What does REMI say? sm Medicaid Expansion; Are You In or Are You Out? Presented by Chris Brown Senior Economic Associate.

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Medicaid Expansion; Are You In or Are You Out?

Presented by Chris Brown

Senior Economic Associate

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Today’s Outline

Background-Law-Option to expand coverage

Modeling Overview

Sample Scenarios

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The Law

• Patient Protection and Affordable Care Act– Signed into law in March 23rd, 2010– Individual mandate to buy health insurance, the

establishment of healthcare exchanges, and an expansion of Medicaid.

– June 28th 2012, Supreme Court upheld most, but not all provisions.

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Background

• Initially states required to expand coverage up to 133% of the federal poverty level or less or lose all current federal Medicare funding……Late June SCOTUS rules states no longer face a penalty for not expanding Medicaid coverage, essentially, making it optional.

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CBO Analysis of Medicaid Expansion

• Congressional Budget Office has assessed the estimated cost of the program with each new budget since its enactment.

• Most recent analysis before the Supreme Court ruling put net costs at $1,252 billion.

• After SCOTUS ruling, revised down to $1168, or $84 billion less.

• So far, no CBO analysis on the impact to individual states.

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Leave it to the States

• Specific components that will impact states– State run vs federally run insurance exchange– “Woodwork Effect” means strains on state

budget.– With the Medicaid expansion optional, concerns

about a “donut hole” of people with an income too high to qualify for their State’s existing Medicaid program but too low to receive Exchange subsidies.

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Weighing on state’s decision

-Budget Pressure-Uncertainty

-Ideology

-Huge amount of federal dollars

-Individual Health

Six states already declared

they are out

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What We Can Provide

REMI has worked extensively to answer difficult “what if?” questions concerning economic policy, including questions concerning healthcare and fiscal policy.

What are the potential net fiscal and job impacts on my state?

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Healthcare Applications

•Economic Effects of Health Care Reform on Virginia

University of Virginia

•The Potential Economic Impact of Cutting Funding to the Arizona Health Care Cost Containment Center

Arizona State University

•Potential Effects on Job Dislocation As a Result of the Implementation of The Vermont Health Benefit Exchange and Green Mountain Care

Vermont Agency of Administration

•The Economic Impact of Tobacco Use in Indiana

Ball State University

•Health Care Reform Policy Analysis

The Urban Institute

•Small Business Effects of a National Employer Healthcare Mandate

National Federation of Independent Business

•The Economic Impact of Private Practice Physicians’ Offices in Florida

Florida State University

Modeling PPACA

• Medicaid Expenditures from micro simulation

• State Budget Changes• Potential Cost Changes

Input Components

• Exogenous Final Demand in Healthcare Sectors

• Budget cuts or tax increases

• Consumer Price Changes for Healthcare

Policy Variables • Net Impact on State• Jobs• GDP• Income

Results

How Does it Fit Into Model Structure?

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Accounting for Uncertainty

Need to have ability to test alternatives-High and low - Range of number of insured- Varying levels of coverage within exchange- Potential for cost containment or decreases-Budgeting assumptions?

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Health Care IndustriesIndustries NAICS

Ambulatory health care services 621

• Offices of health practitioners 6211-6213

• Outpatient, laboratory, and other ambulatory care services; Home health care services

6214-6216, 6219

Hospitals 622

• Hospitals 622

Nursing and residential care facilities 623

• Nursing care facilities 6231

• Residential care facilities 6232, 6233, 6239

Social assistance 624

• Individual, family, community, and vocational rehabilitation services 6241-6243

• Child day care services 6244

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DEMO Scenarios

What is impact if state opts-in?What is impact if state opts-out?

-Example data however states have begun to compile this information already

- Simulation still can allow for Variability

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Example Data Sheet

Column1 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Additional Enrollees 0 0 125000 125000 125000 125000 125000 125000 125000 125000 125000

Cost Per Enrollee (CBO Projection) $6,000

Annual Spending (M) 0 0 750 750 750 750 750 750 750 750 750

Estimated Proportion already eligible 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Estimated Proportion newly eligible 85% 85% 85% 85% 85% 85% 85% 85% 85% 85% 85%

Cost for Already Eligible 0 0 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5

State Cost Share for already eligible 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43%

State Cost Share for newly eligible 0% 0% 0% 0% 0% 10% 10% 10% 10% 10% 10%

State Share 0 0 48.375 48.375 48.375 48.375 48.375 48.375 48.375 48.375 48.375

Federal Share 0 0 64.125 64.125 64.125 64.125 64.125 64.125 64.125 64.125 64.125

Cost for Newly Eligible 0 0 637.5 637.5 637.5 637.5 637.5 637.5 637.5 637.5 637.5

State Share 0 0 0 0 0 63.75 63.75 63.75 63.75 63.75 63.75

Federal Share 0 0 637.5 637.5 637.5 573.75 573.75 573.75 573.75 573.75 573.75

Cost of Penalty 0 0 0.000095 0.000095 0.000695 0.000695 0.000695 0.000695 0.000695 0.000695 0.000695

"Donut Hole" Cost 0 0 10.09375 10.09375 73.84375 73.84375 73.84375 73.84375 73.84375 73.84375 73.84375

Input data can come from micro simulation model or some other means.

Each component will be varied based on state and existing health care structure

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Impact of Mandate

• Example Components– Estimated number of additional enrollees

currently eligible • 18,750

– Estimated Annual Cost = $6000Total increase in expenditure = $112 Million

annuallySpread across health care sectors based on

Medicaid expenditures

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If state opts in

Column1 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Additional Enrollees 0 0 125000 125000 125000 125000 125000 125000 125000 125000 125000

Cost Per Enrollee (CBO Projection) $6,000

Annual Spending (M) 0 0 750 750 750 750 750 750 750 750 750

Estimated Proportion already eligible 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Estimated Proportion newly eligible 85% 85% 85% 85% 85% 85% 85% 85% 85% 85% 85%

Cost for Already Eligible 0 0 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5

State Cost Share for already eligible 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43%

State Cost Share for newly eligible 0% 0% 0% 0% 0% 10% 10% 10% 10% 10% 10%

State Share 0 0 48.375 48.375 48.375 48.375 48.375 48.375 48.375 48.375 48.375

Federal Share 0 0 64.125 64.125 64.125 64.125 64.125 64.125 64.125 64.125 64.125

Cost for Newly Eligible 0 0 637.5 637.5 637.5 637.5 637.5 637.5 637.5 637.5 637.5

State Share 0 0 0 0 0 63.75 63.75 63.75 63.75 63.75 63.75

Federal Share 0 0 637.5 637.5 637.5 573.75 573.75 573.75 573.75 573.75 573.75

Cost of Penalty 0 0 0.000095 0.000095 0.000695 0.000695 0.000695 0.000695 0.000695 0.000695 0.000695

"Donut Hole" Cost 0 0 10.09375 10.09375 73.84375 73.84375 73.84375 73.84375 73.84375 73.84375 73.84375

Red = State Costs Green = Increase in Healthcare expenditures

Includes both the effects of the mandate along with the impacts of the expanded coverage

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If state opts in

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If state opts in

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If state opts in

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If state opts in

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If state opts out

Column1 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Additional Enrollees 0 0 125000 125000 125000 125000 125000 125000 125000 125000 125000

Cost Per Enrollee (CBO Projection) $6,000

Annual Spending (M) 0 0 750 750 750 750 750 750 750 750 750

Estimated Proportion already eligible 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Estimated Proportion newly eligible 85% 85% 85% 85% 85% 85% 85% 85% 85% 85% 85%

Cost for Already Eligible 0 0 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5

State Cost Share for already eligible 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43%

State Cost Share for newly eligible 0% 0% 0% 0% 0% 10% 10% 10% 10% 10% 10%

State Share 0 0 48.375 48.375 48.375 48.375 48.375 48.375 48.375 48.375 48.375

Federal Share 0 0 64.125 64.125 64.125 64.125 64.125 64.125 64.125 64.125 64.125

Cost for Newly Eligible 0 0 637.5 637.5 637.5 637.5 637.5 637.5 637.5 637.5 637.5

State Share 0 0 0 0 0 63.75 63.75 63.75 63.75 63.75 63.75

Federal Share 0 0 637.5 637.5 637.5 573.75 573.75 573.75 573.75 573.75 573.75

Cost of Penalty 0 0 0.000095 0.000095 0.000695 0.000695 0.000695 0.000695 0.000695 0.000695 0.000695

"Donut Hole" Cost 0 0 10.09375 10.09375 73.84375 73.84375 73.84375 73.84375 73.84375 73.84375 73.84375

Red = State Costs Red/Green = Both cost and increase in expenditures

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If state opts out

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If state opts out

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If state opts out

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If state opts out

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Concluding Remarks

• We know there is great uncertainty• Developing clear scenarios can allow you to

test alternatives• Key to decision to expand or not to expand

rests on economic and fiscal impact

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If state opts-in

• Example components– Estimated number of new enrollees up to 133%

FPL• 106,250

– Cost of new enrollees = $637,500• State share = 0% for first 3 years• Federal share = 100% then to 90% after year three

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If state opts-out

• Example components– Cost of penalty for not having insurance

• 95$ for first two years going to 695$ after year two

– Estimated number of individuals state must now cover = same as under mandate

• 18,750 new enrollees for a total cost of $112.5 Million