Florida's Medicaid Choice:

Looking at Implications

Jack Hoadley, Ph.D.Georgetown University Health Policy Institute

Medicaid Expansion ForumJanuary 28, 2013

2

Acknowledgments

o Project support:o Jessie Ball duPont FundoWinter Park Health Foundation

o Co-investigator:o Joan Alker, Georgetown University

o Travel support:oHealth Foundation of South Florida

3

Quick review of ACA structure

o Two principal means to achieve near universal coverageo Federal premium tax credits from 100%

to 400% FPL (~ $19K-$76K, family of 3) to be used in state or federal exchangeoCBO estimate: 20-25 million persons

coveredoMedicaid expansion to 133% FPL (~

$25K) for parents and childless adultsoCBO estimate: 16-17 million persons

covered

Florida Medicaid eligibility levels

New ACA Level133%

4

5

What did the Supreme Court say?

o The entire law was upheld with one exception – the mandatory nature of the Medicaid expansion

o Court’s language was clear that existing Medicaid was not touched – the decision only touched the “newly eligible” group

6

What does the Supreme Court decision mean?

o Other parts of the ACA relating to Medicaid remain intact, including:o “Maintenance of effort,” which prohibits

states from rolling back eligibility for adults until 2014 and children until 2019. o Includes prohibition on proposals to make it

harder for people to enroll, such as premiums or other ways in which a state might add “red tape.”

7

What does the Supreme Court decision mean?

o Important outcome: Extension of Medicaid is optional – states must make a choice.

o Federal government has made clear:o State can come in or out at any time simply by

submitting a state plan amendment.o States cannot do partial expansions

o FL legislature has key role to playo States still have option to pursue waivers

Who will remain uncovered without broader Medicaid

coverage?

8

WHAT IS AT STAKE IN FLORIDA’S CHOICE?

9

10

Florida has 8% of U.S. uninsured

Source: 2011 American Community Survey

Total Population Children Non-elderly Adults0%

5%

10%

15%

20%

25%

30%

35%

21%

12%

30%

15%

8%

18%

Florida U.S.

Rate of uninsured in Florida compared to the United States

11

12

Uninsured children in Florida

Percent of

Uninsured

Children

2011 State Ranking in Percent of Uninsured Children

Number of

Uninsured

Children

2011 State Ranking in Number of Uninsured Children

National 7.5% -- 5,528,000 --

Florida 11.9% #48 475,000 #49

Alabama 5.3% #18 58,000

Georgia 9.5% #43 233,000

Louisiana 5.8% #23 64,000

South Carolina 8.4% #38 90,000

13

How many Floridians would gain coverage?

o We estimate that 815,000 to 1,270,000 adults and children would gain coverage if the state extended Medicaid to parents and other adults below 133% FPL.o Estimated: 150,000 to 225,000 in Miami-

Dadeo Participation rates are likely to go up

even without Medicaid extension because of new “culture of coverage”

Adults newly

eligible for Medicaid

Adults currently

eligible for Medicaid

Children currently

eligible for Medicaid

Total

Total uninsured 1,295,000 257,000 500,000 2,052,000Projected take-up rate (low assumption)

57% 10% 10%  

Number projected to gain Medicaid coverage (low assumption)

740,000 25,000 50,000 815,000

Projected take-up rate (high assumption)

75% 40% 40%  

Number projected to gain Medicaid coverage (high assumption)

970,000 100,000 200,000 1,270,000

New Medicaid enrollment if changes occur

14

15

Why would children get coverage?

o Coverage is being extended for parents and adults – the “newly eligible”

o But we know that more current eligibles will get enrolled as a result of the “welcome mat” effect. Most of these “eligible but unenrolled” will be children.

16

Medicaid coverage saves lives

o Well documented that Medicaid improves access and improves health

o Mortality declined by more than 6% for newly covered adults in Medicaid

o Recent Oregon study found improvement in financial security, health status, access to regular source of care, access to prescription drugs

WHAT’S AT STAKE FOR FLORIDA’S HOSPITALS?

17

18

Florida’s hospitals at risko ACA: significant cuts to Medicaid and

Medicare Disproportionate Share Hospital (DSH) funding.oDSH programs provide funds to hospitals that

serve many low-income patients and thus provide a high level of uncompensated care.

o ACA assumed much uncompensated care would go away due to increased coverage.oFL: $1.2 billion reduction over 10 years (Urban

Inst.)

19

Medicaid DSH cutso Florida: current federal allocation for

Medicaid DSH ~$200 million/yearo Between FY2014-FY2022 national

Medicaid DSH allocations are reduced by up to nearly 50% (especially FY 2018 on).

o Details on implementation forthcomingo DSH reductions are not affected directly

by Court decision - but could be indirectly

20

Medicare DSH cutso Medicare DSH: Add-on to Medicare

payments for hospitals treating high share of low-income patients

o ACA: 75% DSH reductions as of FY2014o Some funds shifted to new uncompensated

care pool to pay hospitalsoMedicare savings if uninsured rate declineso Impact on hospitals will vary

21

Florida Low Income Pool

o Florida’s Medicaid 1115 five-county waiver includes a fund of $2 billion federal dollars known as the “Low Income Pool” (LIP).

o LIP funds go to providers (mainly hospitals and health centers) serving large numbers of uninsured persons.

o LIP and the waiver due to expire June 30, 2014.

22

Florida hospitals in double jeopardy

o Industry estimate: Florida hospitals could face annual cuts of about $650 million

o LIP funding could be reduced or eliminated

o Other possible cuts from Medicare as federal budget negotiations continue

WHAT’S AT STAKE FOR FLORIDA’S BUDGET?

23

24

Federal financial support

o Generous federal matching funds available for those newly eligible for Medicaid:o 100% federal funding from 2014 to 2016o 95%, 94%, 93% in 2017, 2018, 2019o 90% in 2020 and beyond

o Potential for ~ $26 billion in new federal dollars over 10 years

25

Federal financial support

o Normal federal matching funds available for eligible for not enrolledoMedicaid: 58% in FY 2013oCHIP: 71% in FY 2013

26

Does everyone eligible enroll?

o Current enrollment rate for children, among those eligibleo FL: 77% oUS: 85%

o Current enrollment for adults, among those eligibleo FL: 45%oUS: 65%

27

Projecting new enrollment rates

Newly Eligible Individuals

Currently Eligible but Not Enrolled Individuals

Initial State Assumption

100% 100%

Current State Assumption

80% No official assumption

High Urban Institute Assumption

75% 40%

Low Urban Institute Assumption

57% 10%

28

Translating enrollment to costs

o Primary source for cost of Medicaid enrollees:o FL Social Services Estimating Conference

o Important considerationso Overall per-person costs are lower for newly

eligible population (current TANF adults: $333/month

o SSEC Assumption for newly eligible: $306/month

o For eligible but not enrolled: $254/month

29

Translating enrollment to costs

o Modifications to Estimating Conferenceo Include assumption for rate of

enrollment for “eligible but not enrolled”oAdd costs to continue some higher

payments to physicians for primary care services

o Include accounting for offsetting savings

30

Offsetting savings in estimate

o State support for safety-net institutions (public hospitals, health centers)

o State services for people with mental health issues, substance abuse problems, HIV/AIDS

o Medicaid eligibility changes due to health insurance exchange availabilityoMedically needy populationoOthers (e.g., pregnant women)

31

Other potential offsets not modeled

o Some other state-funded serviceso Local government indigent care

fundingo Lower premiums in insurance

exchangeo 15%, based on analysis in other states

o Alternative source of coverage for employees of small firms

BEST ESTIMATE

NEW STATE COSTS PER YEAR  Cost of Medicaid Coverage for Newly Eligible Population

$300 million

Cost of Medicaid Coverage for New Enrollment by Currently Eligible Population

$100 million

Cost of Continuing Higher Primary Care Payment Rates for Physicians

$200 million

TOTAL NEW STATE COSTS PER YEAR $600 millionOFFSETTING STATE SAVINGS PER YEAR  State Support for Safety Net Providers $200 millionState Mental Health, Substance Abuse Programs

$250 million

Medicaid Eligibility Changes, e.g., Medically Needy Program

$250 million

TOTAL OFFSETTING STATE SAVINGS PER YEAR

$700 million

NET STATE SAVINGS PER YEAR $100 millionNote: Estimates are based on a single year after 100% federal funding is phased out. New state costs will be lower in earlier years, especially from 2014 through 2016.

Projecting future state costs (2020)

32

BEST ESTIMATE

NEW STATE COSTS PER YEAR  Cost of Medicaid Coverage for Newly Eligible Population

$0 million

Cost of Medicaid Coverage for New Enrollment by Currently Eligible Population

$100 million

Cost of Continuing Higher Primary Care Payment Rates for Physicians

$0 million

TOTAL NEW STATE COSTS PER YEAR $100 millionOFFSETTING STATE SAVINGS PER YEAR  State Support for Safety Net Providers $100 millionState Mental Health, Substance Abuse Programs

$150 million

Medicaid Eligibility Changes, e.g., Medically Needy Program

$150 million

TOTAL OFFSETTING STATE SAVINGS PER YEAR

$400 million

NET STATE SAVINGS PER YEAR $300 million

Projecting future state costs (2014)

33

34

Economic impact studieso Theory: change in federal dollars, e.g.,

new Medicaid matching funds, has direct and indirect effects on local economiesoDirect: payments to providers, planso Indirect (multiplier) effects:

oPurchases from health care and other vendorsoNew employment for health care, other workersoSpending by newly employed personsoAdditional taxes collected

35

Economic impact studies: limitations

o Although effects are real, magnitude estimates are highly uncertain

o Many moving parts operating in the health system as a whole

o Impacts may diminish as the economy recovers

36

Economic impact

o U of Florida study for FHA: Impact of new federal dollars coming to the state via the ACA on the state economy (using 2020-21 as an example)oNew federal dollars: $2.3 billiono Value added in FL to GDP: $4.2 billiono Labor income: $2.9 billiono Employment: 56,000 jobs

37

Bottom line

o Florida incurs few costs for adults newly eligible for Medicaid, slightly higher costs for new enrollment by those already eligible

o But savings due to more coverage should more than offset costs

o New coverage has positive effects for health and quality of life

38

For more information

o The Georgetown University project websiteo http://hpi.georgetown.edu/floridamedica

id