Incremental Expansions in Maryland: Medicaid and Small Group Coverage
Dr. Rex Cowdry, Executive DirectorMaryland Health Care Commission
Stacey Davis, Deputy DirectorOffice of Planning, Medicaid
Maryland Department of Health and Mental Hygiene
State of the State in Early 2007
• Over 700,000 uninsured individuals• Public coverage of children relatively generous• Public coverage for parents, non-parental adults
relatively poor• Robust, modified community rated small group market
with participation rates just under 50%• Healthy underwritten individual market with an innovative
high risk pool• Rates approx 130-135% of standard risk• Rates below standard risk for low income populations• Non-HIPAA: Choice of pre-ex or a temporary premium surcharge
• Democratic governor (defeated Republican incumbent); General Assembly strongly Democratic but fiscally conservative
Working Families and Small Business Health Coverage Act (SB 6)
• Two main goals– Expand health coverage to low income Marylanders– Expand coverage among small, low income businesses
• Planning team principles for success:– Right-size the planning group.
• Team included Governor’s policy/legislative staff, key Senate and House committee chairs, Secretary of Health and Mental Hygiene and policy staff, Medicaid director, Insurance Commissioner, Health Care Commission ED
– Get out of town. • The brilliance of the SCI Coverage Institute Chicago strategy
• Passed during a Special Legislative Session, November 2007• SCI grant funds used for Medicaid expansion messaging and
small group subsidy modeling
Public CoveragePrior to SB 6
200
100
300
133
40
Age 65 and Over+
19610
250
PW
185
MCHP Premium
MCHP
Medicaid
Pregnant Women
Medicare
300
116
Note: This chart is for illustrative purposes only. Each coverage group has specific eligibility and some asset requirements, which are not shown.
Poverty Level:1 person = $10,8302 persons =$14,5703 persons = $18,3104 persons = $22,050
As of 1/23/2009
Medicaid & Medicare
Primary Adult Care Program – Limited Services
Major gap in public
coverage for low-
income families
Parents or disabled age 19 to 64
Public CoverageAs of July 2008
200
100
300
133
40
Age 65 and Over+
19610
250
PW
185
MCHP Premium
MCHP
Medicaid
Pregnant Women
Medicare
300
116
Note: This chart is for illustrative purposes only. Each coverage group has specific eligibility and some asset requirements, which are not shown.
Poverty Level:1 person = $10,8302 persons =$14,5703 persons = $18,3104 persons = $22,050
As of 1/23/2009
Medicaid & Medicare
Parents to 116% FPL
Primary Care for Other Adults to 116% FPL
Parents or disabled age 19 to 64
Phase I: Parents to 116% FPL
Public Coverage(Delayed implementation)
200
100
300
133
40
Age 65 and Over+
19610
250
PW
185
MCHP Premium
MCHP
Medicaid
Pregnant Women
Medicare
300
116
Note: This chart is for illustrative purposes only. Each coverage group has specific eligibility and some asset requirements, which are not shown.
Poverty Level:1 person = $10,8302 persons =$14,5703 persons = $18,3104 persons = $22,050
As of 1/23/2009
Medicaid & Medicare
Parents to 116% FPL _____________
Incremental Increases to other adults below 116%
Parents or disabled age 19 to 64
Childless Adults
Phase II: ED/Specialty
Phase III: Outpatient
Phase IV: Inpatient
Enrollment Changes to Medicaid
Changes in the Application Process
• No face-to-face interview• Income and childcare expenses are declaratory• Eliminated asset test• Accepted applications at both the local health
departments in addition to the local departments of social services
• Declaratory information is verified through automated systems
• Accuracy of eligibility claims will be examined in upcoming Medicaid fraud and abuse assessment
Medicaid Expansion for ParentsParent Enrollment Trends (Incomes between 30% FPL and 116% of
FPL)
Results of the Expansion:
Over 44,000 Parents have enrolled in One Year
20,950
24,513
28,781
32,00634,626
37,840
40,727
44,548
9,624
12,852
17,113
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Enrollment Trends are significantly higher than prior years - Economy is a factor also
810,000
758,000764,000
733,000715,000
707,000699,000
600,000
650,000
700,000
750,000
800,000
850,000
June 2007 Dec 2007 June 2008 Dec 2008 June 2009 (est.)
Excluding Expansion Parents
Expansion Medicaid Implementation - Lessons
• The economic downturn and the state budget deficit can stall the expansion of coverage.
• Phases II-IV have been modified. The second phase is limited to adding substance abuse services.
• Enhanced coordination is needed between health and social services departments to provide a true “no wrong door” enrollment process.
• Necessary revisions to legacy administrative systems can be challenging and expensive.
• Growth has exceeded expectations.• Calculating enrollment growth directly tied to Medicaid
expansion is difficult because of simultaneous economic downturn.
The Starting Point: MD Small Business More Likely to Offer Insurance Than in Many Other States --- Still, less than ½ offer insurance
Small Business Premium Subsidy Program
SB6- Small Business Subsidy
Design choices:– Target the uninsured or assist all
small businesses?– Target small businesses that are
least likely to offer insurance and most in need of premium assistance?• Low wage, low number of employees
– Subsidize employers or individuals?
– Offer choices of plans / promote competition?
– Administer through the tax code or through health plans?
Design guiding principles:– Achieve credibility with small
employers– Provide enough subsidy to
change behavior– Avoid sudden loss of eligibility /
subsidy (no cliffs)– Use insurance brokers or sell
directly through an insurance exchange.
– Inform and enroll this new “coverage” group in the subsidy option
• Governor’s initiative• Anticipated funding $15-30 million annually
Health Insurance Partnership
• Resulting design: target small businesses who:– have not offered insurance in the past year– have 2-9 eligible employees (including the owner)– have a low average wage (full subsidy up to $25,000, phased out at $50,000)
• Spouses and children eligible for subsidies in families with AGI under $75,000
• Choice of carriers and plans (any willing carrier)
• Pay plans directly to reduce complexity and fraud; subsidy passed through to employer and employee in the form of lower premiums
• Maximum subsidy is the lesser of 50% of the premium or an amount set by the Commission
• Subsidy phases out at renewal as firms grow in size and income
Enrollment in the Health Insurance Partnership:Swimming Upstream (or Uptorrent)
SB6
passes
Partnership
subsidy begins
Actual =
867 covered lives
Partnership Enrollment
Projected = 13,000 covered lives
S&P 500
Lessons from the Health Insurance Partnership
• Confirmation: price elasticity of demand for health insurance is very low among smallest employers.
• Non-offering employers require substantial subsidies - and in the face of a recession and economic uncertainty, even a 50% reduction in premium and extensive outreach are not enough.
• Employers are wary that a program may not be there in a year or two – and mistrust reassurances.
• As with any modified community rated market, adverse selection is expected, especially in smallest groups.
• Effective targeting requires complex eligibility rules.
• Complex eligibility rules complicate employer/employee outreach and affect enrollment.
• However, the Partnership has been a useful trial run for a state Health Insurance Exchange with individual responsibility, broker participation, carrier and plan choice, and income/wage-based premium subsidies.
Related Initiatives
• Kids First Act (HB 1391)
– Uses tax forms to identify uninsured children eligible for Medicaid
– Two types of outreach provided to families• Year 1: Letters Year 2: Letters & Applications
– Goal - create a system which identifies uninsured, Medicaid-eligible children and efficiently enrolls them in health coverage
• Maryland Health Quality and Cost Council (Executive Order)
– Develops strategic health policy reforms to improve the health and health care of Maryland’s citizens. Current foci:
• formulating a strategy to address chronic illnesses, • developing a patient centered medical home demonstration, and • identifying and implementing best practices in areas like infection control.
• COBRA and mini-COBRA subsidies
– ARRA enabled subsidies of both state and federal COBRA coverage
Moving Forward Despite the Economy(with a lot of help from ARRA)
Limited Medicaid expansion
• ARRA FMAP increase helps with enrollment growth
• Phase II - add substance abuse services to the Primary Adult Care Program – Dependent-less adults to 116% FPL
• Proposed coverage expansion: SSI individuals up to 300% FPL
Consider expansion of the Partnership to firms with 2-20 employees
Health Information Technology
• Health information exchange – Extensive policy, privacy, and security discussions, five comprehensive reports on issues
– Competitive planning and design process
– Implementation funding $10 million through Maryland’s unique all-payer hospital rate setting system
– State will apply for ARRA state implementation grant
– Policy to be set by a separate Policy Board with strong representation of public interests
• EHR adoption – CMS project on EHR adoption in small physician practices
– ARRA Medicare/Medicaid incentives
– Private payers in Maryland must also provide parallel incentives for EHR adoption
– MSO/ASP model for small physician offices
– Purchase of EHR system for state hospitals
The Long View of Health Care Coverage
Contingency planning for the state’s role in national health care reform• Procurement delays in state’s crystal ball acquisition
• Examination of individual and small group market reform proposals underway
• Health insurance exchange already modeled with SCI support
• Funding the planned Medicaid expansion challenging, even with enhanced FMAP
Dealing with the costs of our health care system• Enhance Maryland’s all-payer hospital rate setting system
– Particularly important in an era of hospital consolidations, oligopoly power
– Move beyond “Never Events” to “Potentially Preventable Complications” adjustments
• Change consumer incentives– Value-based benefit designs
– Price transparency and outcomes reporting
• Change provider incentives – bundled payments instead of FFS– Patient-centered medical home – with “shared savings” or “efficiency payments”
– Prometheus reimbursement (primary and specialist care)
– Accountable care organizations