Mission:

1. Mission: To promote responsible and equitable fiscal policies through research and education Joy Smolnisky, Director 808 N. West Ave., Sioux Falls, SD 605-367-9667 joys@sdbudgetandpolicyproject.org

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

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

4. 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

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

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

7. FEDERAL TAX CREDITS 92,800 South Dakotans* will be eligible for Premium Subsidies *Data Source: Research using Lewin Group economic models: http://www.familiesusa.org/assets/pdfs/health-reform/premium-tax-credits/South-Dakota.pdf

8. 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

9. Small Business Tax Credits 2010 to 2013: 35% credit / 25% NFP 2014 and after 50% credit / 35% NFP http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers

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

13. Funding mechanisms

14. 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 2018 • Employer requirements • Excise tax on “cadillac” employer provided health plans

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

16. How does this decision affect healthcare in South Dakota?

17. exchange subsidies 138% FPL 100% FPL

18. Medicaid Expansion Bridges the Gap 30,000 uninsured South Dakotans

19. 49,000 uninsured South Dakotans below 138% federal poverty level

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

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

23. How much will Medicaid Expansion cost South Dakota?

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

25. How much will Medicaid Expansion cost South Dakota - the first 6 years? Governor – $99.7 million • 5.5% increase in state Medicaid costs 2014-19 • 48,564 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

26. after 2019 - ballpark calculation: X X 48,564 newly eligible State share of cost $4,264 per person State cost for care: 48,564 x $4,264 x 10% = $20.7 million

27. 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

28. 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

29. exchange subsidies 138% FPL 100% FPL

30. exchange subsidies 138% FPL 100% FPL

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