What Can Californians Expect in 2014?: Analyzing our future with the Affordable Care Act Dylan H. Roby, PhD Assistant Professor of Health Policy and Management UCLA Fielding School of Public Health Director of Health Economics and Evaluation Research UCLA Center for Health Policy Research March 12, 2013

Agenda  Early Success Toward Expanded Coverage  Affordable Care Act Coverage Expansions  Medi-Cal Expansion for Childless Adults  Medi-Cal Eligibility Determination Improvements  Health Insurance Exchange Creation  Estimates from CalSIM  Remaining Uninsured  County vs. State Roles  Utilization of Newly Insured

Early Success Toward Expanded Coverage

Background  §1115 Medi-Cal Hospital/Uninsured Care Demonstration ( )  Authorized $180 million in federal funds to be spent each year ( ) on five or more county-based pilot programs  Ten counties approved  Health Care Coverage Initiatives  Eligibility based on income (0-200% of FPL), citizenship or legal residency (5 year threshold), adults without insurance aged

Health Care Coverage Initiatives  Programs built on existing county indigent care  Certified Public Expenditures used to draw down federal funds  Benefit package similar to Medicaid  Limited formularies, often lacked behavioral health  Coverage was not portable, even in emergencies  Participants  Point-of-Service enrollment in most counties  Certain counties did some outreach to non-users

Cumulative HCCI Enrollment Alameda10,484 San Diego4,500 Contra Costa18,440 Kern10,764 Los Angeles70,949 Orange49,396 San Francisco24,825 San Mateo8,914 Santa Clara23,116 Ventura15,153 Total236,541 Source: UCLA analysis of HCCI enrollment data Los Angeles, Alameda and San Diego had condition or use- based criteria for enrollment. Every HCCI county used 200% of FPL threshold except for Los Angeles (133.33% FPL).

Waiver Renewal  The 2010 “Bridge to Reform” waiver continued and expanded the county coverage programs  Low Income Health Programs (LIHP)  All 58 counties eligible to participate  Two components  Medicaid Expansion (LIHP-MCE): Up to 133% FPL  Coverage Initiative (LIHP-CI): % to 200% FPL  Benefits standardized, includes behavioral health, HIV/AIDS, and out-of-county emergency services

LIHP Programs: CMSP Consortium Merced, Fresno, and San Luis Obispo opted out Tulare, Santa Barbara, and Monterey are pending Newest addition: Sacramento

Current LIHP Enrollees by County & Income *CMSP is the County Medical Services Program, a consortium of 35 counties. Source: UCLA analysis of LIHP enrollment data, September 30, 2012.

Affordable Care Act Coverage Expansions

Expanding Medi-Cal  Federal law allows for expansion up to 133% of FPL (with a 5% income disregard)  Biggest category of new eligibles will be childless adults who did not meet old “categorical” criteria  100% matching in for newly eligible  In 2017, matching reduced to 95% and scaled down to 90% by 2020  50% administrative match  Existing Medi-Cal eligibles (even if un-enrolled) are subject to 50% match

Modernizing Medicaid Eligibility  The Affordable Care Act provides 90% match to:  Simplify and Streamline Eligibility  County-purchased Welfare Systems (SAWS)  California Healthcare Eligibility, Enrollment and Retention System (CalHEERS)  Tax Data Available for real-time eligibility determination  Quickly calculate premium subsidies or re-direct Medi-Cal eligibles  Use Modified Adjusted Gross Income (MAGI) criteria for calculating eligibility  Enable “No Wrong Door” enrollment

Insurance Reforms  Guaranteed Issue in Small Group and Individual Market  Modified Community Rating  Age, Region, Family Size, and Smoking Status  Pricing Constraints within products  Essential Health Benefits “Benchmark”  Minimum Essential Coverage Requirement  Requirements for Employer Offering (50+ FTE)

Covered California (2014)  Online Marketplace for purchasing insurance  Individuals w/o affordable employer-based coverage  Advance Premium Tax Credits based on income  Small businesses (50 FTE or fewer) and their employees  Cannot be otherwise eligible for Medi-Cal  e.g. Lawful permanent residents living in U.S. for 5 years or less cannot get Medicaid under federal law, but will be eligible for tax premium subsidies  Standardized Plans for Actuarial Value Tiers

Estimates from CalSIM

California Simulation of Insurance Markets (CalSIM)  Developed by UC Berkeley Center for Labor Research and Education and UCLA Center for Health Policy Research with support from The California Endowment  Enrollment estimates produced for Covered California  Base and Enhanced Scenarios  Predicts the impact of the Affordable Care Act (ACA) on employer decisions to offer coverage and individual decisions to obtain coverage in California  Uses public data sources—mostly state-specific, including California Health Interview Survey

1.46 million Californians Will Be Newly Eligible for Medi-Cal Newly Eligible for Medi-Cal by Source of Insurance without the ACA, 2019 Source: UC Berkeley-UCLA CalSIM model, version 1.8 Total Eligible: 1,460,000

Nearly half of newly eligible are Latino Source: UC Berkeley-UCLA CalSIM model, version 1.8 Californians under Age 65 Newly Eligible for Medi-Cal, Base Scenario, 2019 English ProficiencyRace/Ethnicity

The Majority of Those Eligible for Medi-Cal, but Not Enrolled, Have Another Source of Coverage Eligible for Medi-Cal but Not Enrolled by Source of Insurance without the ACA, 2019 Source: UC Berkeley-UCLA CalSIM model, version 1.8 Total Eligible: 2,530,000

Medi-Cal Enrollment Increase Among Those Already Eligible  240, ,000 expected to enroll by 2019  71% of those eligible are children, remainder are parents  Most of increase will happen regardless of the Expansion due to mandatory provisions of ACA:  minimum coverage requirement for individuals;  simplified eligibility, enrollment & renewal processes; and  improved awareness of coverage.

In total, Medi-Cal predicted to grow by 1 million or more by Source: UC Berkeley-UCLA CalSIM model, version 1.8 Californians under Age 65 Predicted to Take Up in the Subsidized Exchange and Medi-Cal, (in millions) Enhanced Base Enhanced Base

Federal Government Will Pay for at Least 85% of New Medi-Cal Spending Source: Lucia L, Jacobs K, Watson G, Dietz M and Roby DH. Medi-Cal Expansion under the ACA: Significant Increase in Coverage with Minimal Cost to the State. January Share of New Medi-Cal Spending Federally-Paid with Expansion

Most New State Spending Not Due to Expansion in New State General Fund Spending with Expansion ($ millions) Source: Lucia L, Jacobs K, Watson G, Dietz M and Roby DH. Medi-Cal Expansion under the ACA: Significant Increase in Coverage with Minimal Cost to the State. January 2013.

The Remaining Uninsured

3 to 4 Million Californians are Predicted to Remain Uninsured in 2019 Uninsured Californians under age 65, 2019 Source: UC Berkeley-UCLA CalSIM model, v1.8

County vs. State Roles

Need for County Safety Net  Remaining Uninsured  Half are not subject to mandate due to documentation or unaffordable insurance premiums  Continued Uncompensated Care Burden  Reductions in Disproportionate Share Hospital Subsidies  Welfare & Institutions Code responsibility as provider of last resort

Shifting of Responsibilities  To pay for future cost of Medi-Cal expansion (2017 and on)  Governor is pushing for some re-alignment of indigent care funds from county to state  LAO estimates that amount to be $800M to $1.2B/yr  Governor hypothesizes that new paying patients will reduce need for county indigent care  State-run expansion vs. county-based LIHP expansion  Even counties like LA prefer state-run Medi-Cal Expansion

Will Newly Insured Demonstrate Higher Use of Services?

Consequences of ACA Coverage Expansion  Potential for increased use of services  1.2 to 1.6 million estimated to enroll in Medi-Cal  49% to 60% previously uninsured (180k in Healthy Fam)  Almost 500,000 coming from LIHPs in January 2014  1.7 to 2.1 million estimated to enroll in subsidized Exchange  46% to 56% were previously uninsured  2.1 million estimated to enroll in individual market without subsidies Source: UC Berkeley – UCLA CalSIM Base and Enhanced Models version 1.8

Does Demand for Care Increase after new insurance coverage?  Oregon’s Randomized Medicaid experiment (1 year)  Outpatient Care (+35%)  Prescription Drugs (+15%)  Hospital Admissions (+30%)  ER use did not experience a change  25% increase in overall expenditures  Preventive service use increased substantially  Use differs along the spectrum of insurance coverage  Long-Term vs. Intermittent Uninsurance  Public versus Private Coverage

Recent Analysis of HCCI Data  Decrease in ER and IP use over three years  After initial spike in use  Newly Covered have lower average use than their Previously Covered counterparts over time  ER and IP decreases most, but Primary Care stable  Specialty visits surged temporarily, but diminished substantially in years 2 and 3  Assumptions about newly insured may be incorrect

Conclusions  62% of Remaining Uninsured will live in Los Angeles or other Southern California counties  Continued need for county-based safety net  Phase-in of Medi-Cal and Exchange adoption  In previous experience in CA, it took four years to reach maximum enrollment (Base)  Need to target LEP population and engage in transition of LIHP enrollees to meet targets (Enhanced)  Future Projections for California  Understanding demand for services for newly insured

Contact Information CalSIM Team: Gerald Kominski, Ken Jacobs, Greg Watson, Dave Graham-Squire, Xiao Chen, Miranda Dietz, Laurel Lucia, Daphna Gans, Nigel Lo, Yafeng Zhang, and Jack Needleman LIHP Team: Gerald Kominski, Nadereh Pourat, Livier Cabezas, Erin Salce, Dimiter Milev, Elizabeth Lytle, and Max Hadler