State Strategies to Cover the Uninsured: The Public Sector December 7, 2005 Charles Milligan, JD, MPH Adequate Health Care Task Force

-2- Preview State Coverage of the Uninsured: Medicaid State Coverage of the Uninsured: Pooling A Closing Thought on “Being Insured”

State Coverage of the Uninsured: Medicaid

-4- Medicaid covers the uninsured in three ways. Outreach: Enroll eligible but enrolled individuals (no policy change needed) Expand eligibility to optional eligibility groups (no federal approval needed) Use a “demonstration” (1115) waiver to cover an expansion group (federal approval needed)

-5- Outreach by itself may target the uninsured who are in the lower income categories...

and who comprise 65% of the uninsured.

-7- In fact, most uninsured children already qualify for Medicaid or SCHIP.

-8- Beyond outreach, states may expand eligibility to optional eligibility groups without a federal waiver... Children up to 185% poverty (Medicaid) or 200% poverty (SCHIP) Pregnant woman up to 185% poverty Poor seniors to 100% poverty Yet a few states are cutting back, too, such as MO and TN

or seek an 1115 federal waiver to cover expansion groups Must be “budget neutral” Thus, savings must be made in other parts of Medicaid to provide coverage In 2001, CMS created a template for this, known as the “HIFA” waiver

-10- Coverage expansion in Medicaid has been successful...

growing by 8.4 million people from

yet this growth reflected substitution as much as coverage of the previously uninsured...

-13- One outcome of substitution is that pressure is increasing on Medicaid provider rates... Providers 1. Cannot cost shift onto Medicare or private insurance (due to “prudent purchasing” by these purchasers) 2. Increase in Medicaid enrollment/patient load heightens the importance of Medicaid rates 3. Providers: “social mission diluted by Medicaid expansions” State Medicaid Program

and another is the so-called “Wal-Mart” bill in Maryland. In the 2005 legislative session, Maryland’s legislature passed a bill on “pay or play” that singled out Wal-Mart. Governor Ehrlich vetoed the bill.

-15- These dynamics are leading to new thinking in Medicaid reform and coverage of the uninsured Create disincentives for substitution of Medicaid for ESI Mirror ESI movement to defined contribution (per capita cap) Create “tiered” programs Benefits Cost sharing Enrollment caps

Create disincentives for substitution of Medicaid for ESI Premium assistance Idaho, Illinois, Michigan Mirror benefits and cost sharing New Mexico, Oklahoma, Utah, Oregon, Tennessee Goals: link to private insurance to: Shore up that market for employer purchasing Shore up provider fees

Mirror ESI movement to defined contribution (per capita cap) Defined contribution: Health Savings Account South Carolina Florida Similarly, one goal is to shore up private insurer and provider markets Another goal is to convert beneficiaries into prudent purchasers

-18- Create “tiered” programs Expansive benefits for mandatory Medicaid eligibles, limited benefits with cost sharing for others Michigan New Mexico Iowa Tennessee Oregon

State Coverage of the Uninsured: Pooling

-20- Other States Are Advancing “Pooling” Approaches to the Uninsured Maine’s “Dirigo” Initiative Connecticut’s “MEHIP” Initiative Yet, absent new finances, underlying economic challenges for coverage expansion remain

Questions Charles Milligan Executive Director, UMBC/CHPDM