K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 0 Medicaid and the Economy Diane Rowland and Robin Rudowitz Henry J. Kaiser Family Foundation for Alliance for Health Reform Washington, DC January 9, 2009

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 1 Medicaid Overview

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 2 Medicaid Today Health Insurance Coverage 29.5 million children & 15 million adults in low-income families; 14 million elderly and persons with disabilities State Capacity for Health Coverage Federal share ranges 50% to 76%; 44% of all federal funds to states MEDICAID Support for Health Care System and Safety-net 16% of national health spending; 42% of long-term care services Assistance to Medicare Beneficiaries 8.8 million aged and disabled 19% of Medicare beneficiaries Long-Term Care Assistance 1 million nursing home residents; 2.8 million community-based residents

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 3 NOTE: Does not include spending on SCHIP SOURCE: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Expenditure Accounts, January Total National Spending (billions) $2,098$697$702$131$228 Medicaid as a share of national health care spending: Medicaid in the Health System, 2007

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 4 Medicaid Enrollees and Expenditures by Enrollment Group, 2005 Children 18% Elderly 28% Disabled 42% Adults 12% Children 50% Elderly 10% Disabled 14% Adults 26% Total = 59 millionTotal = $275 billion SOURCE: Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates based on 2005 MSIS data.

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 5 Median Medicaid/SCHIP Income Eligibility Thresholds, 2008 Federal Poverty Line (For a family of four is $21,200 per year in 2008) SOURCE: KCMU/Urban Institute analysis of March 2008 CPS.

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 6 Medicaid and the Economy

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 7 Economic Situation is Severe 44 states facing budget shortfalls in FY 2009 or 2010 –30 with budget shortfalls headed into FY 2009 of $48 billion –41 states facing mid-year budget gaps of $42 billion –38 states already projecting FY 2010; gaps could total $145 billion State revenues falling short Unemployment rising –6.7% unemployment in Nov (up from 4.7% in Nov. 2007) –2 million jobs have been lost over the last year States required to balance their budgets

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 8 During the Economic Downturn Medicaid enrollment and spending growth peaked in 2002 at the same time state revenues dropped sharply States adopted an array of cost containment strategies to control Medicaid spending growth Congress enacted legislation to provide temporary fiscal relief –Half in block grant / half in increased FMAP –2.95% increase in the FMAP for all states –15 months (May 2003-June 2004) –States had to agree to maintain Medicaid eligibility

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 9 How States Used Increased Federal Medicaid Matching Funds from Temporary Fiscal Relief in FY2004 SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, January Helped Resolve a Medicaid Budget Shortfall Helped Avoid, Minimize or Postpone Additional Medicaid Cuts or Freezes Helped Resolve a Shortfall in the State General Fund Budget

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 10 Medicaid is an Economic Engine in State Economies State Medicaid DollarsFederal Medicaid Matching DollarsInjection of New Money Health Care Services Vendors (ex. Medical Supply Firm) Direct Effects Employee Income Indirect Effects Consumer Goods and Services Taxes Induced Effects JOBS

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 11 Percent Change in Medicaid Spending and Enrollment, FY FY 2009 NOTE: Enrollment percentage changes from June to June of each year. Spending growth percentage changes in state fiscal year. Figures for 2009 do not include CA. The CA budget was adopted on 9/23/08 but caseload and spending projections for FY 2009 were not available. SOURCE: Enrollment Data for : Medicaid Enrollment in 50 States, KCMU. Spending Data from KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates. FY 2007, FY 2008 and FY 2009 data based on KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, September 2008.

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 12 Update from the Medicaid Directors Impact varies, but the economic downturn is affecting all states Over half of Medicaid directors report spending & enrollment exceed projections from the start of FY 2009 Many facing mid-year cutbacks in FY 2009 and 2010 could be worse Directors find it difficult to identify options for savings after aggressive cost containment during the last downturn Medicaid directors believe the highest priority for federal action should be a temporary adjustment in the Medicaid FMAP followed by SCHIP reauthorization and withdrawal of regulations under moratoria

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 13 Source: Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, Kaiser Commission on Medicaid and the Uninsured, April % Increase in National Unemployment Rate = Increase in Medicaid and SCHIP Enrollment (million) Increase in Uninsured (million) & $2.0 $1.4 $3.4 Increase in Medicaid and SCHIP Spending (billion) State Federal 1% increase in unemployment = a 3-4% decline in state revenues Unemployment Rate increased from 4.7% to 6.7% (2% Points) from November 2007 to November 2008

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 14 Families Affected by the Economic Downturn Impact of the Economy on Families –Individuals with seemingly secure jobs laid off and unable to find new jobs –Families struggling to pay rent/mortgage, food, utilities and health care –Individuals lost jobs and ESI – could not afford COBRA or other coverage –Unemployment benefits often disqualified them from Medicaid –Many not getting needed care Role of Medicaid –Many 1st time applicants – unfamiliar with public assistance –Medicaid has been a success – critical for access to care particularly for children –Better outreach, easier application processes and broader coverage options for adults could better help families in need

K A I S E R C O M M I S S I O N O N Medicaid and the Uninsured Figure 15 Options for Consideration Direct federal funding support for Medicaid –Enhanced FMAP (how much, how long, conditions) –Shift Medicare related expenses to the federal government –Rescind proposed regulations currently under moratoria Reauthorize SCHIP Improve eligibility simplification and outreach Mitigate the burdens of the DRA imposed citizenship and identity documentation rules Expand Medicaid to additional populations affected by the recession