Florida's Medicaid Choice: Looking at Implications Jack Hoadley, Ph.D. Georgetown University Health Policy Institute Medicaid Expansion Forum January 28, 2013

Acknowledgments o Project support: o Jessie Ball duPont Fund o Winter Park Health Foundation o Co-investigator: o Joan Alker, Georgetown University o Travel support: o Health Foundation of South Florida 2

Quick review of ACA structure o Two principal means to achieve near universal coverage o Federal premium tax credits from 100% to 400% FPL (~ $19K-$76K, family of 3) to be used in state or federal exchange o CBO estimate: million persons covered o Medicaid expansion to 133% FPL (~ $25K) for parents and childless adults o CBO estimate: million persons covered 3

Florida Medicaid eligibility levels New ACA Level 133% 4

What did the Supreme Court say? o The entire law was upheld with one exception – the mandatory nature of the Medicaid expansion o Court’s language was clear that existing Medicaid was not touched – the decision only touched the “newly eligible” group 5

What does the Supreme Court decision mean? o Other parts of the ACA relating to Medicaid remain intact, including: o “Maintenance of effort,” which prohibits states from rolling back eligibility for adults until 2014 and children until o Includes prohibition on proposals to make it harder for people to enroll, such as premiums or other ways in which a state might add “red tape.” 6

What does the Supreme Court decision mean? o Important outcome: Extension of Medicaid is optional – states must make a choice. o Federal government has made clear: o State can come in or out at any time simply by submitting a state plan amendment. o States cannot do partial expansions o FL legislature has key role to play o States still have option to pursue waivers 7

Who will remain uncovered without broader Medicaid coverage? 8

WHAT IS AT STAKE IN FLORIDA’S CHOICE? 9

Florida has 8% of U.S. uninsured 10

Rate of uninsured in Florida compared to the United States Source: 2011 American Community Survey11

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 National7.5%--5,528,000-- Florida11.9%#48475,000#49 Alabama5.3%#1858,000 Georgia9.5%#43233,000 Louisiana5.8%#2364,000 South Carolina8.4%#3890,000 12

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. o Estimated: 150,000 to 225,000 in Miami-Dade o Participation rates are likely to go up even without Medicaid extension because of new “culture of coverage” 13

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 14

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. 15

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 Recent Oregon study found improvement in financial security, health status, access to regular source of care, access to prescription drugs 16

WHAT’S AT STAKE FOR FLORIDA’S HOSPITALS? 17

Florida’s hospitals at risk o ACA: significant cuts to Medicaid and Medicare Disproportionate Share Hospital (DSH) funding. o DSH programs provide funds to hospitals that serve many low-income patients and thus provide a high level of uncompensated care. o ACA assumed much uncompensated care would go away due to increased coverage. o FL: $1.2 billion reduction over 10 years (Urban Inst.) 18

Medicaid DSH cuts o Florida: current federal allocation for Medicaid DSH ~$200 million/year o Between FY2014-FY2022 national Medicaid DSH allocations are reduced by up to nearly 50% (especially FY 2018 on). o Details on implementation forthcoming o DSH reductions are not affected directly by Court decision - but could be indirectly 19

Medicare DSH cuts o Medicare DSH: Add-on to Medicare payments for hospitals treating high share of low-income patients o ACA: 75% DSH reductions as of FY2014 o Some funds shifted to new uncompensated care pool to pay hospitals o Medicare savings if uninsured rate declines o Impact on hospitals will vary 20

Florida Low Income Pool o Florida’s Medicaid 1115 five-county waiver includes a fund of $2 billion federal dollars known as the “Low Income Pool” (LIP). o LIP funds go to providers (mainly hospitals and health centers) serving large numbers of uninsured persons. o LIP and the waiver due to expire June 30,

Florida hospitals in double jeopardy o Industry estimate: Florida hospitals could face annual cuts of about $650 million o LIP funding could be reduced or eliminated o Other possible cuts from Medicare as federal budget negotiations continue 22

WHAT’S AT STAKE FOR FLORIDA’S BUDGET? 23

Federal financial support o Generous federal matching funds available for those newly eligible for Medicaid: o 100% federal funding from 2014 to 2016 o 95%, 94%, 93% in 2017, 2018, 2019 o 90% in 2020 and beyond o Potential for ~ $26 billion in new federal dollars over 10 years 24

Federal financial support o Normal federal matching funds available for eligible for not enrolled o Medicaid: 58% in FY 2013 o CHIP: 71% 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% 26

Projecting new enrollment rates Newly Eligible Individuals Currently Eligible but Not Enrolled Individuals Initial State Assumption 100% Current State Assumption 80%No official assumption High Urban Institute Assumption 75%40% Low Urban Institute Assumption 57%10% 27

Translating enrollment to costs o Primary source for cost of Medicaid enrollees: o FL Social Services Estimating Conference o Important considerations o Overall per-person costs are lower for newly eligible population (current TANF adults: $333/month o SSEC Assumption for newly eligible: $306/month o For eligible but not enrolled: $254/month 28

Translating enrollment to costs o Modifications to Estimating Conference o Include assumption for rate of enrollment for “eligible but not enrolled” o Add costs to continue some higher payments to physicians for primary care services o Include accounting for offsetting savings 29

Offsetting savings in estimate 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) 30

Other potential offsets not modeled o Some other state-funded services o Local government indigent care funding o Lower premiums in insurance exchange o 15%, based on analysis in other states o Alternative source of coverage for employees of small firms 31

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% federal funding is phased out. New state costs will be lower in earlier years, especially from 2014 through Projecting future state costs (2020) 32

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) 33

Economic impact studies o Theory: change in federal dollars, e.g., new Medicaid matching funds, has direct and indirect effects on local economies o Direct: payments to providers, plans o Indirect (multiplier) effects: o Purchases from health care and other vendors o New employment for health care, other workers o Spending by newly employed persons o Additional taxes collected 34

Economic impact studies: limitations o Although effects are real, magnitude estimates are highly uncertain o Many moving parts operating in the health system as a whole o Impacts may diminish as the economy recovers 35

Economic impact o U of Florida study for FHA: Impact of new federal dollars coming to the state via the ACA on the state economy (using as an example) o New federal dollars: $2.3 billion o Value added in FL to GDP: $4.2 billion o Labor income: $2.9 billion o Employment: 56,000 jobs 36

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 37

For more information o The Georgetown University project website o