Medicaid at the Crossroads

1. Medicaid at the Crossroads Cindy Mann Center for Children and Families Georgetown University Health Policy Institute crm32@georgetown.edu Medicaid Summit Chicago, Illinois November 3, 2005

2. Slide 1 What’s At Stake? • Coverage • Children, families • Pregnant women • Adults and children with disabilities • Elderly • Integral to other systems/programs • Major source of financing • States • Health care providers • Communities

3. Slide 2 Medicaid’s Current Role in Illinois Sources of Coverage All Children 0-18 Non-Elderly Adults 18-64 Source: Data based on pooled 2003 and 2004 Current Population Survey (CPS) data.

4. Slide 3 Why the Attention to Medicaid?

5. Slide 4 Average Annual Growth in Medicaid Expenditures, 1991-2003 Source: Urban Institute, 2005; data from HCFA Financial Management Reports, 2004 (HCFA-64/CMS-64).

6. Slide 5 Medicaid as a Percent of Illinois’ Expenditures General Fund Expenditures Total Expenditures Total= $19.0 billion Total= $37.7 billion *“Education” includes elementary, secondary and higher education. *“All Other” varies by state. It includes federal funds for the State Children’s Health Insurance Program and may include a range of other federal funds such as economic development, housing, parks and recreation. Source: Georgetown Center for Children and Families analysis based on National Association of State Budget Officers (NASBO), 2003 State Expenditure Report, Fall 2004.

7. Slide 6 Percentage of All Firms Offering Health Benefits, 2000-2005 *The difference between the offer rate in 2000 and the offer rate in 2005 is statistically significant at p<.05. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits, 1996

8. Slide 7 Elderly and People with Disabilities Account for 70% of Medicaid Expenditures in Illinois Total Illinois Medicaid Expenditures in 2002 = $9.2 billion Source: Georgetown Center for Children and Families analysis based on FY 2002 CMS MSIS data.

9. Slide 8 Ideological Divide • “Medicare and Medicaid have grown exponentially, beyond original fiscal projections, and their trajectories pose a serious threat to other budgetary priorities and to overall long-term economic growth.. (They) must evolve into individual-centered health systems..” • Newt Gingrich, AEI • “Jeb Bush, has a different, better cure -- a consumer-driven program that fundamentally alters Medicaid's power equation: it allows consumers to allocate their own health care, instead of bureaucrats doing so on their behalf.” • Herzlinger and Nerney, Manhattan Institute

10. Slide 9 Solutions? • Reduce scope of coverage • Increase beneficiary costs • Reduce federal role • Financial support • Minimum program standards • Move from defined benefits to defined contribution

11. Slide 10 What’s At Stake?Key Elements of Medicaid • Affordable • Comprehensive and defined benefits; “EPSDT” for children • Covers services typically not covered under ESI • Guarantee of coverage if eligible (“entitlement”) • Open-ended federal financing

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14. Slide 13 OHP Standard Enrollment January 2002-October 2003 Premiums and Other OHP2 Changes Implemented Source: McConnell, J. and N. Wallace, “Impact of Premium Changes in the Oregon Health Plan,” Office for Oregon Health Policy and Research, February 2004.

15. Slide 14 Drug Copayments Reduced Use of Essential Medications and Led to Serious Problems 88% increase In emergency dept. visits # Events per 10,000 person-months 78% increase in adverse events *Includes hospitalizations, institutionalizations, and deaths. Source: R. Tarnblyn et al. JAMA 285(4): 421-9, 2001.

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17. Slide 16 Florida Estimates of Total Medicaid Spending, With and Without Waiver Total 5-year reduction in spending: $4.58 billion Without Waiver With Waiver Source: Georgetown Center for Children and Families analysis of Tables 4 and 5 from Florida Medicaid Reform Section 1115 Waiver Application, August 31, 2005.

18. Slide 17 Flexibility and Financing: Finding the Right Balance Federal minimum requirements and state options Federal guarantee of shared financing State rules only- minimal federal standards Federal rules for all aspects of the program Capped federal financing needed to limit federal exposure Full federal financing

19. Slide 18 Real Issues Facing Medicaid • Millions of people who are uninsured • State revenue system issues • Added pressures during downturns • Broader issues relating to health care costs • Managing care for high cost cases • Disconnect between Medicaid and Medicare • Alignment of responsibilities between federal government and states • Cost of “dual” eligibles and aging population

20. Slide 19 Dual Eligibles Account for More than One-Fourth of Total Medicaid Expendituresin Illinois Dual Eligibles 28% Source: Urban Institute estimates based on data from the Medicaid Statistical Information System (MSIS) and Medicaid Financial Management Reports prepared for the Kaiser Commission on Medicaid and the Uninsured, 2003.

21. Slide 20 Medicaid Is An Important Part of the Solution

22. Slide 21 Federal Medicaid Payments as a Share of Total Federal Funds to Illinois, FY 2003 ($4.53 billion) Total = $8 billion *“Education” includes elementary, secondary and higher education. *“All Other” varies by state. It includes federal funds for the State Children’s Health Insurance Program and may include a range of other federal funds such as economic development, housing, parks and recreation. Source: Georgetown Center for Children and Families analysis based on National Association of State Budget Officers (NASBO), 2003 State Expenditure Report, Fall 2004.

23. Slide 22 Average Annual Medicaid Spending Growth Compared to Growth in Private Health Spending, 2000-2003 Medicaid Acute Care Spending Per Enrollee Health Care Spending Per Person with Private Coverage1 Monthly Premiums For Employer- Sponsored Insurance2 Sources: 1 Strunk and Ginsburg, 2004. 2 Kaiser/HRET Survey, 2003.

24. Slide 23 Trends in the Uninsured Rate of Low-Income Children, 1997 - 2003 Source: Georgetown Center for Children and Families calculations based on Cohen, R. et al., Health Insurance Coverage: Estimates from the National Health Interview Survey, January – September 2004, Centers for Disease Control, March 2005and Trends in Health Insurance and Access to Medical Care for Children Under Age 19 Years: United States, 1998 – 2003, April, 2005.

25. Slide 24 Self-Reported Health Status Among Low-Income Adults and Children Source: Urban Institute analysis of MEPS data from 1996, 1997, 1998, and 1999; Hadley and Holahan, Inquiry, Vol. 40, No. 4 (Winter 2003/2004).

26. Slide 25 Percent of Poor and Near-poor Children with a Usual Place of Care Public, Private, and Uninsured Poor Children* Near-Poor Children* *Poverty status is based on family income and family size using the U.S. Census Bureau poverty thresholds for 2002. Federal Poverty Level (FPL) in 2002 in the 48 contiguous states and the District of Columbia is $15,020 for a family of three. Source: National Health Interview Survey, 2003.

27. Slide 26 Moving Forward Without Moving Backward