1. The Role of Medicaid in a Restructured Health Care System Cindy Mann Executive Director Center for Children and Families Georgetown University Health Policy Institute crm32@georgetown.edu November 4, 2005

2. Medicaid’s Current Role in Illinois Sources of Coverage All Children 0-18 Non-Elderly Adults 18-64 Source: Data based on pooled 2003 and 2004 Current Population Survey (CPS) data. Slide 1

3. Medicaid’s Current Role Pays for more than one out of three (37%) births in the state Provides a broad set of benefits for elderly and disabled people with significant health care needs Single largest source of funding for long- term care Slide 2

4. Elderly and People with Disabilities Account for 70% of Medicaid Expenditures in Illinois Total Illinois Medicaid Expenditures in 2002 = $9.2 billion Slide 3 Source: Georgetown Center for Children and Families analysis based on FY 2002 CMS MSIS data.

5. Medicaid’s Current Role Vital support for safety net providers Supplements financing for other systems –Special education and early intervention services for children –Child welfare system Largest source of federal funds to Illinois Slide 4

6. Total = $8 billion ($4.53 billion) Federal Medicaid Payments as a Share of Total Federal Funds to Illinois, FY 2003 *”Education” includes elementary, secondary and higher education. *“All Other” varies by state. It includes federal funds for the State Children’s Health Insurance Program and may include a range of other federal funds such as economic development, housing, parks and recreation. Source: Georgetown Center for Children and Families analysis based on National Association of State Budget Officers (NASBO), 2003 State Expenditure Report, Fall 2004. Slide 5

7. Under Reform, How Will Coverage be financed? Coverage for people with disabilities and other high medical costs be financed? Affordability for low- and moderate-income people be achieved? Costs be contained? Quality be assured? Portability, continuity of coverage & a more seamless system be achieved? Slide 6

8. Key Issues To be Addressed Medicaid offers Adequate financingOpen-ended federal financing Automatically adjusts with costs, caseload Coverage for people with disabilities and other high cost cases Comprehensive benefits - services beyond those typically available through commercial plans, no lifetime cap, etc. Coverage for people with limited incomes Comprehensive coverage with limited beneficiary costs Cost containmentBroad state discretion to set provider payment rates, establish disease management & incentives to encourage efficient and effective care management Slide 7

9. Key Issues To be Addressed Medicaid offers Assure qualityBroad state discretion/authority to establish, and monitor quality standards Portability, continuity of coverage, a more seamless system Coverage not tied to job status; broad control over delivery system, administration, payment rates - Can merge Medicaid coverage and financing with other systems under a restructured system - Can design the system to work in tandem with employer-based coverage while also filling in the gaps that will arise in an employer-based system Slide 8

10. Slide 9 MassHealth (One application, one eligibility determination process) Medicaid financing for some groups of children and adults SCHIP financing for a smaller group of children Premium Assistance component

11. Slide 10 Dirigo applications sent to Dirigo by employer Dirigo Agency determines employee discount Contracts with private insurer to provide coverage to all Dirigo participants All participants receive the same card and see the same providers* Medicaid Can Be Integrated into Broader Reform: Dirigo 100% discount for Medicaid eligible employees and families Sliding income discount for employees/families between Medicaid and 300% FPL *Note: Medicaid-eligible Dirigo enrollees eligible for some additional “wrap-around” services.

12. Medicaid Coverage/Financing Limitation No financial participation for childless adults –Eleven states and the District of Columbia have waivers allowing some Medicaid financing for this group –Budget neutrality constraints Slide11

13. Other Medicaid Considerations Limits on premiums and cost sharing that can be charged Provider payment rates often lower than commercial insurance Relatively low administrative costs Slide 12

14. Medicaid vs. Private Insurance Costs, Per Capita Source: Hadley and Holohan, Inquiry, 2004 Slide 13

15. Slide 14

16. Medicaid Federal Reforms that Could Help States Meet Their Coverage Goals Automatic “FMAP” adjuster –To require federal share of costs to rise during economic downturns Coverage permitted without regard to “categories” –Option to cover childless adults Reduce cost shift of Medicare costs to state Medicaid programs Slide 15

17. Dual Eligibles Account for More than One-Fourth of Total Medicaid Expenditures in Illinois Dual Eligibles 28% Source: Urban Institute estimates based on data from the Medicaid Statistical Information System (MSIS) and Medicaid Financial Management Reports prepared for the Kaiser Commission on Medicaid and the Uninsured, 2003. Slide 16