The Advocacy Challenge of a Lifetime:

The Affordable Care Act, Medicaid, and Kentucky’s Future 

Kentucky Legal Services Statewide Conference

October 23, 2012

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The Affordable Care Act:An Historic Step Towards Justice

• Most important social reform in half a century.• The culmination of 100 years of bipartisan

struggle to achieve health reform.• Reverses decades of increasing income

inequality by effecting a massive transfer of wealth to poor & middle class.

• Greatest Civil Rights advance in years – eliminates racial gap in health coverage, which is a necessary step toward eliminating disparities in health care and health status.

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Background: The Need for Reform

Until the recent polarization of the issue, there has been a widespread recognition health reform is needed to:

• Broaden insurance coverage

• Curb the unsustainable growth in cost

• Improve quality of care and patient outcomes

These goals – and the ACA’s remedies – are interdependent.

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The U.S. Health System is UNJUST and INEFFICIENT

• ~50 million Americans, most in working families whose taxes subsidize the health care system, have no insurance.

• The Bad News: ALL Americans pay more and get less than people in other industrialized nations.

• The Good News: Great potential to improve care through greater efficiency. Institute of Medicine, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America (9/6/12).

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Love it or Loathe it, We’re Gonna Lose it: The Status Quo is Unsustainable

• The Centers for Medicare and Medicaid Services (CMS) projected that the cost of Medicaid would double between 2011 & 2019.

• Health care inflation threatens the solvency of the Medicare trust funds.

• Medical inflation, if not addressed, makes it all but impossible to reduce the national debt. Medical costs are the real culprit behind “runaway entitlement costs.”

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How the ACA Reforms Health Care

• Expands coverage – cannot control cost or quality without having everyone in the system.

• “Bends the cost curve”, saving $109 billion in projected growth over ten years, according to the nonpartisan Congressional Budget Ofc. ww.cbo.gov/publication/43471

• Improves quality – new performance metrics, improved payment incentives.

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ACA’s 2-Prong Approach to Covering the Uninsured

1. Private insurance reforms and premium subsidies for those above poverty.

A. Outlaws underwriting abuses and discrimination re. preexisting conditions.

B. Provides sliding scale premium subsidies from 138%-400% of poverty, in form of tax credits.

C. State based “exchanges” provide on-line insurance marketplace with transparency, accountability.

D. Personal responsibility, or “individual mandate”, provision requires most people to get insurance or pay tax penalty, so they don’t undermine insurance market by waiting until they get sick to get coverage.

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ACA’s 2-Prong Approach to Covering the Uninsured

2. For those in or just above poverty, reforms Medicaid in two ways:

A. Medicaid expands to cover those <65 with incomes up to 138% of poverty.* Feds pay 100% of cost in 2014-2016, phasing down to 90% in 2019 and thereafter.

* Law sets limit at 133% of poverty but also does not count 5% of family income.

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Medicaid Reform (Cont’d.)B. Eliminates “categorical eligibility”

requirements for those up to 138% of poverty, that have restricted Medicaid to “the worthy poor” (aged, blind, disabled, children, pregnant mothers, etc.). This is HUGE, since categorical restrictions make millions in abject poverty ineligible for Medicaid(Existing sources of Medicaid eligibility remain available, e.g., special coverage for nursing home residents, pregnant mothers, etc.)

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In June, Supreme Court upheld the ACA BUT ruled that Congress can’t condition continued receipt of current federal Medicaid funding on a state’s expansion of Medicaid to the new population.

BOTTOM LINE:

Expansion of coverage to the uninsured up to 138% of poverty remains the law but is un-enforceable. The fate of the uninsured poor will be decided by each state, with little influence by the federal government or national lobbies.

BUT Medicaid Expansion Is Now at Each State’s Option

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If Below 138% of Poverty, It’s Medicaid -- or Nothing

Only individuals with incomes over 100% of the poverty level (about $11,000 per year for single person) will be eligible for premium assistance.

Although those with incomes between 100% and 138% of poverty qualify for premium assistance, it isn’t sufficient, because the ACA assumes they will get coverage via Medicaid.

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ACA’s Medicaid Reform: The Keystone of the ACA

• The ACA counts on Medicaid eligibility reform to cover 46% (17 million) of the 37 million gaining coverage under the ACA. (http://www.cbo.gov/sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdf)

– Two-thirds of the people expected to become eligible for Medicaid as a result of the ACA have incomes below 100% Federal Poverty Level (FPL), which is too low to qualify for exchange subsidies.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf

– The remaining third who are to become newly eligible for Medicaid will have income between 100-138% FPL and can qualify for premium subsidies through the exchanges. BUT the subsidies were not designed for them and many will find the subsidies insufficient to afford private insurance. Id.

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ACA’s Medicaid Reform: The Keystone of the ACA

Unless a state extends the new Medicaid coverage to the low-income uninsured, the other provisions of the ACA may not work. – Cannot control costs and improve quality with many of

the sickest outside of the system. – The cost of caring for the uninsured – currently a de facto

$1,000 “tax” on every insured family – will continue to be shifted onto those with insurance and will adversely affect the insurance exchanges. http://www.factcheck.org/politics/obamas_health_care_claims.html

– Denial of coverage to sickest & poorest of the uninsured defeats the ACA’s promise of social justice.

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Where’s Kentucky?Governor Beshear said: "If there is a

way that we can afford that will get more coverage for more Kentuckians, I’m for it."

Legislative leaders have said little so far, but put down other parts of ACA

If Gov. decides to expand Medicaid, would need to revise last year’s passed budget

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Compelling Reasons for KY to Expand Medicaid

It’s a VERY good deal for State:– Provides $11 billion in federal revenues for KY state

government budgets between 2014-2019.– Reduces state costs for uncompensated care (at least

$140 million)– Stimulates state economies, generating thousands of

jobs and state tax revenues.

U. of Memphis, A Study of the Economic Impacts of the Patient Protection and Affordable Care Act on Tennessee, http://www.thcc2.org/PDFs/economic_impact_of_hcr.pdf.

Ctr. on Budget and Policy Priorities, How Health Reform’s Medicaid Expansion will Impact State Budgets (July 12, 2012), http://www.cbpp.org/cms/index.cfm?fa=view&id=3801

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Medicaid Expansion Matters to Influential Constituencies

– Pharmaceutical industry

– Nursing homes

– Local governments

– Mental health providers

– Community primary care centers

– Numerous state agencies that rely on Medicaid funding

– Rural communities with hospitals at risk

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Medicaid Expansion Is Crucial for HOSPITALS

• Hospitals need Medicaid expansion because: – The ACA reduces Disproportionate Share Hospital (DSH)

payments by 75%:• Medicaid DSH - $14.1 billion in 2014-2019• Medicare DSH - $22.1 billion in 2014-2019• $145 million in KY

– ACA cuts other hospital payments, too.– Supreme Court ruling does NOT affect cuts.

• Hospitals counted on Medicaid expansion to compensate for those cuts.

• Without expansion, hospitals’ indigent care burdens will worsen.

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Without Expansion, Hospitals – and Communities – Are At Risk

• Hospitals are among the largest employers in their communities. They provide jobs at all levels of skill and income.

• If the only hospital in a community closes, doctors have no place to admit patients and practices will close or relocate.

• Without a hospital, community becomes less economically competitive. A hospital closure irreversibly transforms an entire community.

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Providers & The State: A Symbiosis KY’s hospital industry pays Hospital Services Tax of 2.5%

on gross revenues (KRS Sec. 142.303, as amended by Ch. 9, Laws of 2007)

Home Health Care: Health Care Provider Tax of 2% on gross revenues of licensed home-health-care services and HMO services  (KRS Sec. 142.307 as amended by Ch.. 73, Laws of 2005).

These revenues enables KY to draw down over millions of dollars in federal matching funds on which Medicaid and the larger state budget depend.

Without the Medicaid expansion, hospitals & nursing homes will have neither the financial ability, nor the political will, to continue paying the assessment.

Without these provider taxes, the resulting loss of federal funds would have a devastating impact across state government and local governments, and government contractors/grantees.

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Oh, and by the way …

The Medicaid expansion will save thousands of Kentuckians’ lives: B. Sommers, et al., “Mortality and Access to

Care among Adults after State Medicaid Expansions,” New Eng. J. of Med., July 25, 2012 http://www.nejm.org/doi/full/10.1056/NEJMsa1202099#t=article

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Kentucky’s Enrollment Challenge

• 417,387 Medicaid eligible

• 230,056 eligible for exchange coverage with premium tax credit

• 32,624 eligible for exchange w/out tax credit

Source: March 2010 and 2011 Current Population Survey

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Not a Moment to Lose

• The Medicaid political/fiscal status quo cannot hold – if we do not sell the Medicaid expansion, we will go backward to “state flexibility” and “entitlement reform.”

• The Ryan Budget calls for $1.2 TRillion in cuts to Medicaid over ten years, radically transforming the program.

• The Fiscal Cliff looms.

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Making It Happen: Everyone Has a Stake, Everyone Can Contribute

• Consumer advocates – whose inadequately insured clients find medical debt a major burden.

• Housing advocates – whose homeless clients’ lack of consistent mental health coverage leaves them unable to get off the streets and into secure housing.

• Family law advocates – who serve victims of domestic violence whose suffering is compounded by medical debt and lack of access to affordable mental health care.

All have a stake in this fight, and a contribution to make.

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Medicaid Faces Many Perils

• Election campaign & candidate pledges

• The Election

• The Fiscal Cliff & Deficit Reduction Debate

• State Legislature

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RESOURCES

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More Information about the ACAGovernment websites: www.cms.gov;

www.medicaid.gov; www.healthcare.gov

Kaiser Commission on Medicaid and the Uninsured. www.kff.org

Ctr. on Budget and Policy Priorities www.cbpp.org

Families USA Foundation. http://www.familiesusa.org/health-reform-central/

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National Advocacy Resources:

• National Health Law Program’s “Medicaid Expansion Toolbox”: http://www.healthlaw.org/index.php?option=com_content&view=article&id=703&Itemid=516

• American Public Health Association’s Health Reform website with fact sheets and other resources: http://www.apha.org/advocacy/Health+Reform/

• The Herndon Alliance provides info re. how to talk to the public about health reform, which messages work and which don’t: http://herndonalliance.org/table/resources/

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Kentucky Resources

For Kentucky-specific research and advocacy resources:

State and county-level data on health and access to care http://www.kentuckyhealthfacts.org/

Kentucky Voices for Health www.kyvoicesforhealth.org/reform.html

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Atul Gawande in the New Yorker“Getting There From Here: How should Obama reform health care?” The New Yorker, 1/26/09 http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande

“The Cost Conundrum: What a Texas town can teach us about health care” The New Yorker, 6/1/09 http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

“Testing, Testing: The health-care bill has no master plan for curbing costs. Is that a bad thing? The New Yorker, 12/14/09 http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande

“The Hot Spotters:Can we lower medical costs by giving the neediest patients better care?” The New Yorker, 1/24/11 http://www.newyorker.com/reporting/2011/01/24/110124fa_fact_gawande?currentPage=all

“Big Med:Restaurant chains have managed to combine quality control, cost control, and innovation. Can health care?” The New Yorker, 8/13/12 http://www.newyorker.com/reporting/2012/08/13/120813fa_fact_gawande#ixzz239NTLaiD

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Thank You!

Gordon Bonnyman

Tennessee Justice Center

Phone: 615-255-0331 Phone: 615-255-0331

Toll free: 877-608-1009Toll free: 877-608-1009

FAX: 615-255-0354FAX: 615-255-0354

gbonnyman@tnjustice.orggbonnyman@tnjustice.org

www.tnjustice.orgwww.tnjustice.org

Anne HadreasHealth Law Fellow

Kentucky Equal Justice Center201 West Short Street, Suite

310Lexington, KY 40507859-233-0323 phone

859-233-0007 faxahadreas@kyequaljustice.org