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MEDICAID EXPANSIONBUDGET BACKGROUND
January 2013
Office of AdministrationDivision of Budget and Planning
MEDICAID EXPANSIONBUDGET BACKGROUND
Cost for new Medicaid eligibles
Savings in state share for existing populations
Additional revenue
Summary of budget impact
Provider payments2
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MEDICAID EXPANSION COST
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COST -- STATE SHARE
No state cost for first three fiscal years (FY14-FY16)
State share then phases up to 10%
- January 2017 – 5% (half year for FY 2017)- January 2018 – 6%- January 2019 – 7%- January 2020 – 10%
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COST -- NUMBER OF PEOPLE
KEY ASSUMPTIONS
Assumed Take Up Rates: Parents -- 70% increasing to 80% by 2018Childless Adults -- 60% increasing to 80% by 2018Medically Frail -- 95% from first year
Data Sources:U.S. Census Bureau 2011 American Community SurveyU.S. Census Bureau 2010 Table on Prevalence of Disability
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MEDICAID EXPANSION COST NUMBER OF PEOPLE
115,685 115,685 115,685 122,626 129,567
124,032 132,572 141,112149,653
158,193
19,78219,782
19,78219,782
19,782
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Parents Childless Adults Medically Frail
259,499 268,039276,579
292,061307,542
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COST PER PERSON Cost per person developed by actuary
Added cost for wrap around for medically frail
Pay a commercial reimbursement rate
Savings from care management (multiple avenues)
Assumes maximum cost sharing (copays) allowed
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COST PER PERSON
Per Member/Per Month
- $436 for parents- $583 for childless adults- $1,635 for medically frail
Trended forward at average of 4%
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COST -- SUMMARY
$907.5
$1,857.8$1,955.3 $2,032.1
$2,131.8$2,239.7 $2,275.9 $2,329.7
$0.0
$0.0$0.0
$23.9
$55.3
$69.4$94.6
$115.6
$0.0
$0.0$0.0
$30.1
$69.3
$86.6$117.6
$143.3
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Mill
ions
of D
olla
rs
Federal Other GR
$1,858
$908
$1,955
$2.086
$2,256
$2,396$2,488
$2,589
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MEDICAID EXPANSION SAVINGS IN STATE SHARE
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SAVINGS – EXISTING POPULATIONSCurrent Medicaid Populations under 138% FPL
- Pregnant women – covered prior to pregnancy
- Ticket to Work
- Breast/Cervical Cancer
- Spenddown
- Women’s Health Services
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SAVINGS – EXISTING POPULATIONSCurrent State Only Populations under 138% FPL
- Blind Pension
- Corrections
- Dept of Mental Health Clients
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SAVINGS – EXISTING POPULATIONSGENERAL REVENUE (millions of $)
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$17.6
$44.4 $55.2 $54.2 $51.8 $52.4 $51.2 $50.8 $13.5
$27.0
$27.1 $27.1 $27.1 $27.1 $27.2 $27.2
Medicaid State Only Progs
$82.3 $81.3 $78.9 $79.5 $78.4 $78.0
$31.1
$71.4
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MEDICAID EXPANSION ADDITIONAL REVENUE
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ADDITIONAL REVENUEKey Assumptions – Income Tax
- No multiplier assumed
- Looked at increased federal revenue to providers
- Discounted to portion typically used for salaries based on individual provider-type
- Applied 4.5% income tax rate
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ADDITIONAL REVENUEKey Assumptions – Sales Tax
- No multiplier assumed
- 19.2% of income spent on GR taxable goods
- 6.9% of non-salary spent on GR taxable goods
- Tax rate of 3% goes to GR
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ADDITIONAL REVENUEKey Assumptions – High Risk Pool
- High Risk Pool no longer necessary
- Insurance companies help fund pool through assessments
- Taken as credits against taxes owed
- Typically do not take full credit in first year
- Fully realized ($22M), with $1.5M savings from normal growth each year after that
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ADDITIONAL REVENUE$s in millions
$9.9
$30.5 $32.4 $33.5$3.8
$4.1 $4.3 $4.3
$1.8
$1.9 $2.1 $2.0
$17.0$18.5
$22.0
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
FY14 FY15 FY16 FY17
Ind Income Tax Sales Tax - Income Sales Tax - Other Tax Credits
$15.5
$53.5$57.3
$61.8
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MEDICAID EXPANSIONBUDGET SUMMARY
MEDICAID EXPANSIONBUDGET SUMMARY
State costs for new eligibles $0 until FY 2017
Full phase in of state share at 10% in FY 2021
Savings for existing populations begin immediately
Additional revenue estimate conservative – no multiplier
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BUDGET SUMMARYCOST, SAVINGS & REVENUE
General Revenue Summary -- Dollars in MillionsFY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Cost New Eligibles $0.0 $0.0 $0.0 ($30.1) ($69.3) ($86.6) ($117.6) ($143.3)
Savings $31.0 $71.4 $82.3 $81.2 $78.9 $79.6 $78.4 $78.0
New Revenues $15.5 $53.6 $57.3 $61.8 $63.0 $65.0 $67.2 $69.6
Total Impact on GR $46.5 $125.0 $139.6 $112.9 $72.6 $58.0 $28.0 $4.3
PROVIDER PAYMENTS
Hospital ReductionsRegardless of a state’s decision to expand Medicaid,
payments to hospitals will be reduced.
Reductions will be to Disproportionate Share Hospital (DSH) payments.
Hospitals that serve a high percentage of Medicaid and/or other low income individuals qualify for DSH payments.
These payments are designed to help cover the cost of uncompensated care.
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HOSPITAL PAYMENT REDUCTIONSEach state’s share of the DSH reduction is unknown.
HHS Secretary will determine methodology.
That methodology to consider:- Percentage of uninsured,- State’s use of DSH funds, and- State’s current DSH level
(high DSH states, like Missouri, may face a larger cut).
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HOSPITAL PAYMENT REDUCTIONS Cuts at the national level:
- 5% for first three years (starts FFY2014)- 15% for next year- 50% thereafter
Missouri’s FY 2013 DSH payments:- $511 million hospitals- $207 million DMH hospitals
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PROVIDER PAYMENTSMEDICAID EXPANSION
Estimated payments by provider type: 49% ($900 million) professional services.
- 13% ($240M) mental health- 11% ($200M) physician services- 9% ($160 M) in-home- 16% ($300M) other (DME, ambulance, ….)
40% ($740 million) hospital services
11% ($200 million) pharmacies
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CONCLUSIONCuts to hospital payments will happen
If expand Medicaid, those reductions will be more than offset through increased provider payments
Expansion has a net positive impact on the budget
Other considerations - indirect budget implications:- Improved access to care- Better health outcomes- Improved job retention when healthy
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