Medicaid Expansion; Are You In or Are You Out?

1. Medicaid Expansion; Are You In or Are You Out? Presented by Chris Brown Senior Economic Associate

2. Today’s Outline Background -Law -Option to expand coverage Modeling Overview Sample Scenarios

3. The Law • Patient Protection and Affordable Care Act • Signed into law in March 23rd, 2010 • Individual mandate to buy health insurance, the establishment of healthcare exchanges, and an expansion of Medicaid. • June 28th 2012, Supreme Court upheld most, but not all provisions.

4. Background • Initially states required to expand coverage up to 133% of the federal poverty level or less or lose all current federal Medicare funding… …Late June SCOTUS rules states no longer face a penalty for not expanding Medicaid coverage, essentially, making it optional.

5. CBO Analysis of Medicaid Expansion • Congressional Budget Office has assessed the estimated cost of the program with each new budget since its enactment. • Most recent analysis before the Supreme Court ruling put net costs at $1,252 billion. • After SCOTUS ruling, revised down to $1168, or $84 billion less. • So far, no CBO analysis on the impact to individual states.

6. Leave it to the States • Specific components that will impact states • State run vs federally run insurance exchange • “Woodwork Effect” means strains on state budget. • With the Medicaid expansion optional, concerns about a “donut hole” of people with an income too high to qualify for their State’s existing Medicaid program but too low to receive Exchange subsidies.

7. Weighing on state’s decision

8. What We Can Provide REMI has worked extensively to answer difficult “what if?” questions concerning economic policy, including questions concerning healthcare and fiscal policy. What are the potential net fiscal and job impacts on my state?

9. Healthcare Applications

10. Modeling PPACA

11. How Does it Fit Into Model Structure?

12. Accounting for Uncertainty Need to have ability to test alternatives -High and low - Range of number of insured - Varying levels of coverage within exchange - Potential for cost containment or decreases -Budgeting assumptions?

13. Health Care Industries

14. DEMO Scenarios What is impact if state opts-in? What is impact if state opts-out? -Example data however states have begun to compile this information already - Simulation still can allow for Variability

15. Example Data Sheet Input data can come from micro simulation model or some other means. Each component will be varied based on state and existing health care structure

16. Impact of Mandate • Example Components • Estimated number of additional enrollees currently eligible • 18,750 • Estimated Annual Cost = $6000 Total increase in expenditure = $112 Million annually Spread across health care sectors based on Medicaid expenditures

17. If state opts in Includes both the effects of the mandate along with the impacts of the expanded coverage Red = State Costs Green = Increase in Healthcare expenditures

18. If state opts in

19. If state opts in

20. If state opts in

21. If state opts in

22. If state opts out Red = State Costs Red/Green = Both cost and increase in expenditures

23. If state opts out

24. If state opts out

25. If state opts out

26. If state opts out

27. Concluding Remarks • We know there is great uncertainty • Developing clear scenarios can allow you to test alternatives • Key to decision to expand or not to expand rests on economic and fiscal impact

28. If state opts-in • Example components • Estimated number of new enrollees up to 133% FPL • 106,250 • Cost of new enrollees = $637,500 • State share = 0% for first 3 years • Federal share = 100% then to 90% after year three

29. If state opts-out • Example components • Cost of penalty for not having insurance • 95$ for first two years going to 695$ after year two • Estimated number of individuals state must now cover = same as under mandate • 18,750 new enrollees for a total cost of $112.5 Million