IS AT STAKE IN FLORIDA’S CHOICE?

Florida has a lot of uninsured people 9

Rate of uninsured in Florida compared to the United States Source: 2011 American Community Survey10

How many Floridians would gain coverage? o We estimate that 815,000 to 1,270,000 adults and children would gain coverage if the state extended Medicaid to parents and other adults below 133% FPL. 11

Why would children get coverage? o Coverage is being extended for parents and adults – the “newly eligible” o But we know that more current eligibles will get enrolled as a result of the “welcome mat” effect. Most of these “eligible but unenrolled” will be children. 12

Different federal matching rates apply o “Newly eligible” are funded at 100% federal cost for FY ; tapers down to 90% over the next seven years; o Current eligibles get regular Medicaid match rate (58%) or CHIP match rate (71%) o Participation rates are likely to go up even without Medicaid extension because of new “culture of coverage” 13

Uninsured children in Florida Percent of Uninsured Children 2011 State Ranking in Percent of Uninsured Children Number of Uninsured Children 2011 State Ranking in Number of Uninsured Children Florida11.9%48th475,11249th National7.5%--5,527,

Florida vs. neighboring states: Rate of uninsured children in 2011 Florida11.9% Alabama5.3% Georgia9.5% Louisiana5.8% South Carolina8.4% 15

Adults newly eligible for Medicaid Adults currently eligible for Medicaid Children currently eligible for Medicaid Total Total uninsured1,295,000257,000500,0002,052,000 Projected take-up rate (low assumption) 57%10% Number projected to gain Medicaid coverage (low assumption) 740,00025,00050,000815,000 Projected take-up rate (high assumption) 75%40% Number projected to gain Medicaid coverage (high assumption) 970,000100,000200,0001,270,000 New Medicaid enrollment if changes occur 16

Medicaid coverage saves lives o Well documented that Medicaid improves access and improves health o Mortality declined by more than 6% for newly covered adults in Medicaid o Newish Oregon study found health status, access to regular source of care/prescription drugs improved as did financial security 17

WHAT’S AT STAKE FOR FLORIDA’S HOSPITALS?

Florida’s hospitals are at risk o The ACA includes significant cuts to Medicaid and Medicare Disproportionate Share Hospital (DSH) programs. o These programs provide funds to hospitals who provide a high level of uncompensated care. o ACA assumed much uncompensated care would go away b/c of Medicaid expansion. 19

Hospital DSH cuts are severe o Between FY2014-FY2022 Medicaid DSH nationally is reduced by approximately 50%. o Medicare DSH is reduced by approximately 75% starting in FY2014. o Secretary of HHS hasn’t issued rules yet on how cuts will be allocated. o Florida hospitals could face annual cuts of c. $640 million. 20

Florida hospitals are in double jeopardy o Florida’s Medicaid 1115 five county waiver includes a fund of $2 billion federal dollars known as the “Low Income Pool.” o These funds go to providers, mainly hospitals, serving large numbers of uninsured persons. o The LIP and the waiver expire on June 30,

WHAT’S AT STAKE FOR FLORIDA’S BUDGET?

Facts to consider o Generous federal funds available for those newly eligible for Medicaid: o 100% federal funding from 2014 to 2016 o 90% or higher federal funding thereafter o Normal federal funding for “eligible for not enrolled” o 58% in FY

Does everyone eligible enroll? o Current enrollment rate for children, among those eligible o FL: 77% o US: 85% o Current enrollment for adults, among those eligible o FL: 45% o US: 65% 24

Projecting new enrollment rates Newly Eligible Individuals Currently Eligible but Not Enrolled Individuals Initial State Assumption 100% Revised State Assumption 80%No official assumption High Urban Institute Assumption 75%40% Low Urban Institute Assumption 57%10% 25

Translating enrollment to costs o Primary source for cost of Medicaid enrollees: o FL Social Services Estimating Conference o Modifications o Lower assumption for rate of enrollment for “eligible but not enrolled” o Add costs for higher payments to physicians for primary care services o Account for offsetting savings 26

Sources of offsetting savings o State support for safety-net institutions (public hospitals, health centers) o State services for people with mental health issues, substance abuse problems, HIV/AIDS o Medicaid eligibility changes due to health insurance exchange availability o Medically needy population o Others (e.g., pregnant women) 27

BEST ESTIMATE NEW STATE COSTS PER YEAR Cost of Medicaid Coverage for Newly Eligible Population $300 million Cost of Medicaid Coverage for New Enrollment by Currently Eligible Population $100 million Cost of Continuing Higher Primary Care Payment Rates for Physicians $200 million TOTAL NEW STATE COSTS PER YEAR$600 million OFFSETTING STATE SAVINGS PER YEAR State Support for Safety Net Providers$200 million State Mental Health, Substance Abuse Programs$250 million Medicaid Eligibility Changes, e.g., Medically Needy Program $250 million TOTAL OFFSETTING STATE SAVINGS PER YEAR$700 million NET STATE SAVINGS PER YEAR$100 million Note: Estimates are based on a single year after 100 percent federal funding is phased out. New state costs will be lower in earlier years, especially from 2014 through Projecting future state costs (2020) 28

BEST ESTIMATE NEW STATE COSTS PER YEAR Cost of Medicaid Coverage for Newly Eligible Population $0 million Cost of Medicaid Coverage for New Enrollment by Currently Eligible Population $100 million Cost of Continuing Higher Primary Care Payment Rates for Physicians $0 million TOTAL NEW STATE COSTS PER YEAR$100 million OFFSETTING STATE SAVINGS PER YEAR State Support for Safety Net Providers$100 million State Mental Health, Substance Abuse Programs$150 million Medicaid Eligibility Changes, e.g., Medically Needy Program $150 million TOTAL OFFSETTING STATE SAVINGS PER YEAR$400 million NET STATE SAVINGS PER YEAR$300 million Projecting future state costs, (2014) 29

Bottom line o Florida incurs few costs for adults newly eligible for Medicaid, slightly higher costs for new enrollment by those already eligible o But savings due to more coverage should more than offset costs o New coverage has positive effects for health and quality of life 30

For more information o Visit the Jessie Ball duPont Fund website o o Visit the Winter Park Health Foundation website o o The Georgetown University project website o