Medicaid Expansion

1. Medicaid Expansion Middle Atlantic Actuarial Club 2013 Annual Meeting Christopher Truffer, FSA, MAAA Kathryn Rennie September 12, 2013

2. Brief Overview of Medicaid • Started in 1965 • Provides assistance for health care for certain low-income persons • Jointly administered and funded for by Federal and State governments • Federal government pays about 57 percent of costs (50-74 percent across states)

3. 2012 Medicaid Expenditures • $432.0 billion for Medicaid in 2012 • 1.1% increase from 2011 • Benefits: 0.3% increase from 2011 • Slowdown from last several years • Administration: 17.5% increase from 2011 • Health IT bonus payments

4. 2012 Medicaid Enrollment • 56.7 million enrolled in Medicaid in 2012 • 1.9% increase from 2011 • Slowdown in enrollment growth for children, adults • 1 in 5 persons in U.S. enrolled at some time during 2012

5. Medicaid Expansion • Part of the Affordable Care Act (ACA) • Medicaid eligibility extended to persons under age 65 with household income less than 138 percent of Federal poverty level (FPL) • Eligibility based on income only, no categorical eligibility requirements

6. Categorical Eligibility Mandatory Populations • Children • Parents below state’s AFDC cutoffs from July 1996 • Pregnant Women • Elderly and Disabled SSI beneficiaries • Certain Working Disabled • Medicare Buy-in Groups (QMB, SLMB, QI) Optional Populations • Adult without children • Medically needy

7. Pre-ACA Minimum Eligibility Standards, 2009 *Eligibility relates to 1996 Aid to Families with Dependent Children (AFDC) rules in effect in each state Source: 2012 Brief Summaries of Medicare and Medicaid, OACT

8. Post-ACA Medicaid Expansion Eligibility Standards

9. Income Definition Current Income Standards • Varies state by state • Asset tests may be required Post-ACA • Income standards based on Modified Adjusted Gross Income (MAGI) • No asset test requirements • Applies to all under 65 except foster care children and disabled persons

10. Expansion Benefits • Alternative benefit plans • Provide minimum essential health benefits (EHB) provided through the Health Insurance Exchanges • Requires prescription drug and mental health coverage • Plans either based on or actuarially equivalent to 1 of 3 benchmark plans

11. Approved Benchmark Plans • Standard Blue Cross/Blue Shield PPO – FEHBP • State Employee Coverage • Commercial HMO • Secretary Approved Coverage Source: http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-12-003.pdf

12. Federal and State Costs • Federal government pays 100% of costs for newly eligible enrollees from 2014-2016 • Federal government share decreases starting in 2017 • 2017: 95% • 2018: 94% • 2019: 93% • 2020: 90%

13. State Requirements for Expansion • Income eligibility • States must expand to 138% FPL • Maintenance of effort • States cannot enforce stricter enrollment policies than those in place prior to March 2010 • For adults through January 1, 2014 • For children under 19 through September 30, 2019 • Cost sharing and premiums • Must follow current Medicaid regulations

14. Supreme Court Decision • Lawsuit challenging the ACA filed by 26 States • Medicaid expansion was ruled “unconstitutionally coercive” • Conclusion: Medicaid expansion is not optional, however only penalty is withholding of ACA expansion funds

15. Effect of Supreme Court Decision on States Expanding States • Flexibility to start, stop expansion at any time starting January 1, 2014 Non-expanding States • Coverage “doughnut hole” • Health Insurance Exchanges can provide subsidies for those with income over 100% FPL • Childless adults most affected

16. How We Created Our Projections • Initially created fall 2012 • Few States had made public decisions • For those that did, evaluated those to determine most relevant factors • Most predictivefactors • Governor and State legislature party affiliation • Lawsuit participant

17. State Expansion Projections Percentage of States projected to expand eligibility (weighted by population) • 2014: 45% • 2015 and after: 65% Increased participation among currently-eligible persons(“woodwork” effect) • Expanding States: 70% • Non-expanding States: 56% Note: 55% 2014 expansion rate in figures/tables

18. Expansion Estimates • Office of the Actuary Health Reform Model (OHRM) • Models Medicaid expansion, Health Insurance Exchanges, other ACA changes • Based on Medical Expenditure Panel Survey (MEPS), National Health Expenditure (NHE) Accounts and Projections

19. Kaiser Predicted State Decisions 2014 Source: http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/#map

20. Medicaid Expansion Impacts • All Medicaid ACA Expenditures • $514 billion (2012-2021), 9% increase • $468 billion Federal Share (91%), 15% increase • Expansion Expenditures • $448 billion (2012-2021), 87% of total ACA impact • $388 billion Federal share (87%), 83% of Federal ACA impact • Enrollment • 18.3 million (2021), 31% increase Source: 2012 Actuarial Report on the Financial Outlook for Medicaid

21. Medicaid Expansion Impacts • Expanding States generally had higher eligibility levels prior to 2014 than non-expanding States • California estimated to account for about ¼ of all newly eligible enrollees in 2014

22. Medicaid Enrollment by Category, 2000-2021 Expansion Children Adults Aged Territories

23. Medicaid Enrollment under Different Expansion Scenarios, 2000-2021

24. Medicaid Expenditures under Different Expansion Scenarios, 2000-2021

25. Medicaid Projections in Context • 2021 Statistics • 3.2% GDP1 • 8.8% Federal Budget2 • Medicaid would be 20th largest country (Germany 19th)3 • Medicaid would be 22nd largest economy (Sweden 21st, Norway 22nd)4 Sources: 1 CMS, 2012 Actuarial Report on the Financial Outlook for Medicaid; 2 President’s FY 2014 Budget; 3 United States Census Bureau, International Data Base; 4 PwC, The World in 2050.

26. Newly Eligible Enrollees • Per enrollee costs estimated to be less than current enrollees’ costs • Age, gender, health status • Health care utilization • Greater share of costs for physician services, prescription drugs • Lower share of costs for hospital services, long-term care • Most newly eligible enrollees expected to be covered under managed care

27. Medicaid Expenditures per Enrollee by Category, 2000-2021

28. State Proposals for Expansion 1. Move Medicaid enrollees to Exchanges (Arkansas, Iowa, others) 2. Require higher cost sharing or premiums (Michigan, others) 3. Expand only to 100% FPL (Indiana, Ohio, others)

29. Future of Medicaid Expansion • State expansion decisions • Enrollment and participation rate • Health care utilization and costs • Costs to Federal government and States

30. 2012 Actuarial Report • http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Financing-and-Reimbursement/Downloads/medicaid-actuarial-report-2012.pdf

31. Other Sources 2012 Brief Summaries of Medicare and Medicaid: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/downloads/MedicareMedicaidSummaries2012.pdf Benchmark Plan Information: http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-12-003.pdf Kaiser Medicaid Expansion Map: http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/#map