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Alliance for Health Reform Medicaid Briefing: Role of States

Alliance for Health Reform Medicaid Briefing: Role of States. Barbara Coulter Edwards, Principal Health Management Associates February 13, 2009. bedwards@healthmanagement.com. Medicaid: A Partnership. Federally authorized, State administered Federal mandates, State options Eligibility

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Alliance for Health Reform Medicaid Briefing: Role of States

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  1. Alliance for Health Reform Medicaid Briefing: Role of States Barbara Coulter Edwards, Principal Health Management Associates February 13, 2009 bedwards@healthmanagement.com

  2. Medicaid: A Partnership • Federally authorized, State administered • Federal mandates, State options • Eligibility • Benefits • Reimbursement • Service delivery arrangements • States buy health care in the marketplace

  3. State Plan Describes Program • Centers for Medicare and Medicaid Services (CMS) at HHS must approve State Plan, State Plan Amendments • Secretary of HHS has discretion to waive Medicaid requirements • State Plan (and waiver Terms and Conditions) become binding on state

  4. Financing Medicaid • States pay for services, receive federal reimbursement for a portion of spending • Federal Medical Assistance Percentage (FMAP) • minimum = 50% • maximum (‘09) = 75.67% (MS) • Varies based on relationship of state’s per capita income to national per capita income • FMAP adjusted annually, lagging data • (FMAP for administration fixed at 50%, with enhanced percentages for information systems)

  5. Federal Medical Assistance Percentages (FMAP), FY 2009 NH VT WA ME MT ND MN MA OR NY ID SD WI RI MI CT WY PA NJ IA NE OH IN NV WV DE IL IL UT VA VA CO MD CA KS MO KY NC DC TN OK SC AR AZ NM AL GA MS TX LA AK FL HI 71+ percent (6 states) 62 to <71 percent (19 states including DC) 51 to <61 percent (12 states) 50 percent (14 states) SOURCE: Federal Register, November 28, 2007 (Vol. 72, No. 228), pp 67305-67306, at http://edocket.access.gpo.gov/2007/pdf/07-5847.pdf and correction for North Carolina at Federal Register, Friday, December 7, 2007 (Vol. 72, No. 235), p. 69285, at http://edocket.access.gpo.gov/2007/pdf/C7-5847.pdf.

  6. How States Finance Medicaid • State and/or local general fund revenues appropriated to Medicaid (from sales, income, other general taxes) • “Permissible” health care-related taxes and “bona fide” provider-related donations • Inter-Governmental Transfers (IGTs) • Certified Public Expenditures (CPEs)

  7. Medicaid = State Budget Challenge • About 22% of total state spending • Medicaid costs typically grow at faster rate than state revenues • Medical inflation • Aging population • Policy changes • Economy (Medicaid is “counter-cyclical) • States must balance their budgets every year!

  8. Impact of a 1% Growth in Unemployment 1% increase in unemployment also = a 3-4% decline in state revenues $3.4 b State $1.4 b 1.1 m 1.0% 1.0 m = & 1% $2.0 b Federal Increase in Medicaid and SCHIP Enrollment Increase in Uninsured Increase in National Unemployment Rate Increase in Medicaid and SCHIP Spending (billion) Source: Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, Kaiser Commission on Medicaid and the Uninsured, April 2008

  9. Medicaid Grows Faster than State Revenue NOTE: State Tax Revenue data is adjusted for inflation and legislative changes.Preliminary estimate for 2006. SOURCE: KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates and KCMU / HMA Survey for 2006 Medicaid Growth Estimates; Analysis by the Rockefeller Institute of Government for State Tax Revenue.

  10. Controlling Medicaid Spending • Short-term (balance the budget!) • Eligibility • Benefits/cost-sharing • Reimbursement*

  11. State Medicaid Cost Containment Strategies FY 03–07 NOTE: Past survey results indicate not all adopted actions are implemented. SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, September and December 2003, October 2004, October 2005, October 2006

  12. Medicaid Total Spending Projected to Double to Over $700 Billion in Ten Years: 2007 - 2017 All funds: Federal, State and Local Source: Health Management Associates estimates based on data from CBO and CMS, 2007.

  13. State Medicaid Challenge • “Bend the trend” of cost growth: • Delivery system reforms – HIT, disease management, pay for performance, service integration, centers of excellence • Coverage reforms – prevention/primary care, comparative effectiveness, Medicare/Medicaid coordination, community LTC • Consumer behavior, community wellness focus • Increased rates of private coverage

  14. Health Costs a Shared Concern • Medicaid buys in the health care marketplace • Impacts, and is impacted by, the larger system • Can only act within federal parameters • Ultimately, can’t resolve Medicaid’s challenges in isolation of the realities of the larger health care system, federal health policy

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