Alliance for Health Reform Medicaid Briefing: Role of States Barbara Coulter Edwards, Principal Health Management Associates February 13, 2009

June 24, 2016 Medicaid: A Partnership Federally authorized, State administered Federal mandates, State options Eligibility Benefits Reimbursement Service delivery arrangements States buy health care in the marketplace

June 24, 2016 State Plan Describes Program Centers for Medicare and Medicaid Services (CMS) at HHS must approve State Plan, State Plan Amendments Secretary of HHS has discretion to waive Medicaid requirements State Plan (and waiver Terms and Conditions) become binding on state

June 24, 2016 Financing Medicaid States pay for services, receive federal reimbursement for a portion of spending Federal Medical Assistance Percentage (FMAP) minimum = 50% maximum (‘09) = 75.67% (MS) Varies based on relationship of state’s per capita income to national per capita income FMAP adjusted annually, lagging data (FMAP for administration fixed at 50%, with enhanced percentages for information systems)

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 5 June 24, 2016 VA Federal Medical Assistance Percentages (FMAP), FY 2009 AZ AR MS LA WA MN ND WY ID UT CO OR NV CA MT IA WI MI NE SD ME MOKS OH IN NY IL KY TN NC NH MA VT PA WV CT NJ DE MD RI HI DC AK SC NM OK GA SOURCE: Federal Register, November 28, 2007 (Vol. 72, No. 228), pp , at and correction for North Carolina at Federal Register, Friday, December 7, 2007 (Vol. 72, No. 235), p , at TX IL FL AL 71+ percent (6 states) 50 percent (14 states) 62 to <71 percent (19 states including DC) 51 to <61 percent (12 states) VA

June 24, 2016 How States Finance Medicaid State and/or local general fund revenues appropriated to Medicaid (from sales, income, other general taxes) “Permissible” health care-related taxes and “bona fide” provider-related donations Inter-Governmental Transfers (IGTs) Certified Public Expenditures (CPEs)

June 24, 2016 Medicaid = State Budget Challenge About 22% of total state spending Medicaid costs typically grow at faster rate than state revenues Medical inflation Aging population Policy changes Economy (Medicaid is “counter-cyclical) States must balance their budgets every year!

June 24, 2016 Source: Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, Kaiser Commission on Medicaid and the Uninsured, April 2008 Impact of a 1% Growth in Unemployment 1% Increase in National Unemployment Rate = 1.0 m 1.1 m Increase in Medicaid and SCHIP Enrollment Increase in Uninsured & $2.0 b $1.4 b $3.4 b Increase in Medicaid and SCHIP Spending (billion) State Federal 1% increase in unemployment also = a 3-4% decline in state revenues 1.0%

June 24, 2016 Medicaid Grows Faster than State Revenue NOTE: State Tax Revenue data is adjusted for inflation and legislative changes. Preliminary estimate for SOURCE: KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates and KCMU / HMA Survey for 2006 Medicaid Growth Estimates; Analysis by the Rockefeller Institute of Government for State Tax Revenue.

June 24, 2016 Controlling Medicaid Spending Short-term (balance the budget!) Eligibility Benefits/cost-sharing Reimbursement*

June 24, 2016 State Medicaid Cost Containment Strategies FY 03–07 NOTE: Past survey results indicate not all adopted actions are implemented. SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, September and December 2003, October 2004, October 2005, October 2006

June 24, 2016 Medicaid Total Spending Projected to Double to Over $700 Billion in Ten Years: Source: Health Management Associates estimates based on data from CBO and CMS, All funds: Federal, State and Local

June 24, 2016 State Medicaid Challenge “Bend the trend” of cost growth: Delivery system reforms – HIT, disease management, pay for performance, service integration, centers of excellence Coverage reforms – prevention/primary care, comparative effectiveness, Medicare/Medicaid coordination, community LTC Consumer behavior, community wellness focus Increased rates of private coverage

June 24, 2016 Health Costs a Shared Concern Medicaid buys in the health care marketplace Impacts, and is impacted by, the larger system Can only act within federal parameters Ultimately, can’t resolve Medicaid’s challenges in isolation of the realities of the larger health care system, federal health policy