Medicaid Expansion Overview Medicaid Opportunities & Challenges Task Force April 23, 2013 Jeff Bechtel, Senior Consultant Jennifer Jordan, Senior Consultant.

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  • Medicaid Expansion Overview Medicaid Opportunities & Challenges Task Force April 23, 2013 Jeff Bechtel, Senior Consultant Jennifer Jordan, Senior Consultant
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  • Tuesday, April 23 1.Background ACA and Coverage Expansions 2.Medicaid Expansion Overview and Options 3.Medicaid Expansion Considerations Wednesday, April 24 1.Overview of State Expansion Status 2.Medicaid Expansion Debate Arguments for Expansion Arguments against Expansion 3.State Approaches * Note: This briefing document incorporates a significant amount of material from presentations provided by South Dakota state staff relating to Medicaid expansion. 2 Agendas April 23 & 24 Briefings
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  • 1. Background ACA and Coverage Expansions
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  • Medicaid Expansion Health Insurance Exchange Background Interaction Medicaid and Exchange Supreme Court Decision 4 1. Background ACA and Coverage Expansions
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  • PPACA (Patient Protection and Affordable Care Act) was signed March 23, 2010 by President Obama. The Affordable Care Act (ACA) refers to PPACA and the Health Education Reconciliation Act, which amended PPACA. Three major components of the ACA: Health Insurance Reform Health Insurance Exchange Medicaid Expansion The ACA was challenged as unconstitutional by 26 states. Patient Protection and Affordable Care Act (PPACA) 5
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  • ACA Health Coverage Expansion 6 Medicaid Expansion (State Option) Medicaid Expansion (State Option) Subsidized Coverage in Health Insurance Exchanges Medicaid eligibility for most adults 18-64 if state opts in 0% to 138% of FPL Federal Premium Subsidies on Sliding Scale, about $4,800 per person 100% to 400% of FPL 400% of Federal Poverty Level (FPL) = $44,680 for individual, $92,200 for family of four 138% of Federal Poverty Level (FPL) = $15,415 for individual, $31,809 for family of four Plus Subsidized Cost Sharing up to 250% FPL
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  • Medicaid Expansion New, uniform nationwide floor for Medicaid eligibility for most adults age 18-64 below 133%. Because of 5% eligibility disregard, Medicaid was effectively expanded to 138% FPL. Under the ACA (pre-Supreme Court ruling), states that didnt comply would jeopardize all of their Medicaid funding. 7
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  • Health Insurance Exchange: Overview 1.A new, government-managed marketplace for buying and selling health insurance. 2.Think of an Exchange being an Expedia, Orbitz, or Kayak but for health insurance. 3.Health plans must meet array of new federal and state requirements. Many new requirements are similar, but not identical to Medicaid requirements. 4.Initially only individuals and small employers may buy via Exchange. In 2017, any employer may use Exchange (state option). 5.New federal subsidies only available through Exchange. 6.State may choose to operate Exchange. State agency, non-profit, or quasi- governmental entity. Option for regional, multi-state Exchanges. 7.CMS will run Exchange in any state unready or unwilling to operate federally compliant Exchange. 8.Exchanges must be financially self-sustaining. Taxes or assessments on insurers likely to pay for Exchange operations. 8
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  • Federal Subsidies in Exchange Premium Subsidies: Federal premium subsidies for Exchange enrollees between 100% and 400% of FPL. Some legal immigrants eligible for premium subsidies 0-400%. Sliding scale based on income. No asset test. Premium subsidies of roughly $5,000 to $6,000 per person. No federal premium subsidies if person is: Enrolled in Medicaid, CHIP, or Medicare Eligible for Medicaid or CHIP Parent of child who is not covered via Medicaid, CHIP, Exchange, or private insurance Unauthorized immigrant Incarcerated in jail or prison Cost Sharing Subsidies: Deductibles and co-payments also subsidized for those with incomes below 250% FPL. Maximum Out-of-Pocket: Total out-of-pocket cost capped. 9
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  • Estimates and Examples Premiums and Cost Sharing Premium Credits The amount will vary from person to person: it depends primarily on household income and the premium for the plan in which the person is enrolled. The amount of premium is capped as a percent of income. Examples (if premiums were available in 2011): 133% FPL 2% of income / $31 Maximum Monthly Premium (family of 3) 133.1% FPL 3% of income / $62 Maximum Monthly Premium 150% FPL - 4% of income/ $93 Maximum Monthly Premium 250% FPL 8.05% of income/ $311 Maximum Monthly Premium Cost Sharing Cost sharing subsidies protect lower-income individuals from high out-of-pocket costs at the point of service. Subsidies are available to individuals below 250% of FPL. Out-of-Pocket Caps ACA limits the total amount that individuals at of below 400% FPL must pay out-of-pocket for essential benefits. Examples (if out-of-pocket caps were available in 2011): 133% - $3,967 / year (family of 3) 200% - $3,967 / year 300% - $5,950 / year 400% - $7,933 / year 10
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  • Primary Function of Exchange Health Insurance Exchange must perform a wide range of functions. Basic functions include: 1.Certify and oversee Qualified Health Plans (QHPs) offering coverage in Exchange. 2.Facilitate enrollment in QHPs. 3.Screen and enroll eligibles in Medicaid and CHIP. 4.Facilitate federal subsidies and tax credits. Determine exemptions from individual mandate. 5.Rate QHPs on value based on relative quality and price. 6.System-interchange with other agencies (e.g., Medicaid, IRS, Social Security, Homeland Security). 7.Inform individuals about Medicaid and CHIP. 8.Operate comprehensive navigator program for public education and outreach. 9.Perform anti-fraud, anti-waste activities. 11
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  • Interaction of Medicaid and Exchange Considerable interface required between Medicaid, CHIP, and new Exchange. Medicaid market and QHP market very similar in population under 200% FPL. Exchange must: Allow individuals to apply for Medicaid, CHIP, and Exchange plan coverage through website. Allow Medicaid applications and renewals on the web, with electronic signatures. Screen all applicants for everyone for Medicaid and CHIP eligibility and automatically enroll. Conduct outreach to uninsured and underinsured. 12
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  • Incomes of low-income Americans tend to fluctuate from year to year and within a year. Especially high fluctuations below 200% of FPL. Churn is when an individual or family moves from one benefit to another due to income changes. Therefore, a large portion of individuals/families will go back and forth across the income levels for Medicaid and Exchange subsidy eligibility. Churn will be high even without Medicaid expansion. Models project that ~50% of persons under 200% of poverty will move between Medicaid and Exchange subsidy coverage within a year. Means large number of individuals and families will routinely move between Medicaid and Exchange plans. Churn: Members Moving Between Programs 13
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  • ACA Health Coverage Expansion 14 Medicaid Expansion (State Option) Medicaid Expansion (State Option) Subsidized Coverage in Health Insurance Exchanges Medicaid eligibility for most adults 18-64 if state opts in 0% to 138% of FPL Federal Premium Subsidies on Sliding Scale, about $4,800 per person 100% to 400% of FPL 400% of Federal Poverty Level (FPL) = $44,680 for individual, $92,200 for family of four 138% of Federal Poverty Level (FPL) = $15,415 for individual, $31,809 for family of four Plus Subsidized Cost Sharing up to 250% FPL
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  • Supreme Court Decision The Supreme Court evaluated the constitutionality of the State Mandate to expand Medicaid. ACA requires states to expand their Medicaid programs to most adults under age 65 with incomes at or below 138% of federal poverty level. If a state fails to expand Medicaid, it risked loss of all current federal Medicaid matching funds. The Court held that Congress may not use the loss of existing federal Medicaid funds to coerce a state to expand Medicaid. The ACA requirement violated state sovereignty under the Constitution and the voluntary contractual nature of the federal-state relationship in Medicaid. As a result of the Supreme Court decision, the Medicaid Expansion is now voluntary for states. 15
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  • 2. Medicaid Expansion Overview and Options
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  • 2. Medicaid Expansion Overview and Options Description - Optional Medicaid Expansion Description of New Eligibles Medicaid Expansion Services/Benefits 17
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  • State Decision Each state must now decide whether or not to accept federal matching funds to expand Medicaid eligibility to most adults under 65 with income at or below 138% of poverty. Federal matching funds for the cost of the new Medicaid eligibility group remains unchanged from the ACA: 100% in CY 2014 thru CY 2016, 95% in CY 2017, 94% in CY 2018, 93% in CY 2019, and 90% in CY 2020 and all subsequent calendar years. (42 C.F.R. 433.10(6)(i)). 18
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  • Optional Medicaid Eligibility Expansion Starting January 2014: New, uniform nationwide floor for Medicaid eligibility at 138% of Federal Poverty Level (FPL). 133% + 5 percentage point income disregard = 138% Income test based on Modified Adjusted Gross Income (MAGI). No asset test. Medicaid coverage extended to most adults age 18 to 64 who are below 138% FPL. Bottom Line: Medicaid: Most individuals and families at or below 138% of FPL. CHIP: Children now in CHIP between 100% and 138% FPL transitioned to Medicaid. Subsidized Exchange Coverage: Individuals and families between 138% and 400% of FPL would be eligible for subsidized coverage in an Exchange plan. 19
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  • National Estimates If all states implement Medicaid Expansion, an additional 21.3 million people would enroll in Medicaid by 2022. This is a 41% increase compared to projected levels without the ACA. Most of these 21.3 million people would be newly eligible, but some of the increase will be related to participation among people who are currently eligible. Even if no states expand Medicaid, national enrollment will increase by 5.7 million people. 20
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  • A large portion of individuals newly covered whether by Medicaid or Exchange subsidized plans are already privately insured. Crowd Out is when a new government benefit crowds out private spending on that same service. Public spending crowds out private spending. At least 30% of those newly covered by ACA already have individual or employer- sponsored coverage. They will drop (or be dropped) private coverage and sign up for public coverage. Private insurance coverage will shrink shifting a percentage of individuals from commercial market to new Exchange plans. Crowd Out will also drive enrollment in federally subsidized plans. Crowd Out: Shift from Private to Public Coverage 21
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  • Kaiser Commission Estimates The Kaiser Commission on Medicaid and the Uninsured recently prepared state- specific estimates. Kaisers estimates were generally consistent with South Dakotas numbers. Kaiser concluded that a Medicaid Expansion in South Dakota would insure an additional 44,000 people. Kaiser also concluded that an additional 6,000 people will be eligible regardless of whether South Dakota decides to move forward with the expansion. 22
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  • Who is Currently Covered by South Dakota Medicaid? 69 percent are children and 31 percent are adults: Low income children, up to 200% FPL or $46,100 for a family of 3 Pregnant women, up to 133% FPL or $14,857 for family of 1 Very low income parents, up to 53% FPL or $9,552 for a family of 3 Elderly or disabled adults with low incomes Adults who are not disabled or parents with very low incomes are not covered by Medicaid. 23
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  • Who is covered by Medicaid? 24
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  • Medicaid Expansion Eligibles Who are the new eligibles? Adults: Without disabilities; Single; or Parents between 49%-138% FPL. 25
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  • 2013 FPL 2013 Poverty Guidelines for the 48 Contiguous States and the District of Columbia 26 Persons in family/house hold Poverty guideline (100% FPL) 138% FPL 1$11,490$15,856 2$15,510$21,403 3$19,530$26,951 4$23,550$32,499
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  • Medicaid Expansion - Eligibles 27
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  • Summary Medicaid Expansion Population The Medicaid expansion population will consist primarily of parents and adults without dependent children. Medicaid currently covers millions of poor and near-poor Americans, but income and categorical restrictions currently exclude millions of low-income people from the program. While all poor children are eligible for Medicaid, many of their parents are not because most states have much stricter income eligibility for parents than for children. In addition, federal law categorically excludes most adults without dependent children from Medicaid. In simple terms, the Medicaid expansion would change Medicaid from a program that provides health coverage to a subset of the poor (e.g. children, pregnant women, disabled adults), to a program that covers all of the poor. 28
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  • Medicaid Expansion Services Expansion population must be provided Essential Health Benefits (EHB) per the ACA. EHBs include: Ambulatory Patient Services Emergency Services Hospitalization Maternity and Newborn Care Mental Health and Substance Use Disorder Services Prescription Drugs Rehabilitative and Habilitative Services & Devices Laboratory Services Preventive and Wellness Services and Chronic Disease Management Pediatric Services, including oral and vision care Most EHB already covered by Medicaid in South Dakota. Will have to add substance use disorder services for adults. 29
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  • Benefits for Medicaid Expansion Population In addition to providing EHBs, coverage for newly eligible adults under optional Medicaid expansion must receive a benchmark benefit package or actuarial equivalent. This applies to services covered, not cost sharing. Coverage modeled after typical employer plan with prevention, wellness, prescription drug, and mental health benefits included. Options: Standard Blue Cross/ Blue Shield preferred provider option plan under Federal Employee Health Benefits Plan (FEHBP), State employee plan, Largest commercial HMO plan in state, and Secretary-approved coverage. Current, mandatory Medicaid benefit package does not precisely match up with benchmark. 30
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  • Benefits for Medicaid Expansion Population (contd) Populations currently exempt from mandatory enrollment in Medicaid benchmark plans include: seniors, disabled, pregnant women, dual eligibles, persons with special needs. These groups will continue to receive ful...


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