Kathy H. Kliebert Secretary Louisiana and the Affordable Care Act October 8, 2013

Today’s Discussion Louisiana’s Perspective on the ACA’s Impact to Medicaid Expansion Health Insurance Marketplace ACA Implementation Redefining the Safety Net System DHH Business Plan 2

ACA’s Impact on Louisiana: (Medicaid Expansion)

Expansion – Risky Business As of Louisiana’s most recent analysis, 10-year impact figures range from $490 million in savings to $1.64 billion in new state costs. 4

37 states would have Medicaid populations (as a percentage of state residents) at or below where Louisiana is today (29%), according to Kaiser figures. According to Kaiser projections, La. would have the second highest percentage of its population on Medicaid if all states expanded – 39%. Expansions Not Created Equal 5

Expansion: Not all Uninsured = 10,000 people Almost 260,000 would have been newly eligible individuals that were previously uninsured More than 20,000 would have been individuals currently eligible but not enrolled Nearly 187,000 would have come from private insurance rolls Louisiana Medicaid under ACA 6

ACA’s Impact on Louisiana: (Health Insurance Marketplace)

Consumer Impact Biggest impact from increased costs as employers pass along premium increases linked to new insurance rules like: Premiums can only vary by family size, geography, tobacco use, and age Age variance limited by new rules – largest impact to young healthy people Kids can remain on parents policies until age 26 No denials for pre-existing conditions, and A transitional risk adjustment fee that will cost $63 per plan participant in the first year. If an individual is not covered by “minimum essential” health care coverage, they face an individual mandate tax. AHIP/LAHP study estimates that ACA premium tax alone will force policyholders in La. to pay over $2,000 more for single coverage and over $4,500 more for family coverage over the next ten years. 8

The Employer Mandate Treasury announced one-year delay – signaling major concerns with fall-out. Now, beginning in 2015, large employers (50+ FTEs) will be mandated to offer affordable coverage to full-time employees or face significant monetary penalties. 9 Pushing the “train wreck” further down the tracks?

10 Source: New York Times Economix The current “50 Employee” Cliff – will be exacerbated by provisions of ACA The cost to go from the 49 th to 50 th FTE is $40,000 for business that do not offer “affordable” coverage. This is a significant disincentive for small businesses to grow beyond this threshold. Steepening the “50 Cliff”

Trickle Down to State Budgets? Employer mandate will have largest impact to employers with predominantly low-wage jobs, forcing them to pass costs on to customers. Major implication for state budgets: home and community-based service providers in Medicaid. Low-wage direct-care jobs that often do not provide health insurance today. Unlike other businesses, costs cannot be easily passed on to consumers, who in this case are often state Medicaid programs. Already increasing rate pressure for states to pay more. 11

Provider Perspective ACA will cause immediate changes and shifts in long-term market forces – with implications for state budgets. In the short run: Revenue will shift from uncompensated care to insurance for some individuals. Health systems may not be better off in Expansion states as individuals shift from private coverage to Medicaid – in Louisiana there are nearly 250,000 individuals who would either fall off private coverage or lose access to subsidized coverage on the exchange should Louisiana expand Medicaid. Pent up demand may overwhelm the system’s capacity to treat and serve. Over time: Market forces will encourage consolidation and integration (e.g., ACO’s, bundled payments) - Insurers and state policy makers will have to watch carefully as this activity may place upward pressure on rates. 12

ACA Implementation

No Expansion + No Exchange ≠ No Work Even given a decision to not expand Medicaid or established a state- based Exchange, states still face significant requirements and mandates related to ACA. For example, Louisiana (and other states): Must convert current income standards to the new MAGI standard for determining Medicaid eligibility. This will require extensive staff training and modifications to the Eligibility system and external interfaces. Created new interface to communicate with the Federally Facilitated Exchange to share applicant account data for October 1, DHH is had to retrofit existing systems and created new functionality to ensure real-time eligibility decisions. Developed a new “intuitive” single streamlined online application as defined by CMS for October 1, New online application must provide for real time eligibility decisions by January 1,

Enrollment on the Marketplace has begun Louisiana will have a federally facilitated marketplace, but still many unknowns Continual delays of key provisions challenge implementation Uncertainties regarding outreach efforts, information and confusion will have impacts on all of us Despite the uncertainties, DHH has been able to make the necessary changes to Medicaid for the October 1 st deadline and will continue to make these changes for the January 1 st deadline. ACA Implementation

Redefining the Safety Net System

Reduction in FMAP funding posed a challenge. Opportunity for reform. Key strategies: Local community partnerships. New models of delivery. Focus on strengthening graduate medical education. Redefining the LSU Health System

Baton Rouge Earl K. Long Medical Center with Our Lady of the Lake Medical Center and Woman’s Hospital Bogalusa Bogalusa Medical Center with St. Elizabeth (Our Lady of the Angels) FMOL New Orleans Interim LSU Hospital and University Medical Center with Louisiana Children’s Medical Center Houma Leonard J. Chabert Hospital with Ochsner Health System and Terrebonne General Medical Center Lake Charles Walter O. Moss Medical Center with Lake Charles Memorial Hospital and West Calcasieu Cameron Hospital Lafayette University Medical Center (University Health Center) with Lafayette General Shreveport/Monroe LSU Shreveport and EA Conway with the Biomedical Research Foundation Alexandria Huey P. Long with Rapides Medical Center and CHRISTUS St. Francis Cabrini Hospital Establishing Partnerships

DHH Business Plan

Highlights transformational priorities in three main themes: Building Foundational Change for Better Health Outcomes Promoting Independence through Community Based Care Managing Smarter for Better Performance DHH’s Big Bets and Business Plan

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