Medicaid at 50: Evolution from Public Assistance to Health Insurance Presentation to the National Association of Social Insurance June 23, 2015
Growth in Medicaid Market Share and Influence 2 Now single largest source of health insurance in the nation Other Private 6% Uninsured 14% U.S. Health Insurance Enrollment by Source Medicare 15% Other Private 3% Exchanges 4% Uninsured 7% Medicare 15% Medicaid 16% Medicaid 22% ESI 47% CHIP 1% ESI 47% Pre-ACA in 2013 Projected in 2015 CHIP 2% Source: National Health Expenditure Projections 2011-2021 http://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/downloads/proj2011pdf.pdf
Medicaid Growth in Context 3
Steady Growth in Enrollment 4 Medicaid Enrollment (in millions of person-year equivalents) 90 80 70 60 50 40 30 20 10 0 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 Historic expansions to children, pregnant women 1987 1989 1991 = Periods of Program Expansion Enrollment grows by 14.6% 1993 1995 1997 CHIP Enrollment grows by 9.8% 1999 2001 2003 2005 Enrollment grows by 6.7% 2007 2009 2011 = Periods of Recession 2013 ACA Enrollment grows by 15% 2015 2017 2019 2021 Fiscal Year Projected Source: OACT 2012 and 2013 Actuarial Reports http://medicaid.gov/medicaid-chip-program-information/by-topics/financing-and-reimbursement/downloads/medicaid-actuarial-report-2013.pdf US Business Cycle Expansions and Contractions, National Bureau of Economic Research
Medicaid Spending Growth in Context 5 Medicaid spending growth has been driven largely by enrollment. Per capita growth slower than private insurance and Medicare. 35% 30% 25% 20% 15% 10% 5% 0% Cumulative Growth in Per Capita Spending 1997 2013 29% 14% 6% Private Medicare Medicaid Source: http://blogs.wsj.com/washwire/2015/04/16/public-vs-private-health-insurance-on-controlling-spending/
Medicaid Spending Focused on High Need Enrollees 6 Estimated Medicaid Enrollment and Expenditures by Enrollment Group as Share of Total, FY 2012 Children 20% Children 49% Adults 16% Adults 25% Disabled 44% 65% of costs 26% of enrollment Disabled 17% Aged 9% Enrollment Aged 21% Expenditures Source: http://medicaid.gov/medicaid-chip-program-information/by-topics/financing-and- Reimbursement/Downloads/medicaid-actuarial-report-2013.pdf
Medicaid Accounts for 26% of State Budgets When State and Federal Funds are Considered 7 Total State Budget (State & Federal Funds) FY 2014 Transportation 8% Corrections 3% Other 32% Public Assistance 1% Elementary & Secondary Education 20% Medicaid ($2,239 million, 28.4%) Higher Education 10% Medicaid 26% Sources of Medicaid Funds Federal Funds 64% State General Funds 24% Other State Funds* 12% * Includes intergovernmental transfers, provider taxes, fees, donations, assessments Source: National Association of State Budget Officers, State Expenditure Report, Examining Fiscal 2012-2014 Spending http://www.nasbo.org/publications-data/state-expenditure-report/state-expenditure-report-fiscal-2012-2014-data
And 15% When Looking Only at Non-Federal Funds 8 Medicaid as a Share of Total State Budgets (State Funds Only*) FY 2014 Other 35% Elementary & Secondary Education 24% Higher Education 13% * Includes intergovernmental transfers, provider taxes, fees, donations, assessments Transportation 7% Corrections 5% Medicaid 15% Public Assistance 1% Source: National Association of State Budget Officers, State Expenditure Report, Examining Fiscal 2012-2014 Spending http://www.nasbo.org/publications-data/state-expenditure-report/state-expenditure-report-fiscal-2012-2014-data
Evolution from Public Assistance to Health Insurer 9
Medicaid s Welfare Program Roots 10 Medicaid was part of LBJ s 1965 Great Society Program, which also created Medicare. Medicaid eligibility was tied to Cash Assistance. I am asking for programs to improve the care of the health of our preschool and school-age children as well as help our States and communities improve their health services to the needs of our Nation Whatever we do or hope to do depends upon the health of our people. We cannot be satisfied until all Americans have available to them the best medical treatment that the best medical men can devise. Source:http://www.presidency.ucsb.edu/ws/index.php?pid=27351
Adjunct to Welfare Programs 11 Eligibility for Medicaid Linked to Eligibility for Welfare Categorical Eligibility: Not Enough to be Poor Application for Welfare was the Application for Medicaid Long applications In-person interviews at welfare office Applicants required to prove eligibility with paper-based documentation Other requirements often imposed Enrollment not encouraged
Key Turning Points 12 Expansions for Pregnant Women/ De-Linked from Welfare 1984 1989 Welfare Reform: Eligibility For Parents De-Linked from Welfare 1996 ACA: Medicaid Eligibility and Enrollment Changes 2014 Expansions for Children/De-Linked from Welfare 1988 1990 CHIP Created/ Medicaid Application Process Simplified for Children 1997+ Medicaid has also played a historic role of meeting care needs of special populations With ACA, Medicaid shifts to broad-based coverage
The New Coverage Paradigm 13
New Coverage Paradigm 14 Medicaid is one of three Insurance Affordability Programs providing a continuum of subsidized insurance for those without affordable ESI 400% FPL 241% FPL Coverage gap in median nonexpansion state 133% FPL 100% FPL Exchange Subsidies Medicaid/CHIP Children Varies by State 48% FPL 33% FPL Adults Children Other Adults Jobless Parents Working Parents Pregnant Women Sources: http://www.ncsl.org/portals/1/documents/health/tfcmannls12.pdf; http://kff.org/medicaid/fact-sheet/medicaid-eligibility-for-adults-as-of-january-1-2014/
Making the Coverage Continuum Work 15 Simplified Eligibility Rules - Aligned With Marketplace One Application for the 3 Insurance Affordability Programs No In-Person interviews: Online Application (or In-Person, Mail, Phone) Data-driven Verifications and Renewals One IT System or Shared Service Across Programs Applicant enrolled in whichever program is appropriate
Medicaid as Health Insurance: Real Time Eligibility 16 Improved online application processes allow states to verify application information against electronic sources, all during one application sitting. Rhode Island estimates it can process up to two thirds of its Medicaid applications for enrollees subject to new ACA rules without manual intervention or additional information being required from the applicant Continuity of coverage at renewal is also improving as states implement datadriven verification processes and reduce paperwork requirements. Washington estimates it can renew coverage for up to two thirds of enrollees subject to new ACA rules without requiring additional action or information from enrollees
Expansion Drives Larger Drops in Uninsurance 17 25.0% Uninsurance Rate in Non-Expansion States 21.6% 25.0% Uninsurance Rate in Expansion States 20.0% Decline of 33% 20.0% 15.0% 14.4% 15.0% 14.8% Decline of 49% 10.0% 10.0% 7.5% 5.0% 5.0% 0.0% Q4 2013 Q1 2015 0.0% Q4 2013 Q1 2015 Source: Urban Institute Health Reform Monitoring Survey: http://hrms.urban.org/quicktakes/trends-in-uninsurance-and-state-marketplace-and-medicaid-expansion-decisions.html
Looking to the Future 18
30 States Have Expanded Medicaid 19 5 States are Implementing Alternative Medicaid Expansions Washington Oregon California Nevada Idaho Utah Arizona Montana Wyoming Colorado New Mexico North Dakota South Dakota Nebraska Kansas Oklahoma Minnesota Iowa Wisconsin Missouri Arkansas Michigan Indiana Illinois Kentucky Tennessee Ohio West Virginia Georgia Vermont New York Pennsylvania North Carolina South Carolina Maine New Hampshire Massachusetts Rhode Island Connecticut New Jersey Delaware Washington, DC Maryland Virginia Texas Alaska Hawaii Alabama Louisiana Mississippi Expanded Medicaid (29 + DC) Not Expanded Medicaid (21) Alternative Medicaid Expansions (5) Medicaid expansion decisions as of June 2015. Montana has passed legislation to implement an alternative expansion but has not yet submitted a waiver request to CMS
Features of Alternative Medicaid Expansions 20 Premiums Premium Assistance Marketplace and ESI Cost Sharing Health Savings-Like Accounts Healthy Behavior Incentives Connecting to Work (no waiver required)
Medicaid: Part of the Movement to Achieve Delivery System and Payment Reform 21 Access & Person-Centered Care Value-Based Purchasing Focus on High-Needs/High-Cost Enrollees Leading in Some Areas Alignment Across the Marketplace New York - DSRIP Waiver NY s DSRIP waiver pays hospitals who partner with community providers and organizations to coordinate care across settings and meet quality and efficiency metrics. The waiver aims to transition hospitals to value-based payment arrangements with MCOs over the next 5 years. State Examples Examples Arkansas Multi-Payer Bundled Payments AR implemented a multi-payer, episode-based bundled payment program for 100 + acute care procedures. Providers are accountable for the total cost of an episode of care, and receive bonuses if they meet established cost thresholds and quality targets or penalties if they exceed cost thresholds.
Then and Now: Key Debates Over Medicaid s Future 22 NYT Headlines 1965-1967 Survey Reports Lag on Medicaid Little-understood program set up in only 19 states The Medicaid Program Really Is Aiding More than half of all American citizens live today in states and territories covered by Medicaid, the quiet but potentially history-making sister of Medicare Cutbacks Sought by Conservatives 5% Cut in State Spending, Repeal of Medicaid Urged U.S. Curb Urged on Rising Cost Of Doctors, Drugs and Hospitals Secretary of Health, Education and Welfare recommended today a broad program to slow the rising cost of medical care. NYT Headlines Now Complicated Politics of Medicaid Expansion are Playing Out State by State Some feelings about the federal government here run deeper than practical economics Medicaid, Often Criticized, Is Quite Popular With Its Customers surveys suggest that people understand Medicaid s drawbacks but appreciate its advantages. House Republicans Propose Budget with Deep Cuts The Republicans proposed budget privatizes Medicare, turns Medicaid into block grant After Slow Growth, Experts Say, Health Spending Is Expected to Climb The period in which health care has accounted for a stable share of economic output is projected to end in 2014...