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Mission: To promote responsible and equitable fiscal policies through research and education Joy Smolnisky, Director 808 N. West Ave., Sioux Falls, SD 605-367-9667joys@sdbudgetandpolicyproject.org
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The Affordable Care Act (ACA) in South Dakota Concepts Coverage Costs Choices Consequences
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How will ACA affect South Dakotans’ access to and cost of health insurance? Federal law includes: regardless of state decision to expand Medicaid 1.Coverage guarantees 2.Insurance exchanges 3.Federal tax credits to pay for insurance 4.Individual mandate 5.Funding provisions Medicaid Expansion
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Coverage Guarantees Young adults can stay on parents plan until age 26 (2010) Eliminates life-time limits on coverage (2010) Guaranteed availability of insurance Minimum medical loss ratio for insurers
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state-based American health benefits exchange 1.“essential health benefits” packages 2.Four categories of plans 3.Limited annual cost-sharing
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How will affect South Dakotans’ access to and cost of health insurance? Federal law includes: regardless of state decision to expand Medicaid 1.Coverage guarantees 2.Insurance exchanges 3.Federal tax credits to pay for insurance
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FEDERAL TAX CREDITS 92,800 South Dakotans* will be eligible for Premium Subsidies * Data Source: Research using Lewin Group economic models: http://www.familiesusa.org/assets/pdfs/health-reform/premium-tax- credits/South-Dakota.pdf
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FEDERAL TAX CREDITS – Cost Sharing 1/3 of out-of-pocket cap 1/2 of out-of-pocket cap 2/3 of out-of-pocket cap
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Small Business Tax Credits 2010 to 2013: 35% credit / 25% NFP 2014 and after50% credit / 35% NFP http://www.irs.gov/uac/Small-Business-Health- Care-Tax-Credit-for-Small-Employers
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Dollars (in millions) available to help South Dakotans pay health insurance premiums in 2014
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Federal Spending on Exchange Subsidies in SD, 2014-2019 Million $ in South Dakota Premium Subsidies Cost Sharing Subsidies Total 876$ 876$ 106$ 983 Source: Urban Institute
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Funding mechanisms 2010 Penalty tax on hospitals without financial assistance policies 10% tax on indoor tanning services 2011 Changes to tax free savings accounts 2012 New annual fees on drug manufacturing sector
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2013 New limits on itemized medical deductions & flexible spending accounts ($2,500/yr) Medicare Tax increase (individual incomes over $200,000/families over $250,000) Tax on Medical Devices (2.3%) Eliminates tax-deduction for employers receiving Medicaid retiree drug subsidy 2014 Employer requirements 2018 Excise tax on “cadillac” employer provided health plans
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How will ACA affect South Dakotans’ access to and cost of health insurance? Federal law includes: regardless of state decision to expand Medicaid 1.Coverage guarantees 2.Insurance exchanges 3.Federal tax credits to pay for insurance 4.Individual mandate 5.Funding provisions Medicaid Expansion
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How does this decision affect healthcare in South Dakota?
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138% FPL 100% FPL
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Medicaid Expansion Bridges the Gap 30,000 uninsured South Dakotans
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49,000 uninsured South Dakotans below 138% federal poverty level
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Medicaid Expansion FMAP (federal share) for newly eligible parents and childless adults
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Another concern…. 1.Will Federal Government continue commitment to 90% FMAP rate after 2020 for Medicaid Expansion?
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How much will Medicaid Expansion cost South Dakota?
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Cost projections are based on assumptions Projected eligibles Participation rates Crowd-out rate woodwork effect Per enrollee cost
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How much will Medicaid Expansion cost South Dakota - the first 6 years? Governor – $99.7 million 5.5% increase in state Medicaid costs 2014-19 48,564 new eligibles from expansion & 5,982 existing eligibles Urban Institute - $112 million Kaiser: 1.1% increased state spending Uncompensated care savings estimate change cost to a range of: $15 million total expense to $82 million in state government savings
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after 2019 - ballpark calculation: X 48,564 newly eligible $4,264 per person State share of cost X State cost for care: 48,564 x $4,264 x 10% = $20.7 million
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Adding administrative costs: State cost for care*: 48,564 x $4,264 x 10% = $20.7 million State cost for administration: 48,564 x 2.5% = $ 5.2 million Annual SD cost* estimate after 2019 =$25.9 million *based on FY11 cost per eligible - calculations by SD B&PP
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HOW MUCH IS $26 million*? 8.6% of FY12 state spending on Medicaid to increase coverage by 42% $533 per year per person newly enrolled $31.41 per year per SD resident in new state spending *based on FY11 cost per eligible - calculations by SD B&PP
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138% FPL 100% FPL
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138% FPL 100% FPL
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Medicaid Expansion Bridges the Gap 30,000 uninsured South Dakotans 92,800
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