Florida's Medicaid Choice: What Does the Supreme

Court Ruling Mean?

Joan Alker and Jack HoadleyGeorgetown University Health Policy Institute

November 15, 2012

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Quick review of ACA structure

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

400% FPL to be used in state or federal exchange; CBO = 20-25 million persons covered

oMedicaid expansion to 133% FPL for parents and childless adults; CBO = 16-17 million persons covered

Current Medicaid eligibility levels in Florida

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What did the Supreme Court decision say?

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

o Language of decision was clear that existing Medicaid was not touched – the decision only touched the “newly eligible” group

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What does the Supreme Court decision mean?

o Other parts of the ACA which relate to Medicaid remain intacto There are many but one worth noting is

the “maintenance of effort” which prohibits states from rolling back eligibility for adults until 2014; children 2019. This includes proposals to make it harder for people to enroll such as premiums or other ways in which a state might add “red tape.”

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What does the Supreme Court decision mean?

o Important outcome is that extension of Medicaid is optional – states must make a choice.

o Fed government has made clear that state can come in or out at any time simply by submitting a state plan amendment.o FL legislature has key role to play

o Might states pursue waivers?

Who will remain uncovered without broader Medicaid coverage?

WHAT IS AT STAKE IN FLORIDA’S CHOICE?

Florida has a lot of uninsured people

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Source: 2011 American Community Survey

Total Population Children Non-elderly Adults0%

5%

10%

15%

20%

25%

30%

35%

21%

12%

30%

15%

8%

18%

FloridaU.S.

Rate of uninsured in Florida compared to the United States

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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.

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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.

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Different federal matching rates apply

o “Newly eligible” are funded at 100% federal cost for FY2014-2016; tapers down to 90% over the next seven years;

o Current eligibles get regular Medicaid match rate (58%) or CHIP match rate (71%)

o Participation rates are likely to go up even without Medicaid extension because of new “culture of coverage”

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Uninsured children in FloridaPercent

of Uninsure

d Children

2011 State Ranking in Percent of Uninsured Children

Number of Uninsured Children

2011 State Ranking in Number of Uninsured Children

Florida 11.9% 48th 475,112 49thNational

7.5% -- 5,527,657 --

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Florida vs. neighboring states: Rate of uninsured children in 2011

Florida 11.9%Alabama 5.3%Georgia 9.5%Louisiana 5.8%South Carolina 8.4%

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

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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 Newish Oregon study found health status, access to regular source of care/prescription drugs improved as did financial security

WHAT’S AT STAKE FOR FLORIDA’S HOSPITALS?

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Florida’s hospitals are at risko The ACA includes significant cuts to

Medicaid and Medicare Disproportionate Share Hospital (DSH) programs.

o These programs provide funds to hospitals who provide a high level of uncompensated care.

o ACA assumed much uncompensated care would go away b/c of Medicaid expansion.

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Hospital DSH cuts are severe

o Between FY2014-FY2022 Medicaid DSH nationally is reduced by approximately 50%.

o Medicare DSH is reduced by approximately 75% starting in FY2014.

o Secretary of HHS hasn’t issued rules yet on how cuts will be allocated.

o Florida hospitals could face annual cuts of c. $640 million.

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Florida hospitals are in double jeopardy

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

o These funds go to providers, mainly hospitals, serving large numbers of uninsured persons.

o The LIP and the waiver expire on June 30, 2014.

WHAT’S AT STAKE FOR FLORIDA’S BUDGET?

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Facts to considero Generous federal funds available for

those newly eligible for Medicaid:o 100% federal funding from 2014 to 2016o 90% or higher federal funding thereafter

o Normal federal funding for “eligible for not enrolled”o 58% in FY 2013

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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%

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Projecting new enrollment ratesNewly Eligible Individuals

Currently Eligible but Not Enrolled Individuals

Initial State Assumption

100% 100%

Revised State Assumption

80% No official assumption

High Urban Institute Assumption

75% 40%

Low Urban Institute Assumption

57% 10%

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Translating enrollment to costso Primary source for cost of Medicaid

enrollees:o FL Social Services Estimating Conference

o Modificationso Lower assumption for rate of enrollment

for “eligible but not enrolled”oAdd costs for higher payments to

physicians for primary care servicesoAccount for offsetting savings

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Sources of offsetting savingso 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)

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 percent federal funding is phased out. New state costs will be lower in earlier years, especially from 2014 through 2016.

Projecting future state costs (2020)

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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)

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Bottom lineo 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

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For more informationo Visit the Jessie Ball duPont Fund website

o http://www.dupontfund.org

o Visit the Winter Park Health Foundation websiteo http://www.wphf.org

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