Texas Medicaid: Overview, ACA issues, and Block Grant Proposals

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1 Texas Medicaid: Overview, ACA issues, and Block Grant Proposals October 19, 2012 TMA Medicaid Congress Austin, Texas Anne Dunkelberg, Assoc. Director, Center for Public Policy Priorities 7020 Easy Wind Drive - Austin, Texas (512)

2 Fast Facts: Texans & Health Insurance, million uninsured Texans, 23.8% of all ages Slight improvement over 2010 (6.2 million, 24.6%) Still worst rate in the nation by several percentage points Children s coverage is stable at 1.2 million uninsured under age 19; 16.3% of all kids. Texas now NEXT-to-worst uninsured rate for kids, after Nevada. More than half of these uninsured children are US citizens or legal residents who could be enrolled in Medicaid or CHIP, but are not. Texans remain less likely to get job-based health coverage than Americans on average; 50.6% of Texans were insured thru their own job, or their spouse or parent s, compared to 55.1% for the US.

3 Fast Facts 2: Texans & Health Insurance, 2011 Working age adults (19-64) in Texas are nearly twice as likely to be uninsured as children. These adults have higher rates of job-based coverage than kids, but do not have access to free or low-cost public insurance through Medicaid and CHIP. Affordable Care Act (ACA) reform impact on the newest numbers: Uninsured rate for Texans aged dropped 3.4 percentage points, compared to no improvement for ages Stability protections for children s health care in Medicaid and CHIP kept public coverage of kids stable, but private coverage of Texas children continued to decline. Texas experts estimate that even moderate enrollment growth in private and public health coverage under the ACA in 2014 would cut Texas uninsured number and rate by half. See cppp.org/research.php?aid=1231

4 Working-Age Texans Almost Twice as Likely as Children to be Uninsured 15 31% uninsured 4.8 million 10 16% uninsured Uninsured Medicaid million 3% uninsured 81,205 Medicare Job-based - Under to and over Source: CPPP Analysis of 2012 CPS Annual Social & Economic Supplement

5 Texas Uninsured by Income % of 6.1 million uninsured have incomes <400% FPL % FPL $67,050-$89, % FPL $55,875-$67,050 >400% FPL >$89, K 421K 656K Million <100% FPL <$22,350/yr for family of four 6.1 million includes 1.7 million non-us citizens; ~2/3 of these (about 1.1 million) likely undocumented % FPL $44,700-$55, K % FPL $33,525-$44, K 525K 614K % FPL $27,938-$33, % FPL $22,350-$27,938 Annual income limits given for a family of four, 2011 federal poverty level U.S. Census, 2012 CPS 5

6 Uninsured Texans by Age Group, ,000 3% of Texas Seniors uninsured 63% are below 200% FPL 65+ <2/3 are below 200% FPL million Rate: 16.3% of 0-18 are uninsured 6.1 million uninsured Texans million Rate: 30.9% of are Uninsured Source: U.S. Census, March 2012 CPS 6 6

7 Most Uninsured Texans are U.S. Citizens Total: 6.1 million uninsured Texans in 2011 Non-Citizens: 60.5% uninsured rate; Approx. 1.1 million undocumented, 570,000 legal immigrants 1.67 m US Citizens: 19.7% uninsured rate 4.46 m Immigrants NOT the cause of Texas last-place ranking: If all non-citizens are removed from data, Texas is still tied for worst uninsured rate with CA, FL, LA and NM but with all the immigrants still included in their rates! Sources: CPPP Analysis of 2011 and 2012 CPS Annual Social & Econ. Supplement, two-year average for , Hispanic Center, Feb. 1, 2011 Unauthorized Immigrant Population: National and State Trends, 2010

8 Medicaid Now (U.S) Health Insurance Coverage 31 million children & 17 million adults in low-income families; 14 million elderly and persons with disabilities Assistance to Lowincome Medicare Beneficiaries 8.8 million aged and disabled 19% of Medicare beneficiaries Long-Term Care Assistance 1 million nursing home residents; 2.8 million community-based residents MEDICAID Support for Health Care System and Safety-net $16B in Disproportionate Share Hospital payments; 40% of community health center revenues SOURCE: Kaiser Commission on Medicaid and the Uninsured, 2009 Biggest Source of Federal Funds in State Budgets Federal share ranges 50% to 76%; 43% of all federal funds to states 8

9 States Have Medicaid Choices & Floors Texas meets federal minimum Medicaid standards for kids. Texas could cover more parents, seniors, and disabled adults (under current law). States have near-complete control over what Medicaid pays health care providers (no federal minimum standards) 9

10 Texas Medicaid/CHIP: Who is Helped Today Disabled, 415,969 CHIP, 561,462 January 2012, HHSC data 25.2 million Texans 7.4 million under 19 Elderly, 342,177 Poor Parents, 140,295 Medicaid Children, 2,523,329 TANF Parent, 82,964 Maternity 83,453 Total enrolled 1/1/2012: 3.6 million Medicaid; 561,000 CHIP 1 in 7 Texans, but 42% of Texas kids 10 10

11 Special Texas Medicaid Groups Maternity: More than half of Texas births (true in all states); ends 2 months from delivery. Breast and Cervical Cancer Treatment: uninsured women <200% FPL Family Planning: women <185% FPL. (State $$ only now) Medicare Savings Groups: seniors or disabled with incomes too high for SSI, but below 120% FPL get help from MediCAID with their MediCARE costs. Community Attendant Program: non-medical services to help seniors or disabled remain at home. Medically Needy: In Texas, only for children and pregnant women, allows for TEMPORARY Medicaid during months when high medical bills reduce income to Medicaid levels. 11

12 Who is Left Out of Medicaid Today? Medicaid is not available to all poor or low-income Texans: Must have limited income and assets in most cases Must fit into a covered category (e.g. be pregnant and earning 185% FPL or less) VERY FEW working poor adults qualify for Texas Medicaid Categories NOT covered: Non-disabled, childless adults 25 year-old single construction worker cannot get coverage, even if laid off Undocumented immigrants, except in an emergency (and must otherwise meet all Medicaid requirements) E.g., the undocumented 25 year-old single construction worker construction worker cannot get ER visit covered Adult Legal Immigrants, though Texas has option to cover Lawful permanent resident of U.S. who entered U.S in 1998 cannot get coverage, even if severely disabled 12

13 Income Caps for Texas Medicaid and CHIP, 2012 $35,317/yr $35,317/yr $25,128 $38, % 185% $25,390/yr $19,090 $8, % 200% 133% 100% $2,256 $3,696 19% 75% 12% Income Limit as Percentage of Federal Poverty Income Annual Income is for a family of 3, except Individual Incomes shown for SSI and Long Term Care 13

14 Why Very Few Poor Parents Covered in Texas Medicaid Texas Medicaid has VERY limited coverage of parents (<12% of poverty; > 10 min wage disqualifies-- $308 a month for family of 3). Dollar limit set by Texas legislature 1985 and never updated. Today, about 226,000 poor Texas parents get Medicaid, though there are about 2.6 million children enrolled. 60% of adult Texans below poverty are uninsured (1.4 million) Medicaid Maternity coverage income limit much higher, but coverage ends 2 months after delivery. Medicaid does not cover undocumented at any age. LEGAL immigrant adults NOT covered in Texas Medicaid (a state choice). (This is unlike kids: Legal immigrant kids covered in Texas Medicaid and CHIP)

15 Medicaid Benefits Federal law REQUIRES state to cover certain services for all ages, including: Inpatient/outpatient hospital Physician services Lab and x-ray EPSDT (here, Texas Health Steps) all medically necessary care; no arbitrary limits Ambulance Home health Rural Health Clinics/FQHCs Nursing facilities Immunizations and comprehensive care for children Family planning Nurse Midwife, Nurse Practitioner Birthing centers, smoking cessation for pregnant women 15

16 More on Medicaid Benefits States can choose to not cover, or to limit these Optional services for recipients 21 and older only: Rx coverage (all states cover, but limits allowed for adults; TX limits 3 Rx/mo. except in HMOs) Institutional care for developmentally disabled Community care for elders or people with disabilities Dental care, Eyeglasses, Hearing aids Private duty nursing Case management Podiatry Chiropractic Mental health counseling States must cover all medically necessary services FROM EITHER LIST without arbitrary limits for children under age

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19 Big Medicaid Changes Since 1990 Enrollment growth in last 20 years mostly due to coverage of kids in/near poverty (federal laws require, but NOT for parents). Spending growth last 20 years mostly due to aged and disabled (~60%) services spending. Texas has expanded Medicaid programs for community care for aged and disabled Texans substantially. Federal law changes from : Added maternity coverage; Required comprehensive benefits for kids; and Required coverage of poor and near-poor children (before, only super-poor kids qualified); Texas streamlined enrollment & renewal for kids in 2001 (allow mail-in application/renewal, and 6 months of coverage). Serious problems with eligibility systems kept many Medicaid qualified Texans waiting for months from 2006 to Improved dramatically from

20 The Affordable Care Act and Texas Medicaid 20

21 2014: Health Reform Building Blocks Build on current system: Vast majority of Americans still get coverage through their employer. Medicaid expansion: US citizens to 133% FPL ($14,856 individual; $30,657 for 4 in 2012). Reform Private Health Insurance: standard minimum benefits, can t charge more based on health status, limits on premium increases as people age, no denial of coverage, no excluding pre-existing conditions, no annual or lifetime maximums. New Health Insurance Exchanges where private insurers options can be compared and purchased. Open to people without job-based coverage and small employers, and all members of Congress will get coverage thru exchange. Sliding scale premium assistance in the exchange from 100% up to 400% of FPL ($92,200 for family of 4). Sliding scale deductibles/co-pays and out-of-pocket caps in the exchange to increase affordability & reduce medical bankruptcy. Individual mandate to have coverage (with major exemptions). Some requirements for employers to contribute if their employees get sliding-scale help in exchange, with exemption for all employers with 50 or fewer FT workers. 21

22 Health Reform Building Blocks Medicaid Expansion Eligibility up to 133% of the federal poverty level ($30,657/yr for family of four) Adds 1.1 million TX adults (near term) 100% federal funding Max state share of 10% starts

23 What did the Supreme Court decision change about the ACA and Medicaid? The Court held that states should not have to risk of all of their existing Medicaid federal funding if they failed to comply with the expansion. (The authority to withhold federal dollars from states that violate Medicaid law has been part of Medicaid federal law since it was created in 1965, but the US Secretary of Health and Human Services has never had to impose that penalty on any state.) So, the law still technically still directs all states to expand Medicaid coverage in 2014, but if a state chooses not to accept the expansion, they do not face any penalty. 23

24 What does Texas pay, and what does federal government pay if we expand Medicaid to adults under the ACA? The federal government will pick up 100 percent of the costs for the first three years of Texas expansion to the adults, 95% in 2017, 94% in 2018, 93% in 2019, and no less than 90 percent every year after that. Texas will also expect to see increased enrollment known as the welcome mat effect by already-eligible but currently uninsured children. So, Texas costs for children s Medicaid would also be expected to increase, and the state s share of that growth would be our regular state Medicaid share (just under 42 cents per dollar in 2012, updated by Congress every year). 24

25 How many would gain insurance with Medicaid expansion? National experts and Texas HHSC estimate million uninsured US citizen adults in Texas will be eligible for the Medicaid option in 2014, and HHSC projects just over a million of these would actually enroll by 2016 (note the important difference between estimates of potential eligibles versus actual participating enrollees). HHSC also estimates that over 400,000 more children already eligible today, but unenrolled will sign up for Medicaid by 2016 because of heightened public awareness that will accompany the roll-out of private and public coverage expansions under the ACA starting January

26 Official HHSC Cost Estimates HHSC estimates the state-budget (GR) Medicaid costs to cover these new adults and welcome mat children would: total $3.1 billion GR over five years from , and those state funds will draw down $28.6 billion in federal matching funds for Texas health care providers. Of that $3.1 billion total, HHSC estimates for the years from : The state s cost for the adult Medicaid expansion totals $1.3 billion GR, drawing another $25.3 billion in federal match. HHSC estimates another $1.8 billion state GR and $3.3 billion federal match will result from this welcome mat effect new enrollment of currently eligible children. HHSC and national expert models alike assume new welcome mat enrollment in Texas Medicaid by the uninsured children who are currently eligible but not enrolled may occur to a large degree and with about the same state-budget cost whether or not Texas chooses to expand coverage to adults. 26

27 More on Medicaid Expansion Costs For perspective, Texas hospitals currently spend in excess of $5 billion in a single year for uncompensated care, nearly all of which is supported by local property tax dollars, but without the benefit of the 9 to one match Texas would receive under the ACA s Medicaid expansion opportunity. For the adult expansion and the children s Medicaid coverage growth, that s $9 federal match for every $1 state contribution. (Compared to current federal match for Texas Medicaid of $1.45 in fed funds per every $1 GR.) The current 1115 Medicaid Transformation waiver has a budget cap (October 2011 to September 2016) of $29 standard match rate so state share about 40%: So, state is struggling to find $12 billion in local matching dollars, so we can raise about $17 b fed match 27

28 Expert Opinion on What Court said & What it means The SC decision did not alter: any other aspects of the ACA; or The federal Medicaid law in any other respect. States that expand must abide by all Medicaid provisions of the ACA in order to get the enhanced fed $ for the expansion. Federal Medicaid could choose to allow states to phase in over time, or cover lower income level, but they are not obligated to. 28

29 Family Income 2014: ACA Provides Public Support Fitted to Income >$89,400 for a family of four; >400% of FPL $67,100-$89,400; % of FPL $44,700-$67,100; % of FPL Job-based coverage, or Full-cost coverage in the exchange Job-based coverage, or Subsidized exchange coverage: premiums capped at 9.5% of income Job-based coverage, or Subsidized exchange coverage: premiums capped at % of income $29,700-$44,700; % of FPL CHIP Job-based coverage, or Subsidized exchange coverage: premiums capped at 3% - 6.3% of income <$29,700 for a family of four; < 133% FPL Medicaid???Medicaid??? Children Family income based on 2011 federal poverty income levels for a family of four Adults (non-disabled adults, not eligible for Medicare)

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32 Linking Americans to Coverage (2014) FPL Unsubsidized 400% 300% Exchange Subsidized 200% 133% 100% 200% 185% 133% Medicaid Expansion 74% Basic Health or Exchange 2014 Children Pregnant Women 20% Parents Seniors & People with Disabilities Medicaid and CHIP (Texas 2011 eligibility levels) Uninsured or insured via other coverage source 0% 0% Adults w/o Children Undocumented Immigrants 32

33 Americans Coverage in 2019: If nothing changed compared to health reform law Uninsured 57 million 20% Medicaid/CHIP 32 million 11% Uninsured 26 million 9% Private Exchanges 23 million 8% Medicaid/CHIP 48 million 17% Nongroup & Other 30 million 11% Employer 161 million 58% Nongroup & Other 27 million 10% Employer 156 million 56% Without Reform Under Reform Million U.S. Residents Under Age 65 Source: Congressional Budget Office, March 2012 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage 33

34 If Texas Opts Out ACA makes sliding-scale premium assistance available only to persons above 100% FPL (exception: legal immigrants excluded from Medicaid), so: Uninsured Texas adults below 100% FPL would have NO assistance available in UI/KFF estimates 1.75 million uninsured TX adults under 133% FPL, 1.33 of these with incomes below 100% FPL. Those from % FPL would be eligible for premium assistance, but because the system was designed with assumption that this group would have Medicaid, some of these near-poor will have difficulty affording the coverage even with a cap on premiums of 2% of family income. Costs of care for uninsured poor Texas adults will continue to be carried primarily by local property taxpayers, secondarily by other charity care providers, and without benefit of the 90%+ federal matching dollars. 34

35 Romney and Ryan Budget Proposals, Federal Deficit Reduction and Medicaid 35

36 Romney Budget basics Proposal: Cap total federal spending at 20 percent of gross domestic product (GDP); boost defense spending to 4 percent of GDP To achieve this would require very large cuts in both entitlements and discretionary programs. If ACA repealed (per Romney plan) but exempted Social Security from cuts, (per Romney plan), and cut Medicare, Medicaid, and all other entitlement and discretionary programs equally (by the same percentage) to meet Romney s 20% GDP spending cap and 4% GDP defense spending target, then Would have to cut non-defense programs (other than Social Security) by 22 percent in 2016 and 34 percent in 2022 (see Figure 1). Or, if exempted Medicare from cuts for this period, the cuts in other programs would have to be even more dramatic 32 percent in 2016 and 53 percent in By 2022, the cuts under Governor Romney s budget proposals would shrink nondefense discretionary spending which, over the past 50 years, has averaged 3.9 percent of GDP and never fallen below 3.2 percent to 1.8 percent of GDP if Medicare shares in the cuts, and to 1.3 percent of GDP if it does not. 36

37 Romney budget, continued Over the coming decade, Romney s cap would require cuts in programs other than core defense of $6.1 trillion, compared with $5.0 trillion in cuts under the House-passed budget plan. To the extent that policymakers also spared other programs from these cuts for example, veterans benefits, military and civilian service retirement, the FBI, or air traffic control the cuts in all remaining programs would have to be still deeper. These cuts would be noticeably deeper than those required under the austere House-passed budget plan authored by Budget Committee Chairman Paul Ryan (R-WI). (Romney s nondefense cuts are deeper because his proposal increases core defense spending the defense budget other than war costs and some relatively small items such as military family housing to 4 percent of GDP, while the Ryan budget does not.) 37

38 Center on Budget and Policy Priorities Medicare and Medicaid Controlled Costs Better than Private Insurance Over the Last Decade Average Annual Growth Rate, % 8% 7% 6% 5% 4% 3% 2% 1% 0% 4.6% Medicaid Per Beneficiary 5.1% Medicare Per Beneficiary 7.2% Private Per Capita, Comparable to Medicare 7.7% Private Employer Insurance Premiums cbpp.org 6 38

39 Ryan Proposals, Big Picture House Budget Committee Chairman Paul Ryan s proposal to convert Medicaid to a block grant, which the House passed Spring 2012 as part of Chairman Ryan s overall budget plan, would have cut federal Medicaid funds to most states by more than 35 percent by 2010 and to several of them by more than 50 percent if it had been in effect starting in Medicaid cost growth largely mirrors health care cost growth systemwide, and slowing Medicaid costs over the long run requires controlling costs throughout the U.S. health care system. The Affordable Care Act takes significant initial steps toward achieving this goal; and over time, significant further steps will be needed. But trying to address Medicaid in isolation from the rest of the health care system, by converting it to a block grant or imposing a per capita cap, would sharply shift costs and risks to states, beneficiaries, and providers. 39

40 Top Concerns: Block Grants, per-capita Cap Block grant, PCC would lock Texas into our historically low Medicaid spending, far below national average. Both result of low provider fees and minimal coverage of parents. Also locks in recent rate cuts, like physician fees and Medicare Equalization Does not provide for cost surges due to medical advances; (recent example, use of anti-retrovirals) Does not provide for natural disaster or recession surges in enrollment Rewards states that have not attempted to economize with a higher cap. Texas would either have to spend more state funds on Medicaid, or significantly shrink our Medicaid spending on a per-beneficiary basis. 40

41 Texas Well and Healthy Texas Coalitions & Campaigns Working on ACA Implementation and/or Medicaid-CHIP Support 41

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