This data note reviews the Medicaid estimates included in the American Health Care Act prepared by the Congressional Budget Office (CBO) and staff at the Joint Committee on Taxation (JCT).
Disclosure: This is the opinion/facts from the Kaiser Family Foundation, not me. But I found this interesting. My opinion will be forthcoming.
Kaiser Family Foundation article:
Medicaid covers about 73 million people nationwide. Jointly financed by the federal and state governments, states have substantial flexibility to administer the program under existing law. Medicaid provides health insurance for low-income children and adults, financing for the safety net, and is the largest payer for long-term care services in the community and nursing homes for seniors and people with disabilities. President-elect Trump supports repeal and replacement of the Affordable Care Act (ACA) and a Medicaid block grant. The GOP plan would allow states to choose between block grant and a per capita cap financing for Medicaid. The new Administration could also make changes to Medicaid without new legislation.
1. HOW WOULD ACA REPEAL AFFECT MEDICAID?
A repeal of the ACA’s coverage expansion provisions would remove the new eligibility pathway created for adults, increase the number of uninsured and reduce the amount of federal Medicaid funds available to states. The Supreme Court’s 2012 ruling on the ACA effectively made the Medicaid expansion optional for states. As of November 2016, 32 states (including the District of Columbia) are implementing the expansion. The full implications of repeal will depend on whether the ACA is repealed in whole or in part, whether there is an alternative to the ACA put in place and what other simultaneous changes to Medicaid occur. However, examining the effects of the ACA on Medicaid provide insight into what might be at stake under a repeal.
What happened to coverage? The ACA expanded Medicaid eligibility to nearly all non-elderly adults with income at or below 138% of the federal poverty level (FPL) – about $16,396 per year for an individual in 2016. Since summer of 2013, just before implementation of the ACA expansions, through August 2016 about 16 million people have been added to Medicaid and the Children’s Health Insurance Program. While not all of this increase is due to those made newly eligible under the ACA, expansion states account for a much greater share of growth. States that expanded Medicaid have had large gains in coverage, although ACA related enrollment has tapered. From 2013 to 2016 the rate of uninsured non-elderly adults fell by 9.2% in expansion states compared to 6% in non-expansion states.
What happened to financing? The law provided for 100% federal funding of the expansion through 2016, declining gradually to 90% in 2020 and beyond. Expansion states have experienced large increases in federal dollars for Medicaid and have claimed $79 billion in federal dollars for the new expansion group from January 2014 through June 2015. Studies also show that states expanding Medicaid under the ACA have realized net fiscal gains despite Medicaid enrollment growth initially exceeding projections in many states.
What other Medicaid provisions were in the ACA? The ACA required states to implement major transformations to modernize and streamline eligibility and enrollment processes and systems. The ACA also included an array of new opportunities related to delivery system reforms for complex populations, those dually eligible for Medicare and Medicaid and new options to expand community-based long-term care services.
2. WHAT WOULD CHANGES IN THE FINANCING STRUCTURE MEAN FOR MEDICAID?
A Medicaid block grant or per capita cap policy would fundamentally change the current structure of the program. These policies are typically designed to reduce federal spending and fix rates of growth to make federal spending more predictable, but could eliminate the guarantee of coverage for all who are eligible and the guarantee to states for matching funds. States would gain additional flexibility to administer their programs but reduced federal funding could shift costs and risk to beneficiaries, states, and providers.
How would it work? Block grants or per capita caps could be structured in multiple ways. Key policy decisions would determine levels of federal financing as well as federal and state requirements around eligibility, benefits, state matching requirements, and beneficiary protections. Previous block grant proposals have determined a base year financing amount for each state and then specified a fixed rate of growth for federal spending. Under a Medicaid per capita cap, the federal government would set a limit on how much to reimburse states per enrollee. Payments to states would be based on per enrollee spending multiplied by enrollees. Spending under per capita cap proposals fluctuate based on changes in enrollment, but would not account for changes in the costs per enrollee beyond the growth limit. To achieve federal savings, the per capita growth amounts would be set below the projected rates of growth under current law.
What are the key policy questions? Key questions in designing these proposals include: what new flexibility would be granted to states, what federal requirements would remain in place, what requirements would be in place for state matching funds, what is the base year and growth rates, and how would a potential repeal of the ACA work with a block grant proposal? Given the lack of recent administrative data, setting a base year could be challenging. These financing designs could lock in historic spending patterns and variation in Medicaid spending across states, resulting in states deemed “winners” or “losers.”
What are the implications? Capping and reducing federal financing for Medicaid could have implications for beneficiaries, states, and providers including: declines in Medicaid coverage or new financial barriers to care; limited funding for children (the majority of Medicaid enrollees) as well as the elderly and those with disabilities (populations that represent the majority of Medicaid spending); reduced funding for nursing homes and community-based long-term care (Medicaid is the largest payer of these services); reductions in federal revenues to states and Medicaid revenues for safety-net providers. A block grant would not adjust to increased coverage needs during a recession. Block grants or per capita caps would not adjust to changes in health care or drug costs or emergencies. Recently Medicaid costs have increased due to high cost specialty drugs and Medicaid has been used to help combat the growing opioid crisis.
3. HOW COULD MEDICAID BE CHANGED THROUGH ADMINISTRATIVE ACTIONS?
The Administration could make changes to Medicaid without changes in legislation.
How can changes be made through guidance? A new administration can reinterpret existing laws through new regulations and new sub-regulatory guidance. While there are rules that govern how to change regulations, a new administration has more flexibility to issue or amend sub-regulatory guidance, such as state Medicaid director letters. Rules promulgated by the Obama administration could be rolled back or changed.
How can changes be made through waivers? Throughout the history of the Medicaid program, Section 1115 waivers have provided states an avenue to test and implement demonstrations that, in the view of the Health and Human Services Secretary, advance program objectives but do not meet federal program rules. Longstanding federal policy has required waivers to be budget neutral for the federal government.
What kind of waivers may be considered? Seven states are using waivers to implement the ACA Medicaid expansion, including Indiana. The Indiana waiver, implemented under then Governor Pence, includes provisions to impose: premiums on most Medicaid beneficiaries; a coverage lock-out period for individuals with incomes above the poverty level who fail to pay premiums; health savings accounts; and healthy behavior incentives. The Obama administration has not approved waivers that would require work as a condition of Medicaid eligibility. It also has denied Ohio’s waiver request to impose premiums regardless of income and exclude individuals from coverage until all arrears are paid on the basis that this would restrict or undermine coverage from existing levels. Many other states are using waivers to implement payment and delivery system reforms. The incoming administration could decide whether or not to renew existing waivers and can approve a new set of waivers to promote its own program goals.
Turning Medicare Into a Premium Support System: Frequently Asked Questions — The Henry J. Kaiser Family Foundation
Premium support is a general term used to describe an approach to reform Medicare that aims to reduce the growth in Medicare spending. These FAQs raise and discuss basic questions about the possible effects of a premium support system for Medicare beneficiaries, the federal budget, health care providers, and private health plans.
The Effects of Medicaid Expansion under the ACA: Findings from a Literature Review — The Henry J. Kaiser Family Foundation
Research on the effects of Medicaid expansions under the Affordable Care Act (ACA) can help increase understanding of how the ACA has impacted coverage; access to care, utilization, and health outcomes; and various economic outcomes, including state budgets, the payer mix for hospitals and clinics, and the employment and labor market. These findings also may…
Recently, Montana became the 31st state, including D.C., to expand Medicaid. Discussion regarding Medicaid expansion is ongoing in one state: Utah. Nineteen (19) states have rejected Medicaid expansion, including NC.
When Medicaid expansion was first introduced, it was a highly polarized, political topic, with Republican governors, generally, rejecting expansion and Democrat governors, generally, accepting expansion.
Now, however, many Republican governors have opted to expand Medicaid. There are currently 31 Republicans, 18 Democrats, and one independent that hold the office of governor in the states. Yet, 31 states have expanded Medicaid. Here is an extremely, difficult-to-read chart outlining the states that have opted to expand, those that have opted to reject expansion, and the one state (Utah) still discussing:
I know, it’s hard to read. Feel free to go to the actual Kaiser website to see the chart readable by humans. (Microsoft’s “Snipping Tool” leaves much to be desired; Apple’s “Screen Shot” is much better, in my opinion).
An interesting fact is that, in its first week with Medicaid expansion, Montana had over 5,500 people sign up for Medicaid.
Another interesting fact is that, approximately 18,078 physicians graduate from medical school in America per year. But in Montana?
N/A…as in, none. Not applicable. You see, Montana does not have a medical school. It does participate in the Washington, Wyoming, Alaska, Montana, and Idaho collaborative program. However, the collaborative program does not do a stellar job at recruiting physicians to Montana. It tries. But the statistics are stacked against Montana.
“Sixty-eight percent of doctors who complete all their training in one state end up practicing there,” according to the Association of American Medical Colleges.
Yet Montana has no medical school. And expanded Medicaid. If any of you ever took economics, there is this accepted theory called, “supply and demand.”
Supply and demand dictates that, when supply is low and demand is high, the product, whatever it is, can be sold at the highest price. Medicaid expansion, however, is creating an anomaly. Medicaid expansion expects a higher demand to meet the lower supply without increasing the reimbursement rates. This is a fundamental flaw in Medicaid expansion. If, on the other hand, Medicaid expansion was premised on an increase in reimbursement rates, we may see an uptick in supply. When demand is high and supply is low, many people “demanding” get nothing.
Let’s think about how many patients each primary care physician can handle.
“According to a 2013 survey by the American Academy of Family Physicians, the average member of that group has 93.2 “patient encounters” each week — in an office, hospital or nursing home, on a house call or via an e-visit. That’s about 19 patients per day. The family physicians said they spend 34.1 hours in direct patient care each week, or about 22 minutes per encounter, with 2,367 people under each physician’s care.” See article.
“The baseline projections from BHPr’s physician supply and requirements models suggest that overall requirements are growing faster than the FTE supply of physicians (Exhibits 51 and 52). Between 2005 and 2020, requirements are projected to grow to approximately 976,000 (22 percent), while FTE supply is projected to grow to approximately 926,600 (14 percent). These projections suggest a modest, but growing, shortfall of approximately 49,000 physicians by 2020 if today’s level of health care services is extrapolated to the future population. ” See article.
This is not the first time I have noted the increasing physician shortage with Medicaid expansion. There is a huge difference in giving someone a Medicaid card and providing a person with quality health care. A card is a piece of paper. If you cannot find a physician..or psychiatrist…or pulmonologist….or neurosurgeon who will accept Medicaid, then your Medicaid card is simply a piece of paper, not even worth the paper upon which it is printed. See blog. And blog. And blog.
The same can be said with the shortage of dentists. See blog.
With a shortage of approximately 49,000 physicians in 2o20, I pray that I am not holding a Medicaid card.
If I am, I will be another victim of high demand with low supply.
Representative David Price spoke as the Keynote Speaker at the North Carolina Society of Health Care Attorneys annual meeting yesterday morning. Since Representative Price was actually up in Washington D.C. during the shutdown, it was very interesting to hear him speak. His opinion, as one would expect from his ideology, was that the shutdown was idiotic and unnecessary.
What I found interesting was how he described the relationships between congressmen and women today versus in the 90s. Remember, he has represented NC in Washington for more than one decade. He described the relationships, even across party lines, as more cordial in the 90s than today’s relationships. I wonder why our legislative body has become more segregated.
In the afternoon session, Linwood Jones from the North Carolina Hospital Association spoke about recent legislative action. This legislature was not good to hospitals. As Linwood described the legislative session this year…”It was all about Medicaid.” (I know you were wondering how the NC Society of Health Care Attorneys annual meeting was going to be germane to Medicaid). According to Mr. Jones, the Medicaid budget was the primary factor in almost all budget cuts. And what entities get most of Medicaid funding?
Duh…Hospitals. Hospitals are the biggest providers in the state, and, in some areas, the biggest employers.
Our Medicaid budget is approximately $13 billion.
Remember…36 million a day is what we spend on Medicaid in NC.
How much of that $13 billion Medicaid budget goes to hospitals? According to Kaiser Family Foundation, 25.7% for inpatient care. Or $3.341 billion annually. Or $9.252 million a day!!
Including outpatient care? 38.7% Or $5.031 billion annually. Or $13.932 million a day!!
According to the handy-dandy Wikipedia website, North Carolina has 126 hospitals in 83 counties. For those of you who never went to 6th grade in North Carolina, we have 100 counties in NC. (In the 6th grade, if you grew up here, you learn all about North Carolina geography, which apparently didn’t stick, because I still get lost).
That is $13.932 million dollars a day going to 126 hospitals in NC. That is a lot of money!!!
Does Medicaid matter to hospitals?
Heck, yes!! Remember, a hospital cannot turn anyone away, including Medicaid recipients and uninsured. Add the fact that the mentally ill in NC are not getting medically necessary services because our managed care organizations (MCOs) have monetary incentives to NOT provide the expensive mental health services; PLUS the fact that Medicaid reimbursements are painfully low, which leads to many physicians not accepting Medicaid, and you get the sad sum of Medicaid recipients ending up in emergency rooms of hospitals.
Don Dalton, a spokesman for the Hospital Association, said that statewide about 46 percent of hospitals’ revenue comes from Medicaid. (See Rose Hoban’s article).
But, hospitals don’t make a huge profit. Especially on Medicaid recipients.
On average, Medicaid reimburses hospitals 80% of the actual cost for hospital services.
But this year, the General Assembly created a budget in which the 80% will be reduced to 70%.
Medicaid reimbursements were already bad. But now, the Medicaid reimbursements will be 10% worse. Subtract 10% from the $13.932 million dollars a day…
This is not a good thing for hospitals nor Medicaid recipients.
When Representative Price was speaking, a woman raised her hand with a question/vignette. She said that she and her friends had gotten on the health care exchange (Obamacare) (Healthcare.gov) website and “shopped” for health insurance. She said that all the people who signed up for health care exchange (because it is mandated and there is a penalty for not having insurance) had their premiums increase anywhere from 300%-800%. Although Rep. Price made a good point, that they all should have contacted Blue Cross Blue Shield (BCBS) and asked why BCBS dropped that particular insurance plan. Nonetheless, the woman harped on the fact that Obama had promised, “You like your insurance? You can keep it! You like your doctor? You can keep him/her!” (I added the “her.”)
So, here we are…with low Medicaid reimbursements to begin with, high medical costs, and the General Assembly reducing the Medicaid rates for hospitals by 10%.
Incentive to accept Medicaid recipients? I think not…but hospitals have no choice.
Physicians and other Medicaid providers have the choice as to whether to accept Medicaid patients, but hospitals? No choice there. Hospitals must accept Medicaid recipients. Mandatory!!!
In my opinion, the very first step toward fixing the Medicaid system is RAISING Medicaid reimbursement rates.
Sound counterintuitive? Yes, I agree it sounds counterintuitive. But think about Medicaid like this:
If you agree with me that Medicaid is an entitlement and that the Medicaid budget is way too high, but that all Medicaid recipients deserve quality health care…if you agree with all that…
And you also agree with me that it is drastically more expensive for Medicaid recipients to go to the emergency room (ER) for health issues that could be solved in a family physicians’ office…if you agree with all that…
Then we would save Medicaid dollars by increasing (drastically) the Medicaid reimbursements. If doctors had a monetary incentive to accept Medicaid, then more doctors would accept Medicaid (Logic 101). If more doctors accept Medicaid, then more Medicaid recipients have the ability to go see a doctor. If more recipients have more office visits then ER visits drop. If more unnecessary ER visits drop, then the State pays less money to the hospitals, which is an extremely higher rate (even with the 10% reduction) than a higher Medicaid reimbursement to physicians. Cut the $13.932 million a day to hospitals, not by decreasing the reimbursement rate, but by fewer Medicaid recipient going to the ER…instead have the recipients receive quality care outside the hospital, thus saving money…
By reducing the Medicaid reimbursements to hospitals, the legislature did decrease the Medicaid budget, but not in a way that intelligently attempts to fix the system. The same amount of Medicaid recipients will be going to hospitals. Since the hospitals cannot turn anyone away, reducing reimbursements to hospitals merely hurts the hospitals.
Want to decrease the Medicaid budget? Increase Medicaid reimbursements (drastically) to Medicaid providers. More providers accepting Medicaid means more recipients receiving quality care and NOT checking into the ER….
Money saved intelligently. Too bad the legislature didn’t ask my opinion prior to slashing Medicaid reimbursement rates.