1. Medicaid Financing and Reform
Presented by:
Robin Rudowitz
Principal Policy Analyst
Kaiser Commission on Medicaid and the Uninsured
Second National Medicaid Congress
Medicaid Basics and Overview
June 13, 2007 MC

2. Medicaid Financing OverviewMC

3. Medicaid Today MEDICAID Health Insurance Coverage
27 million children and 14 million adults in low-income families; 8 million persons with disabilities
Assistance to Medicare Beneficiaries
7.5 million aged and disabled — 18% of Medicare beneficiaries
Long-Term Care Assistance
1 million nursing home residents; 43% of long-term care services
MEDICAID
Support for Health Care System and Safety-net
15% of national health spending
State Capacity for Health Coverage
44% of federal funds to states MC

4. Medicaid Expenditures by Service, 2005
DSH Payments
5.6%
Home Health and Personal Care
13.3%
Inpatient
13.9%
Mental Health
1.5%
Physician/ Lab/ X-ray %
ICF/MR
4.1%
Outpatient/Clinic
7.0%
Long-Term
Care
34.2%
Acute
Care
60.2%
Nursing
Facilities
15.2%
Drugs
10.0%
Other Acute
6.4%
Payments to Medicare
2.8%
Payments to MCOs
16.3%
Total = $305.3 billion
SOURCE: Urban Institute estimates based on data from CMS (Form 64), prepared for the Kaiser Commission on Medicaid and the Uninsured. MC

5. Medicaid Enrollees and Expenditures by Enrollment Group, 2003
Elderly 11%
Elderly
28%
Disabled 14%
Adults
26 %
Disabled
42%
Children
49%
Adults 12%
Children 18%
Total = 55 million
Total = $234 billion
SOURCE: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on 2003 MSIS data. MC

6. Medicaid Payments Per Enrollee by Acute and Long-Term Care, 2003
$11,659
$10,147
Long-Term Care
Acute Care
$1,799
$1,410
SOURCE: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on 2003 MSIS and CMS 64 data. MC

7. Health Care Spending Per Person with
Growth in Medicaid Acute Care Spending vs. Private Health Spending,
Average Annual Growth :
Medicaid Acute
Care Spending
Per Enrollee
Health Care Spending Per Person with
Private Coverage
Monthly Premiums
For Employer-
Sponsored Insurance
SOURCE: Holahan and Cohen, Understanding the Recent Changes in Medicaid Spending and Enrollment Growth Between , Kaiser Commission on Medicaid and the Uninsured, May 2006. MC

8. Samples adjusted for health differences
Per Capita Spending For Medicaid Enrollees vs. Low-Income Privately-Insured
Samples adjusted for health differences
Adults
Children
SOURCE: Hadley and Holahan, “Is Health Care Spending Higher under Medicaid or Private Insurance? “ Inquiry, Winter 2003/2004. MC

9. Federal and State Financing TrendsMC

10. Composition of Federal Spending in FY 2006
2006 Total Outlays = $2.66 trillion
SOURCE: CBO Historical Budget Data.. MC

11. Medicaid Spending In the States, 2005
State General Fund Spending $541 billion
Federal Funds to States by Program $358 Billion
SOURCE: National Association of State Budget Officers, State Expenditure Report, Fall 2006 MC

12. Medicaid Spending Growth, 1996-2007 (Estimate)
Economic Downturn, Enrollment & Cost Growth,
Health Care Cost Growth
Start Economic Recovery, Slower Enrollment Growth
Strong Economy, Welfare Reform, Enrollment Declines, Managed Care
FY 2007 Estimate Based on Adopted Budget
Nearly Flat Enrollment Growth Rx spending for Duals Moved From Medicaid to Part D**
NOTE: Estimates in State Fiscal Year. FY 2007 estimate based on states adopted FY 2007 budget. State Clawback payments are counted as state Medicaid payments. SOURCE: KCMU analysis of CMS Form 64 Data and KCMU / HMA State Budget Survey, 2006 MC

13. State Tax Revenue and Total Medicaid Spending Growth, 1997-2006
NOTE: State Tax Revenue data is adjusted for inflation and legislative changes. Preliminary estimate for 2006.
SOURCE: KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates and KCMU / HMA Survey for 2006 Medicaid Growth Estimates; Analysis by the Rockefeller Institute of Government for State Tax Revenue. MC

14. Factors Affecting Medicaid Spending Growth in FY 2006
Total Medicaid spending growth hit near record lows (2.8%)
Enrollment: Low rate of growth in persons served
Part D: Medicaid drug costs for dual Medicare-Medicaid enrollees shifted to Medicare in January 2006
Cost containment strategies: Cumulative impact of policies adopted in recent years
State share of Medicaid spending growth was higher than total Medicaid spending growth (6.8%)
“Clawback”: States still are counting Medicare payments as state Medicaid spending
FMAP Declines: Almost 3 out of 4 states experienced a reduced FMAP in 1 or both years for FY 2006 and FY 2007 MC

15. Percent Change in U.S. Medicaid Enrollment, FY 1998- FY 2006
Annual growth rate:
NOTE: Percentage changes from June to June of each year.
SOURCE: For : Eileen Ellis, Vernon Smith, David Rousseau and Karyn Schwartz, Medicaid Enrollment in 50 States: June 2006 Update—Preliminary Data, Kaiser Commission on Medicaid and the Uninsured, June For 2006: Data provided to HMA by state officials for the Kaiser commission on Medicaid and the Uninsured, 2006. MC

16. Medicaid Policy TrendsMC

17. States Undertaking New Medicaid Cost Containment Strategies FY 2003 – FY 2007
NOTE: Past survey results indicate not all adopted actions are implemented.
SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, September and December 2003, October 2004, October 2005, October 2006 MC

18. Medicaid Pharmacy Cost Containment Measures in Place in FY 2006
Numbers NOT double-checked
SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2006. MC

19. State Policy Actions Implemented in FY 2006 and Adopted for FY 2007
Adopted FY 2007
Implemented FY 2006
States with Expansions / Enhancements
Provider Payments
Eligibility
Benefits
Long Term Care 5 9 10 15 18 17 43
States with Program Restrictions 46
SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2006.
NOTE: Past survey results indicate not all adopted actions are implemented. MC

20. Other Policy Actions Implemented in FY 2006 and Adopted for FY 2007
SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2006 MC

21. Deficit Reduction Act: Key Medicaid Changes
Citizenship documentation
New requirement for current and new beneficiaries to document proof of citizenship
Previously: states established citizenship or satisfactory immigration status (47 states allowed applicants to self-declare citizenship status)
Benefits
Allows “benchmark” or “Secretary-approved” coverage for some groups
Previously: states provided “mandatory” benefits and could choose to provide “optional” benefits (e.g., prescription drugs)
Premiums & Cost Sharing
Allows higher or new cost sharing/premiums; state option to make co-pays enforceable
Previously: nominal cost sharing allowed; premiums generally prohibited
Comparability and Statewideness
Allows variation in benefits and cost sharing across groups and geographic areas
Previously states generally were required to have uniform benefits and cost sharing across groups and areas of the state
Long-term Care
Broader eligibility options for children with disabilities, tighter eligibility for Medicaid nursing home care, new state options to promote community-based care MC

22. Impact of the DRA Citizenship Documentation Requirements
States Reporting:
Greater Administrative Costs
Yes No
Don’t Know
Numbers NOT double-checked
Impact on Enrollment
SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2006. MC

23. States Taking Up DRA Options for FY 2007
# of States
New Options
Benefits 5
Cost Sharing 1
Make Copayments Enforceable 2
New LTC Options
LTC Partnership Program 22
Self-Directed Personal Assistance Services 16
HCBS Alternatives to Residential Treatment Facilities for Children
HCBS State Option
Medicaid Buy-In for Disabled Children 4
Grants and Demonstration Programs
Medicaid Transformation Grants: Grants Awarded to…. 27
Money Follows the Person: Grants Awarded to…. 31
Health Opportunity Accounts 3 MC

24. States Using DRA Benefit Flexibility
West Virginia: “Secretary-approved coverage” and “member agreement”
Parents required to sign and comply with a “member agreement” to access certain benefits for themselves and their children (including mental health services, diabetes care, and drugs beyond a four-drug limit)
Providers monitor their patients’ compliance and report to the state
Kentucky: Creates 4 Targeted Benefits Plans and Increases Cost Sharing
Global Choices (default), Family Choices (most kids), Optimum Choices (MRDD), Comprehensive Choices (Nursing Home Care)
New cost sharing requirements and service limits
Disease management, Get Healthy Benefit Accounts, and premium assistance
Expanded access to community based long-term care services
Idaho: 3 Targeted Benefit Plans Promotes Responsibility and Prevention
Targeted benefits for children / working adults, individuals with disabilities and elderly
Emphasis on long-term savings through prevention and responsible use of health care
Kansas: Personal Assistance Services for Ticket To Work Beneficiaries
Virginia: Disease Management
Asthma, congestive heart failure, coronary artery disease and/or diabetes MC

25. Future Outlook MC

26. President’s FY 2008 Budget: Medicaid Legislative Savings Proposals Over 5 Years
Total = $12 billion
SOURCE: OMB, Fiscal Year 2008 Budget, February 2007. MC

27. President’s FY 2008 Budget: Medicaid Regulatory Savings Proposals Over 5 Years
Total = $12.7 billion
SOURCE: OMB, Fiscal Year 2008 Budget, February 2007. MC

28. SCHIP Enrollment Projections for Children if Federal Financing is Held Constant at $5 Billion Annually
SOURCE: CBO March 2001 Baseline: SCHIP Fact Sheet, February 23, 2007 MC

29. Many Uninsured Children are Eligible but Not Enrolled in Medicaid or SCHIP
Not Eligible,
> 300% FPL
Not Eligible, <300% FPL
Eligible for Medicaid or SCHIP
Total = 8 Million Uninsured Children in 2004
*The Federal Poverty Level (FPL) for a family of three in 2004 if $15,067 per year SOURCE: Urban Institute analysis of the 2005 Annual and Social Economic Supplements to the CPS for KCMU. Data has been adjusted for the Medicaid undercount. CPS does not fully account for immigration status so estimates in the eligible category potentially include some undocumented children. MC

30. State Strategies to Expand Coverage
Incremental Reform
Public-private partnerships focusing on working poor and small businesses
Focusing on Children
Universal coverage for children
Coverage for children as part of broader universal coverage
Improving Medicaid and SCHIP coverage through enhanced outreach and administrative simplification and coordination
Comprehensive Reform
Resurgence of interest in broad health reform at state level
Laws in three states, proposals in nine
Combination approaches emphasizing shared benefits and burdens MC

31. Figure 31
State Efforts to Streamline the Enrollment Process for Medicaid and SCHIP
Number of States in 2006 * *
* In 2006 an additional 11 states apply Continuous Eligibility only in their SCHIP program. 2 additional states apply Presumptive Eligibility only in their Medicaid program and 1 state applies Presumptive Eligibility only in their SCHIP program.
SOURCE: Based on a national survey conducted by the Center on Budget and Policy Priorities for KCMU, 2006. MC

32. State Coverage Expansions for Children, 2006-2007WA VT ME MT ND MN OR NY MA WI RI PA CT OH IN IL WV CO CA NC TN OK SC NM AK LA HI
Enacted Universal Coverage (6 states)
Enacted Expanded Coverage (6 states)
Proposed Universal or Expanded Coverage (15 states & DC) MC

33. Key Elements of the Massachusetts Health Care Reform Plan
Individual Mandate
Employer assessment for those that do not offer coverage
Subsidized Coverage
Sliding scale subsidies for individuals <300% FPL
Full subsidies for those <150% FPL
The Connector links consumers & small employers to insurance
Establishes affordability standards and certifies insurance products
Medicaid Expansion to Children <300% FPL
Financing
Total Costs = $1.6 billion
65% federal financing / 9% State funds / 23% Hospital Assessment and Insurance Surcharge / 3% Employer Assessment MC

34. States Moving Toward Universal CoverageVT ME OR MA WI CT PA NJ IL CA KS
Enacted Universal Coverage (3 states)
Proposed Universal Coverage (9 states) MC

35. Conclusion and Outlook
Improved state revenues and low Medicaid spending growth provides relief after years of fiscal stress and new opportunities to expand coverage
On-going Medicaid pressures expected to persist
Increasing health care costs
Increasing uninsured / declines in employer coverage
Increasing aged and disabled
Tension in federal / state financing for Medicaid
Some states discussing near-universal health coverage
Medicaid is a base on which states build coverage expansions
A primary focus is children
Federal policies have implications for state reform efforts
Citizen documentation requirements
Legislative / Regulatory Proposals in the President’s Budget
SCHIP reauthorization MC