Medicaid Expansion: The Role of State Legislators

1. Medicaid Expansion: The Role of State Legislators Rachel Nuzum Vice President, Federal and State Health Policy The Commonwealth Fund Progressive States Network Medicaid Expansion Webinar, April 22, 2013

2. Recap: Medicaid Expansion under the ACA • ACA creates new adult Medicaid eligibility category up to 133% FPL • Federal government provides 100 percent financing for most states through 2016, phasing down to 90 percent for all states by 2020 • Collapses current eligibility categories into four primary groups: • children, pregnant women, parents, and the new adult group • Children eligible at higher income categories in Medicaid and CHIP depending on standards in state • States have option to expand >133% if lower income covered • Simplifies eligibility determinations by relying on MAGI for children/ non-disabled adults; income disregards replaced with a 5% across the board adjustment effectively raising eligibility to 138% FPL • Those newly eligible would receive “benchmark” benefit package but must include the law’s essential health benefits package Source: DHHS Medicaid Program; Eligibility Changes under the Affordable Care Act of 2010, Final Rule, Federal Register, March 23, 2012; T. Jost, Implementing Health Reform: A Final Rule on Medicaid Eligibility, Health Affairs Blog, March 18, 2012.

3. Impact of Supreme Court Decision on Medicaid Expansion • Decision permits, but does not require, states to expand their Medicaid programs to cover childless adults with incomes up to 138% of FPL • An estimated 6 million fewer will be covered by Medicaid given the SC ruling, some of those expected to go into health insurance marketplaces (exchanges)

4. Strong Case For State Participation in Expansion • Half of current uninsured nonelderly population under 133% of poverty; half of 32 million newly insured under reform law will be covered by Medicaid • Considerable evidence that Medicaid coverage improves health and financial security, and reduces mortality • State and local governments (and taxpayers) will benefit from reduction in uncompensated care: in 2008, state and local governments shouldered $10.6 billion, or nearly 20 percent, of the cost of care for uninsured in hospitals, financed through local revenues • DSH payments that states can make are reduced by $22 billion over 2014-22 • All states are participating in Medicaid with current federal match of 50-74% and CHIP 65-82%, will be difficult to turn down 100% to 90% • Medicaid launched in Jan. 1966: 26 states in first year, 11 in 1967, 2 in 1968, 3 in 1969, 7 in 1970, 1 in 1972 , AZ in 1982; • CHIP launched in 1997: All 50 states participating by 1999 • About 60% of current Medicaid spending is not federally required: the match has provided sufficient incentive for states to add benefits and beneficiaries beyond what is required • Seven states (CA, CT, CO, MN, MO, NJ, WA) and DC have already expanded their Medicaid programs to adults with new federal matching (existing rate) for adults available under the law

5. Status of State Participation in Medicaid Expansion, as of April 2013 NH WA VT ME ND MT AK MN OR NY WI ID MA SD MI RI WY PA CT IA NJ NE OH DE NV IL IN MD UT WV VA CO DC MO CA KS KY NC TN OK SC AZ NM AR GA MS AL HI LA TX FL Expanding (23 + DC) Expanding with variation (5) Unclear/undecided (9) Not expanding (13) Source: AvalereState Reform Insights; Center of Budget and Policy Priorities; Politico.com; Commonwealth Fund analysis

6. Medicaid as a driver of payment and delivery system reform Cost containment is critical regardless, impacts expansion decision and current program. There is major interest in multi-payer initiatives and ongoing payment and delivery system reforms. • CO, MN, VT pioneering innovative models to align incentives, better coordinate care, reduce total costs, and improve outcomes • Convened Medicaid directors and federal officials from CMCS and CMMI to articulate major state barriers and potential federal actions to better support state efforts • CMMI awarded $300 million in State Innovation Model grants to support the development of multi-payer payment and delivery system transformation

7. Estimated Change in Medicaid Enrollment, Uninsured Adults <133% FPL and Spending Over 2013-2022 as a Result of the Medicaid Expansion* Percent 29.8% 26% 21% 16.2% 12.3% 2.9% 0.3% Total change in Medicaid expenditure relative to no ACA baseline Incremental impact of Medicaid expansion Reduction in Uninsured Adults <133% FPL - 47.6% *Scenario assumes all states expand Medicaid. Compared to no ACA baseline. Projections based on an average take-up rate of 60.5% among newly eligible uninsured and 23.4% among currently eligible but not enrolled individuals. FPL refers to Federal Poverty Level. Source: J. Holahan, M. Buettgens, C. Carroll, S. Dorn, The Cost and Coverage Implications of the ACA Medicaid Expansion. Kaiser Family Foundation. November 2012.

8. Over 15 Million People May be Without Affordable Insurance if States Do Not Expand Medicaid Individuals <100% FPL who are uninsured, ages 19-64 State has indicated will not participate in Medicaid expansion State leaning towards not participating in Medicaid expansion State undecided on participation in Medicaid expansion Note: FPL refers to Federal Poverty Level Source: American Health Line http://ahlalerts.com/2012/07/03/medicaid-where-each-state-stands-on-the-medicaid-expansion/ Accessed April 16, 2013. Analysis of March 2011 Current Population Survey by N. Tilipman and B. Sampat of Columbia University for The Commonwealth Fund.

9. Mortality Rate for Nonelderly Adults Declined in States that Have Expanded Their Medicaid Programs Medicaid enrollment Mortality Before Medicaid expansion After Medicaid expansion Before Medicaid expansion After Medicaid expansion Source: B. D. Sommers, K. Baicker, A.M. Epstein, Mortality and Access to Care among Adults after State Medicaid Expansions, N Engl J Med July 2012. http://www.nejm.org/doi/full/10.1056/NEJMsa1202099

10. Medicaid Expansion: Key Implementation Issues • State participation in Medicaid expansion and implications for: • Coverage of lower income families • Exchange enrollment, affordability and federal premium tax credits • Providers, especially safety-net • State and local government spending on Medicaid and uninsured • Federal and state policy options if state participation is delayed • Coverage options for adults under 100% FPL: new legislation • Affordability of subsidized private plans for those between 100-133%FPL • Penalty for not having coverage would fall on people between the tax-filing threshold (87% FPL) and 100%FPL in states that do not expand • Other Medicaid implementation issues • Significant coordination issues between Medicaid and exchanges regarding Medicaid eligibility determination and enrollment • Preventing gaps in coverage when income and eligibility changes • Ensuring care continuity when eligibility changes: broad access to the same health plans and/or provider networks through Medicaid, the individual exchanges, small business exchanges

11. Additional Resources State Health Policy and Medicaid http://www.commonwealthfund.org/Topics/State-Health-Policy-and-Medicaid.aspx State Innovation Models Initiative: General Information http://innovation.cms.gov/initiatives/state-innovations/ Aligning Incentives in Medicaid: How Colorado, Minnesota, and Vermont Are Reforming Care Delivery and Payment to Improve Health and Lower Costs, The Commonwealth Fund, March 2013. Authors: S. Silow-Carroll, J. Edwards, and D. Rodin http://www.commonwealthfund.org/Publications/Case-Studies/2013/Mar/Aligning-Incentives-in-Medicaid.aspx Medicaid Payment and Delivery Reform in Colorado: ACOs at the Regional Level, The Commonwealth Fund, March 2013. Authors: D. Rodin and S. Silow-Carroll http://www.commonwealthfund.org/Publications/Case-Studies/2013/Mar/Colorado-Medicaid-Payment.aspx Health Care Payment and Delivery Reform in Minnesota Medicaid, The Commonwealth Fund, March 2013. Authors: J. Edwards http://www.commonwealthfund.org/Publications/Case-Studies/2013/Mar/Minnesota-Medicaid-Payment.aspx Medicaid is One of Multiple Payers in Vermont’s Health Care Reforms, The Commonwealth Fund, March 2013. Authors: S. Silow-Carroll http://www.commonwealthfund.org/Publications/Case-Studies/2013/Mar/Vermont-Medicaid-Payment.aspx State Medicaid Programs are Driving Payment and Delivery System Reform, The Commonwealth Fund, September 2012. Authors: K. Nolan and A. Kahn http://www.commonwealthfund.org/Blog/2012/Sep/State-Medicaid-Directors-Are-Driving-Payment-and-Delivery-System-Reform.aspx Medicaid Works: Public Program Continues to Provide Access to Care and Financial Protection for Society’s Most Vulnerable, The Commonwealth Fund, August 2012. Authors: K. Davis and K. Stremikis http://www.commonwealthfund.org/Blog/2012/Aug/Medicaid-Works.aspx Advancing Accountable Care Organizations in Medicaid, The Commonwealth Fund, August 2012. Authors: T. McGinnis http://www.commonwealthfund.org/Blog/2012/Aug/Advancing-Accountable-Care-Organizations-in-Medicaid.aspx

12. Acknowledgements Sara R. Collins, PhD Vice President, Affordable Health Insurance Jordan Kiszla Program Assistant, Federal and State Health Policy Tracy Garber, MPH Senior Policy Associate, Affordable Health Insurance