December 1, 2009

Medicaid and Simplification States differ on approach Strong desire among states to simplify-process excessively complex Complexity of enrollment process is a function of many factors Desire of state to reach full population Ability of state to fund enrollment levels Concerns about fraud and fraud prevention Litigation that often complicates enrollment process 1

Medicaid Coverage Patchwork Medicaid is not one program Eligibility and income levels created over time by adding new programs Different income levels for various programs Childs age Parents Seniors and Persons with Disabilities Working Disabled Breast and Cervical Cancer 2

Many Eligibility Tests Asset tests Deprivation Disability Definition of Household Defined by family law. Step-parent and siblings income does not count toward eligibility Does not match income tax or food stamp rules Definition changes affect eligibility-wealthy step-parent may make the child no longer eligible for Medicaid 3

Enrollment vs. Funding Health Care Reform may Provide increased federal funding rate for newly eligible populations Provide temporary increased but lower federal funding for current eligibles Require state maintenance of effort (MOE) for eligibility levels and processes Need to resolve how to simplify and yet sort out new vs. current eligibles Will states be required to test assets, deprivation and family size to determine who gets what funding level? 4

Medicaid Under Stress U.S. unemployment rate was 5.5% in 2001 and 2007, but is not expected to return to that level until Mark Zandi, Moodys Economy.com, Per Census Bureau, state tax revenue down over 20% since 2007 State revenues (in real terms) will not return to 2007 levels until Rockefeller Institute of Government,

State Outlook: Continued Fiscal Stress The bottom line is that states will continue to struggle over the next decade because of the combination of the length and depth of this economic downturn and the projected slow recovery. Even after states begin to see the light, they will face the over-hang of unmet needs accumulated during the downturn. The fact is that the biggest impact on states is the one to two years after the recession is over…it will take states nearly a decade to fully emerge from the current recession. Source: NGA, The State Fiscal Situation: The Lost Decade, November 12,

Current status States must balance budgets States are reducing provider rates and program benefits Cannot reduce Medicaid Eligibility but some have reduced CHIP Eligibility ARRA FMAP scheduled to end with a major funding crisis for states-eligibility restrictions may become option Build up demand in Medicaid and other state programs due to budget crisis 7

Challenges What is the effect of Medicaid Expansion on Medicaid networks and Medicaid provider rates? Without help will states be able to afford their existing Medicaid programs at current levels? How does eligibility simplification get done with federal claiming rules? What happens if simplification causes some people to no longer be eligible for Medicaid? Does continuing the patchwork of programs make sense? 8

Conclusion Most states want to simplify their programs Question of whether: States can pay for the increased caseload cost of doing so? Whether federal coverage and claiming rules will allow for the simplification 9