1. Interstate Health Compact Concept: An Advocate’s Perspective August 30, Anne Dunkelberg, Assoc. Director, Center for Public Policy Priorities, 900 Lydia Street - Austin, Texas Phone (512) (X102) – 1

2. SB 7 (82-1) Interstate Health Compact: Big Picture Concerns
If federally approved, would Allow Texas to request block grant of all federal health funds (except Veterans’ care and Indian health), at the funding level.
This language would authorize state to block grant Medicare, Medicaid, CHIP, FQHCs, and all federal health public health and mental health block grants.
Could fundamentally change Medicare to a program which is different in every state.
Current US Senate and President would not approve; but a different Senate and administration could approve a compactor simply change federal law to let all states opt out of federal programs and laws at will.

3. SB 7 (82-1) Interstate Health Compact: Big Picture Concerns
Texas Compact assumes:
Too much is being spent in Texas existing safety net, too many are being served, and too generous benefits are being provided,
Asks for permission to reduce who is covered and/or what health care they get.
Makes no provision to make affordable coverage available to the 6.4 million un insured Texans.
Texas would give up:
current entitlement to federal matching funds for Medicare and Medicaid that increase along with inflation and population need (e.g., in recessions and disasters).
Texas would be locked in at current Medicaid per-enrollee expenditure levels around $600 below the national average.
HHSC reports Texas has spent or will spend $6.7 billion in ARRA Medicaid fiscal relief (FY ). Do we want to opt out of this kind of relief in future recessions?

4. SB 7 (82-1) Interstate Health Compact: Big Picture Concerns
Texas would lose new insurance coverage and federal dollars under the Affordable Care Act in 2014:
$120 billion in new Federal funds for Texas from ACA premium tax credits and Medicaid expansion would be lost:
Texas Comptroller and Texas HHSC estimate for Medicaid :
State Medicaid costs will increase $5.8 B
Federal funds for Texas will grow $76.3 B
Texas will gain $43.5 B in federal dollars for sliding-scale Exchange help to buy private coverage (no state match).
This funding would be lost under a compact that locks Texas in at federal funding. (

5. Texas Uninsured by Income Today… 88% of 6
Texas Uninsured by Income Today… 88% of 6.4 million uninsured <400% FPL
758K
1.752 Million
628K
6.4 million includes 1.6 million non-citizens; ~2/3 of these ( just over 1 million) likely undocumented
525K
1.170 Million
693K
901K
Annual income limits given for a family of four, 2009 federal poverty level U.S. Census, CPS

6. Health Care Spending Must be Controlled, Not Medicaid Alone
U.S. Health Care growth rate is "unsustainable," and must be controlled to keep within population, general inflation, and GDP growth.
Texas must aggressively promote delivery payment reforms across the entire health care system, not just Medicaid but also your insurance and mine -- and Medicare.
Medicaid is NOT uniquely troubled by rising care costs:
the CBO reports that growth rates for Medicare, Medicaid, and "All Other" U.S. health spending have out-stripped GDP growth consistently since 1975.
Medicare logged the highest cost growth in excess of GDP, and
Medicaid "tied" with All Other health spending over that entire period, despite having grown at a much slower rate than the rest of the system since 1990.
The changes needed to reduce federal deficits and debt will not be made simply by cutting or eliminating Medicaid.
Real solutions to our country's health care spending woes will only come from hard work that looks across all of the population and every source of coverage. 6

7. Deficit Reduction YES; Abandoning the Poor NO
The House/Ryan budget plan takes two-thirds of its spending cuts from low-income programs, and then uses those cuts to offset the cost of making the Bush tax cuts permanent and prevent defense cuts, not to reduce the deficit.
Don’t ask the poorest Americans to carry most of the load. Cuts to keep federal spending growth under control must protect essential services for the poor including Medicaid.
• Americans agree: Latest polls show a large majority of Americans oppose major cuts to Medicare and block- granting Medicaid to reduce federal deficits.
59 percent of Americans oppose any Medicare cuts at all;
53 percent of Americans oppose any Medicaid cuts at all, and
60 percent oppose making Medicaid a block grant. 7

8. Cato Cost Analysis Overstated?
TPPF has relied heavily on Cato Institute analyses that have been widely critiqued
TPPF has drawn these alarming numbers from those projections:
Texas Medicaid will account for 46.6% of the Texas all funds budget in
Texas Medicaid GR spending will grow by 866% from 2009 to 2040
Key questions /issues with Cato model:
Very high participation assumptions,
inaccurate estimates of per beneficiary cost and
failure to consider savings that health reform will generate to the state, for example reductions in uncompensated care
“adventurous” assumptions that the federal Medicaid matching rate after 2020 for those newly eligible for Medicaid under health reform will drop from 90% to the standard FMAP.
per beneficiary costs assumed to make these estimates are not defined nor is their source explained,
the participation rates (take-up-rates) assumed among Medicaid eligibles are not defined, nor is a methodology or rationale provided.
See CBPP report ( ).

9. Cato’s estimates of state cost under ACA quite high compared to other existent estimates.
The primary reason for this appears to be unrealistically high enrollment projections, including assumed take-up rates in excess of 90%.
For example, the CBO estimates total additional Medicaid enrollment for all 50 states under ACA in 2019 at 16M, while Cato estimates nearly 14M in 2020 in just five states that currently make up only 40 percent of total Medicaid program enrollment.
The Kaiser Family Foundation released similar health reform cost estimates for all the states.
The author of the Cato Institute acknowledges that his estimates are much higher than KFF’s – and states that this is because the KFF estimates “appear to exclude cost increases from new Medicaid enrollments of ‘old eligibles’ arising from ObamaCare’s individual mandate to purchase health insurance”.
This is inaccurate; the KFF analysis does include costs associated with enhanced enrollment among those currently eligible for Medicaid. However, KFF defines a robust rate of participation at 75%.
100 percent participation has never been achieved in any means-tested program in the decades those programs have operated.
The ACA exempts all persons with incomes below the federal income tax filing threshold from the individual mandate; thus most Medicaid-eligible persons would not be subject to the mandate or penalties.

11. Cato Cost Analysis Overstated?
Cato model assumed that individuals who are already covered with private insurance coverage are just as likely to enroll in Medicaid as are uninsured persons (an assumption not supported by any current data or research).
Cato models in both the Cato working paper and the TPPF report use questionable assumptions regarding historical Texas Medicaid enrollment.
For example, HHSC reports annual average Medicaid enrollment for FY 2008 at 2.9 million,
but TPPF’s Final Notice report (table 1 page 7) asserts that figure for 2008 to be 4.4 million (the Cato report only describes enrollment increases, and does not provide a base enrollment figure for 2008).

12. Enrollment Growth Rate Assumptions
TPPF report projects Texas Medicaid enrollment will jump from 3.5 million as of 9/1/2011 (per Texas HHSC) to 5.2 million in 2014, without implementation of the Affordable Care Act.
TPPF further projects that with the Affordable Care Act, Texas Medicaid enrollment would jump an additional 3.3 million to a total of 8.6 million in the year 2014, the very first year in which adult Medicaid eligibility is increased.
According to the US Census, fewer than 3 million of the 6.4 million uninsured Texans in 2009 had incomes below 150% FPL, and the Medicaid upper limit in 2014 will be a lower amount, 133% FPL.
The Census’ 6.4 million uninsured include an estimated 1.0 million undocumented residents, who do not and will not qualify for Medicaid coverage, so the number of Medicaid-eligible uninsured Texans today is substantially lower than 3 million.
Cato assumption of 5.1 million more Texans below 133% FPL joining Medicaid by the end of 2014 would therefore require some combination of (1) large numbers of privately insured Texans dropping their insurance for Medicaid, (2) extraordinary population growth, and/or (3) dramatic growth in the Texas poverty rates.
Starting with very high base numbers for and 2014, the model applies very high take-up assumptions, resulting in very high numbers for 2020, 2030, and 2040
Moreover, these long-term estimates are of little value when not presented in the context of population and inflation growth or total projected state budget spending in those years.

13. Cato Cost Analysis Overstated?
Cato income thresholds assumed for modeling adults’ current Texas Medicaid eligibility appear to be too high.
For example, Cato methodology states that Texas adults are covered by Medicaid if they have a Medicaid-eligible child.
In fact, this is not the case; parental coverage is limited to the 1996 cash assistance income threshold, which currently cuts off parental Medicaid coverage in Texas at 12% of the FPL for an unemployed parent, or 20% FPL for a working parent. As of March 1, 2011, 2.4 million Texas children were enrolled in Medicaid, but fewer than 196,000 parents.
Cato author trends forward estimated costs per enrollee who receives Medicaid-paid health services, as opposed to average cost per enrollee in Medicaid; the latter and larger number always includes a significant percentage of enrollees who receive no care. In succeeding stages of the Cato analysis, these higher per-care-recipient costs appear to be used in place of the average cost of care for total enrollees, again driving up the estimated costs.
Each of the assumptions used above would increase projected enrollment and costs, and affect both the estimates of Medicaid costs with and without the Affordable Care Act.

14. Uninsured Texans by Age Group, 2009
6.4 million uninsured
Source: U.S. Census 14 14

15. Texas Medicaid/CHIP: Who is Helped Today
March 2011, HHSC data
Total enrolled 3/1/2011: 3.5 million Medicaid; 533,000 CHIP 15 15

16. Look Beyond the Sound Bite: Proposed Changes in DC (1)
Medicare
U.S. House Budget Committee Chairman Paul Ryan’s budget resolution—approved by the U.S. House but not the Senate—
would convert Medicare to a voucher program in which Medicare will pay less for care, but seniors would have to pay twice as much out of pocket to get the same coverage.
would also end today’s sliding-scale help for very low income Medicare beneficiaries, & replace with new program that would leave average senior in poverty (less than $10,890/yr.) with $4,700 in annual out-of-pocket costs—43% of their income.
Medicaid
Ryan budget plan would turn Texas Medicaid into a block grant that would:
By 2030, cut Medicaid funding in half,
Would lock in today’s Texas Medicaid spending per enrollee at $600 below the national average, and
end our current protection of increased federal support in disasters and recessions.

17. Look Beyond the Sound Bite: Proposed Changes in DC
Spending Caps Alone Can Cut Medicare and Medicaid Just as Deeply
Several other proposals for hard caps on spending—whether for total federal spending, for Social Security, Medicare, and Medicaid, or just for federal health spending—all have been calculated to cut Medicare and Medicaid just as deeply or even deeper than the Ryan plan.
Balanced Budget Proposals: Even deeper cuts
House Judiciary version of balanced budget amendment would bar federal spending from exceeding 18% of GDP in any year.
Under Ryan budget, federal Medicaid funding in 2030 would be 49 percent lower;
CBO says CBO says Ryan budget federal spending would be 20¼ percent of GDP in 2022 and 20¾ percent of GDP in or TOO HIGH for the BBA 18% cap—so under BBA far deeper cuts would be needed.

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19. Texas Medicaid Enrollees and Expenditures by Enrollment Group (2009)
Source: THHSC

20. We would lose federal funding for:
Why It’s Not That Simple: Medicaid covers America’s Medically Uninsurable
Leaving Medicaid would cause Texas to lose over $16 billion a year (at 2009 levels) in federal matching funds--the number one source of federal dollars in our state budget.
We would lose federal funding for:
Over two-thirds of Texans in nursing homes,
over 55% of Texas births,
virtually all residential services and community services and supports for Texans with physical and intellectual disabilities, and
health coverage for the nearly 3 million Texas children covered today by Medicaid and CHIP.

21. Comparison of Texas Medicaid Physician Office Payments to Medicare and Commercial Insurance Payments
Note: There is no public data on commercial plan payments rates to physicians. Rates are estimated based on the Medicare Payment Advisory Commission's assumptions that Medicare fees average 82% of commercial rates for office visits.; the Medicaid fees reflect the 2 percent cuts for current biennium.

22. Which Texans would Gain Coverage If Reform were Fully Implemented Today?
Of the 6.4 Million Uninsured Texans today…
≈ 2.5 million (adults and kids) would qualify for help with coverage in the exchange
≈ 700,000+ would qualify for exchange coverage at full cost
≈ 1.3 million U.S. citizen adults would newly qualify for Medicaid
≈ 500,000 to 600,000 kids qualify for Medicaid or CHIP right now
CBO predicts ≈ 1.1 to 1.8 million would remain uninsured
≈ 2 Texans gain private exchange coverage for each 1 gaining through Medicaid