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Testimony: FMAP and Health Insurance Testimony: FMAP and Health Insurance House Select Committee on House Select Committee on

Federal Economic Stabilization FundingFederal Economic Stabilization Funding

March 12, 2009March 12, 2009

Anne Dunkelberg, Assoc. Director, dunkelberg@cppp.org Stacey Pogue, Policy Analyst, pogue@cppp.org

900 Lydia Street - Austin, Texas 78702Phone (512) 320-0222 (X102) – www.cppp.org

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Source: Stan Dorn, Bowen Garrett, John Holahan, and Aimee Williams, Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, prepared for the Kaiser Commission on Medicaid and the Uninsured, April 2008

Impact of Unemployment Growth on Medicaid and SCHIP and the Number Uninsured

1%

Increase in National

Unemployment Rate

=1.0 1.1

Increase in Medicaid

and SCHIP Enrollment

(million)

Increase in Uninsured(million)

&$2.0

$1.4

$3.4

Increase in Medicaid and

SCHIP Spending(billion)

State

Federal

1% increase in unemployment also = a 3-4% decline in state

revenues

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ARRA FMAP Assistance

Texas is expected to get $5.45 billion in federal funds to help pay for Medicaid through 2011 (GAO).   

Congress intended these funds for 2 primary purposes: to make sure that in a time of economic hardship when the need is greatest,

(1) states do not cut Medicaid, and (2) states have extra funds to meet the increased

number of uninsured as unemployment rises and incomes decline.

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How the Economic Recovery FMAP WorksExample: If Texas Medicaid Spending for 2009-2011 were $60 billion

Fed $ State $

$24 B State

$36 B Fed

Before ARRA

With ARRA FMAP “Bump” (1) State puts up fewer $ to provide same amount of care (2) BUT STATE DOES NOT HAVE TO INVEST A SINGLE PENNY TO IMPROVE PROGRAM.

$41.45 B Fed

$18.55 B State

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FMAP: Accountability and PrioritiesPer ARRA, Texas cannot

(1) Cut Medicaid eligibility or complicate enrollment OR

(2) put $5.45 B in Rainy Day Fund or other reserve.

Beyond avoiding Medicaid cuts, the next priority for these economic recovery funds is to address Texas Medicaid’s enrollment system crisis. The system can’t handle current demand, much less growing needs with rising unemployment. Additional staff and 12-month enrollment are the keys to improvement.

– HHSC Exceptional Items #2 and #3 to maintain and expand eligibility staff (to get back to 2004 staff-to-client ratios and move toward compliance with fed law: $133 million GR (biennium, agency estimate)

– 12-month child Medicaid enrollment, which would dramatically reduce the HHSC eligibility backlogs (allows 2 million fewer renewals per year) and allow the system to operate competently with fewer staff .

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12,487

7,136

437

782

-

3,000

6,000

9,000

12,000

15,000

1995 1998 2001 2004 2007

Eli

gib

ilit

y S

taff

-

200

400

600

800

1,000

Recip

ien

ts P

er

Wo

rker

Staffing

Recipients per Worker

Source: Texas Health and Human Services Commission, Data Report for H.B. 3575 Eligibility System Legislative Oversight Committee, April 2008. Fiscal 2008 are targeted amounts.

Eligibility Staff Shortage: A Vicious Cycle

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Texas Medicaid: Who it Helps

Children, 1,866,004

Disabled, 384,099

Elderly, 375,498

Poor Parents, 116,141

TANF Parent, 26,663

Maternity, 91,803

December 2008, HHSC data.

Total enrolled 12/1/2008: 2.9 million

Because children account for

over 2/3 of enrollment, 12-

month renewals WOULD

transform workload for entire

program

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Year-long coverage in Children’s Medicaid —equality with CHIP policy—would be the single most effective way:• To prove Texans’ commitment to the bipartisan goal of insuring the poorest

uninsured children first.

• To increase enrollment of Texas’ eligible uninsured children, and cut uninsured kids by one quarter! (per HHSC enrollment estimates)

• To dramatically cut the costs and workload of our state eligibility workers, and boost their performance.

12-month coverage will:

• Promote continuity of care and stable medical homes for children, and ease recruitment and retention of Medicaid doctors & providers.

• Help Texas Medicaid meet Frew federal court lawsuit settlement goals for check-ups, immunizations, and access to care (7.6 months average)

• Reduce costs per child: Texas and California studies have found that 12-month coverage reduced hospitalizations and the annual cost per child.

• 12 month continuous eligibility for Children’s Medicaid would dramatically reduce HHSC’s workload from 3.8 million renewals per year to 1.9 million,

– helping Texas get back into compliance with the Federal law requiring 45 day application processing, and

– reducing the number of state workers needed to comply with federal law.

• Earn Texas an estimated $25.6 million in 2011 and $54 million in 2012-13 in bonuses (part of Congressional CHIP Reauthorization)

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COBRA/Continuation Help in Recovery • ARRA has a temporary 65% premium reduction for COBRA

and state continuation coverage– COBRA

• for firms with 20+ employees• Coverage lasts 18 months

– State continuation is “COBRA-like” coverage• Only option for small firms (under 20 full-time employees)• Coverage only for 6 months

• Premium reduction for workers laid off between 9/1/08 and 12/31/09 and their families

• Premium reduction lasts up to 9 months

• Enrollees pay 35% of premiums to health plan. Health plan takes the 65% reduction as a credit against payroll taxes

• ARRA has a second chance for electing COBRA. Workers laid off between 9/1/08 and 2/17/09 can elect COBRA now and get the premium reduction

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Steps Needed to Help Texas Workers• Increase state continuation to 18 months for firms not eligible for

COBRA– Short 6-month continuation prevents recently unemployed Texans from

getting full 9 months of premium reduction– Makes coverage period consistent with COBRA– Allows 9 months of reduction to Texans laid off at the beginning of the

recession who would otherwise get little or no help– HB 2453 and SB 1771

• Create a new enrollment period for state continuation that conforms with ARRA

– ARRA creates a new enrollment period only for COBRA– Otherwise workers laid off from small businesses from 9/1/08 to 2/17/08 will

not get a second chance at continuation with the 65% reduction

• Changes will:– Help recently unemployed Texans get the maximum federal assistance – Help unemployed maintain private health insurance while seeking new jobs– Not require GR nor create GR obligations in the future

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