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

Medicaid: A Partnership December 6, 2018 Medicaid: A Partnership Federally authorized, State administered Federal mandates, State options Eligibility Benefits Reimbursement Service delivery arrangements States buy health care in the marketplace New Medicaid options - “Benchmark” benefits and enforceable cost-sharing for some populations - New options for reforming long term care - New options to expand eligibility - Health Opportunity Accounts New Medicaid requirements - Citizenship documentation - Asset transfer limits for long term care - Restricted use of Case Management

State Plan Describes Program December 6, 2018 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 Waive statewideness, free choice of provider, eligibility requirements, comparability to promote home and community alternatives to institutional care, to cover groups not otherwise eligible for federal matching funds, to experiment with new delivery and financing arrangements

December 6, 2018 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)

Federal Medical Assistance Percentages (FMAP), FY 2009 NH VT WA ME MT ND MN MA OR NY ID SD WI MI RI WY CT PA IA NJ NE OH IN NV IL IL WV DE UT VA CO VA MD CA KS MO KY NC DC TN OK SC AR AZ NM AL GA MS TX LA 50% minimum, 83% maximum (not counting any temporary “stimulus” bump AK FL HI 71+ percent (6 states) 62 to <71 percent (19 states including DC) 51 to <61 percent (12 states) 50 percent (14 states) SOURCE: Federal Register, November 28, 2007 (Vol. 72, No. 228), pp 67305-67306, at http://edocket.access.gpo.gov/2007/pdf/07-5847.pdf and correction for North Carolina at Federal Register, Friday, December 7, 2007 (Vol. 72, No. 235), p. 69285, at http://edocket.access.gpo.gov/2007/pdf/C7-5847.pdf. December 6, 2018

How States Finance Medicaid December 6, 2018 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) In May 2008 CMS published a final regulation that would impose new restrictions on when and how states can claim use CPEs or IGTs in relationship to publicly operated providers (like public hospitals). Very controversial, Congress placed the regulation under a moratorium and that moratorium was extended by the Supplemental Appropriations Act of 2008 until April 1, 2009. The regulation may be further extended by the stimulus package.

Medicaid = State Budget Challenge December 6, 2018 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!

= & Impact of a 1% Growth in Unemployment 1% $3.4 b $1.4 b State 1.1 m December 6, 2018 Impact of a 1% Growth in Unemployment 1% increase in unemployment also = a 3-4% decline in state revenues $3.4 b $1.4 b State 1.0% 1.1 m 1.0 m = & 1% $2.0 b Federal Increase in National Unemployment Rate Increase in Medicaid and SCHIP Enrollment Increase in Uninsured Increase in Medicaid and SCHIP Spending (billion) Source: Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, Kaiser Commission on Medicaid and the Uninsured, April 2008

Medicaid Grows Faster than State Revenue December 6, 2018 Medicaid Grows Faster than State Revenue Overall Medicaid spending increased by just 2.8% in FY 2006. This was one of the lowest rates of spending growth in the history of the program. For the first time since 1999, Medicaid spending growth was less than growth in state revenues. This has changed the atmosphere in which Medicaid policy making occurs. NOTE: State Tax Revenue data is adjusted for inflation and legislative changes. Preliminary estimate for 2006. 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.

Controlling Medicaid Spending December 6, 2018 Controlling Medicaid Spending Short-term (balance the budget!) Eligibility Benefits/cost-sharing Reimbursement*

State Medicaid Cost Containment Strategies FY 03–07 December 6, 2018 Cut rates, benefits or people Try to get better value for dollars spent Reduce underlying costs 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

Medicaid Total Spending Projected to Double to Over $700 Billion in Ten Years: 2007 - 2017 December 6, 2018 All funds: Federal, State and Local Source: Health Management Associates estimates based on data from CBO and CMS, 2007.

State Medicaid Challenge December 6, 2018 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

Health Costs a Shared Concern December 6, 2018 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