Cindy MannCenter for Children and Families

Georgetown University Health Policy Institutehttp://ccf.georgetown.edu

American Hospital AssociationState Issues ForumJanuary 15, 2009

Moving Forward in Uncertain Times

Much is Happening

• State activity• Immediate federal legislative action• Federal administrative action• Federal health reform

State Developments

FL

NC

SC

GALATX

AL

AR

KS

OKAZ TN

MS

NVUT

NM

CA

WYID

WA

ORND

SD

NE

MT

MO

IN

MI

WI

IL

ME

OH

KY

HI

AK

PA

WV VA

CTNJ

DEMD

RI

NHVT

DC

MA

CO

IA

NYMN

State Budget Woes Worsening

Source: E. McNichol and I. Lav, “State Budget Troubles Worsen,” Center on Budget and Policy Priorities (December 23, 2008). Note: includes states with shortfalls in FY 2009 or projected shortfalls for FY 2010.

States with Shortfalls (45 states, including DC)

State Cuts

Most states are facing the prospect of either program cuts or provider rate cuts – or both– California - instituted renewals every six months for

children in Medicaid– Illinois - lengthening the amount of time to pay

providers– New Jersey - cuts in funds to charity hospitals– Rhode Island - reduced the income eligibility level

for parents

Source: V. Smith, et al., “Medicaid in a Crunch: A Mid-2009 Update on State Medicaid Issues in a Recession,” Kaiser Commission on Medicaid and the Uninsured (January 2009); and N. Johnson, E. Hudgins, and J. Koulish, “Facing Deficits, Most States are Imposing Cuts that Hurt Vulnerable Residents,” Center on Budget and Policy Priorities (December 2008).

Source: As of September 17, 2008 based on a review by the Center for Children and Families of state initiatives in 2007 and 2008.

State Action on Children’s Health Coverage2007-2008

Implemented 2007 Legislation to Improve Children’s Coverage (15 states)

FL

NC

SC

GALATX

AL

AR

KS

OKAZ TN

MS

NVUT

NM

CA

WYID

WA

ORND

SD

NE

MT

MO

IN

MI

WI

IL

ME

OH

KY

HI

AK

PA

WV VA

CTNJDE

MD

RI

NHVT

DC

MA

Enacted New Legislation/Took Administrative Action to Improve Children’s Coverage (10 states)

CO

IA

NYMN

Moving Forward Even in Challenging Fiscal Climate

“We are making tough decisions, but we're doing that while also protecting the core priorities, such as education, providing health care to our children and supporting tax reform that I believe will help revitalize our economy in the long run.”

Governor Ted Strickland (D-OH) announcing $540 million in cuts (September 10, 2008)

The Affordability Gap is Widening

119.0%

11.2%21.9%

38.2%

56.6%

71.8%

87.9%98.2%

109.1%

26.8%

2.0%

23.7%19.6%9.9%8.2%5.4%

12.9% 15.9%

0%

20%

40%

60%

80%

100%

120%

140%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Health Insurance Premiums Federal Poverty Level

Source: Center for Children and Families analysis of Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008; and the Federal Poverty Level for a family of three, 1999-2008, available: http://aspe.hhs.gov/poverty/figures-fed-reg.shtml.

Average Total ESI Premium for Family Coverage as a Share of Income at Selected Income Levels

16%

19%

0%

5%

10%

15%

20%

25%

200% FPL in 1996 300% FPL in 2006Note: Share of income evaluated for families earning exactly 200% and exactly 300% of the FPL.

Source: G. Kenney & J. Pelletier, “Setting Income Thresholds in Medicaid/SCHIP:Which Children Should be Eligible?” Urban Institute (January 2009).

Assuring Eligible Children Can be Enrolled

“We have made great strides in improving access to health care for our vulnerable children.”

Governor Huntsman (R-UT) celebrating the 10th Anniversary of SCHIP (August 21, 2008)

7 out of 10 Uninsured Children are Eligible But Unenrolled

49% are Medicaid Eligible

19% are SCHIP Eligible

Source: L.Dubay analysis of March 2005 Current Population Survey using July 2004 state eligibility rules

The “Welcome Mat” Effect

STATETotal New Enrollment

Previously Eligible

Illinois 244,700 165,600 (68%)Data from November 2005 - June 2008

Massachusetts 51,000 32,750 (64%)Data from June 2006 - June 2008

Pennsylvania 19,000 11,000 (59%)Data from February 2007 - June 2008

Wisconsin 49,108 40,881 (83%)Data from February 2008 - May 2008

Source: Center for Children and Families, "Putting Out the Welcome Mat: Implications of Coverage Expansions for Already-Eligible Children” (September 9, 2008).

Reaching the Eligible but Unenrolled Children

< 1%

Procedural closings in Louisiana:

Source: LaCHIP/Medicaid Eligibility Division, La. Department of Health & Hospitals, September 2008

Federal Developments

Immediate Congressional Action

• SCHIP• Economic Recovery

– FMAP– Health IT– Infrastructure grants– Covering the uninsured

Changes in Coverage as Unemployment Rises

-5.9

2.4 2.6

-8.3

3.4 3.7

-10.7

4.4 4.8

-13.2

5.4 5.8

7% Unemployment 8% Unemployment 9% Unemployment 10% Unemployment

ESI Medicaid/SCHIP Uninsured

Source: J. Holahan and A. Garrett, “Rising Unemployment, Medicaid and the Uninsured,” Kaiser Commission on Medicaid and the Uninsured (January 2009).

Millions of People

Medicaid Costs Rise as Unemployment Rises

$10.6$8.6

$6.7$4.7

$3.6

$5.0

$6.5

$8.0

7% Unemployment 8% Unemployment 9% Unemployment 10% Unemployment

Federal Share State Share

Source: J. Holahan and A. Garrett, “Rising Unemployment, Medicaid and the Uninsured,” Kaiser Commission on Medicaid and the Uninsured (January 2009).

Billions of Dollars

$8.3

$15.2

$18.6

$11.7

Increased Coverage

2.4 million 5.4 million4.4 million3.4 million

Hospital Uncompensated Care is Growing

$34.0$31.2

$28.8$26.9

$24.9$22.3$21.5

$18.5$19.0 $20.7 $21.6

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Growth In Uncompensated Care

Source: American Hospital Association, “Uncompensated Hospital Care Cost Fact Sheet” (November 2008).

State Budgets and Potential Fiscal Relief

Source: E. McNichol and I. Lav, “State Budget Troubles Worsen,” Center on Budget and Policy Priorities (December 23, 2008). Current proposed FMAP increases range from $80 to $100 billion over 9 – 10 quarters.

Additional Mid-Year Shortfalls

Debate ranges from

$35b - $44b/1yr

In Billions

38 States Reporting

SCHIP: More than You Might Expect

• Significant expansion in allotments– Use it or lose it formula

• Permanent allowance for use of funds for children eligible under pre-SCHIP Medicaid expansions

• “Performance Bonus” payments for Medicaid enrollment

• New enrollment options• ? End of federal ban on states using Medicaid/SCHIP

for legal immigrant children/pregnant women here <5 years

• But no further SCHIP waivers for parents/childless adults

Federal Developments: Administrative Activity

(Some) Matters That Have Been Raised In the Transition Review Process

• Medicaid regulations– 6+

• August 17th directive• Waivers• Improving relationships with…everyone• Improving participation rates• “Value based purchasing”• Improving quality• Health IT

Health Reform

Medicaid and Health Reform

• Likely that Medicaid will play an even greater coverage role in the future

• What changes are needed?

Medicaid Has A Large Role in the Health Care System

Hospital Payments, 2007

15%

43%

24%

18%

Out-of Pocket Payments Private Health Insurance Medicare Medicaid

Source: M. Hartman, et al., “National Health Spending in 2007: Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998,” Health Affairs (January/February 2009).

In 2007, Medicaid Paid Hospitals $329.4 Billion

Medicaid Already Has a Large Coverage Role

1.4%

55.3%

11.3%

27.6%

4.4%

2.5%

60.9%

17.2%

13.9%

5.5%

Children (Under 19)

Total Population (Under 65)

ESI Medicaid/SCHIP

Other Public

UninsuredIndividual Coverage

Source: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on the Census Bureau's March 2007 and 2008 Current Population Survey.

More Than Half of All Uninsured Have Incomes below 200% of the Poverty Level

Total Uninsured Population (Persons in Poverty Universe) = 45.6 Million

< 100% FPL11.5 million (25.3%)

Source: Commonwealth Fund based on US Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 2008.

100-200% FPL13.3 million (29.2%)

200-300% FPL8.9 million (19.5%)

300%+ FPL11.8 million (26.0%)

< 200% FPL24.8 million

(54.4%)

Senator Baucus: Call for Action Public Program Proposals

• Medicaid extended to all at 100% of FPL, automatic FMAP increases during downturns, unspecified simplifications and financing

• SCHIP: All children must be covered to at least 250% of the FPL

• New options in Medicare

Medicaid and Health Reform

• What changes are needed?– Eligibility– Enrollment– Access/health provider payment levels– Financing– Integration with other components– Don’t leave Medicaid behind on quality, HIT

Realigning Responsibilities

What percent of state Medicaid budgets is spent on Medicare beneficiaries?

• 5%• 10%• 15%• 42%

Considerable Alignment of Interests