Medicaid and Health Reform: A Cautionary View

1. Medicaid and Health Reform: A Cautionary View Barbara Coulter Edwards Principal September 15, 2008

2. Section 1115 Waivers Expand Medicaid Eligibility (1991-1993) Medicaid Eligibility Expanded to Women and Children (1984-1990) SSI Enacted (1972) SCHIP Enacted (1997) Medicaid Enacted (1965) Medicaid’s History Covering the Uninsured 58 Million Beneficiaries Millions of Medicaid Beneficiaries Recession and State Fiscal Crisis (2001-2004) AFDC Repealed (1996) SOURCE: Kaiser Commission on Medicaid and the Uninsured analysis of data from the Centers for Medicare and Medicaid Services, 2004. CBO March 2005 Medicaid baseline.

3. Many Already Potentially Eligible Percent of Uninsured Children by Income* 41% <100% FPL 28% 100-200% FPL *12% of U.S. Children Uninsured

4. “Pesky Little Problem” • Current federal Administration is “cool” to state financing proposals; federal funds may not materialize! • SCHIP expansion veto • Limits on IGTs, provider taxes, CPEs, waiver refinancing • CMS limits to SCHIP over 250%

5. Can States Commit to Uninsured… • …if states can’t sustain current Medicaid commitments? • Short term – economic downturns require immediate state response • States must balance budgets annually • Medicaid is countercyclical – demand is greatest when states can least afford it • 35-40 states expected to have shortfall in FY 2009

6. Medicaid’s Future Medicaid Annual Growth by Category of Eligibility 2007-2017 • Anticipate continued upward spending pressure, especially as caseload grows in Aged, Blind, Disabled Source: Calculations by HMA based on CMS historical data and CBO Projections through 2017, March 2007 Medicaid Baseline.

7. What About Long Term Care? • “Universal coverage” proposals don’t address long term care… • …or deal explicitly with people with chronic, high cost needs

8. Medicaid Financing Needs Attention • Reformers see Medicaid as a vehicle for covering more working adults • And, appear to presume Medicaid will continue as the safety net for high costs groups, especially long term care • The “sustainability” of Medicaid for states needs to be assured!

9. Basic Question • Is it actually helpful for states to pursue strategies they may not be able to sustain? • Or does it take pressure off Congress to act? • Should states keep trying to cover the uninsured… • …or is this a federal responsibility?