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Hot Issues in Health Care

Focus on Medicaid & SCHIPNovember 12, 2004

Martha KingNational Conference of State Legislatures

(NCSL)Health Program Director

303/856-1448martha.king@ncsl.org

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“While I can explain the meaning of life, I don’t dare try to explain how the Medicaid system works.”

Medicaid “Experts”

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Medicaid Made Simple

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Medicaid: Why Should You Care?

22% of Colorado’s total budget Largest financing source for low-income

(43% of federal allocations to states) Pays half of U.S. nursing home costs Covers 31% of U.S. population 85+ Funds about 35% of U.S. births Subsidizes care for the uninsured Subsidizes graduate medical education

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Distribution of the Average State’s Budget for Health Services, 2001

Medicaid69.2%

Population Health 6.3%

Other7.8%

State Employee Benefits

8.3%Community

Based Services5.6%

Source: Milbank Memorial Fund, National Association of State Budget Officers and The Reforming States Group,2000-2001 State Health Care Expenditure Report (New York: Milbank Memorial Fund, April 2003), http://www.milbank.org/reports/2000shcer/index.html

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16.7% 17.0%11.1%

48.2%

17.2%

Total PersonalHealth Care

Hospital Care ProfessionalServices

Nursing HomeCare

Prescription Drugs

TotalNationalSpending(billions)

$1,130 $412 $422 $92 $122

SOURCE: Heffler, S. et al., 2002. Based on National Health Care ExpenditureDate, Centers for Medicare and Medicaid Services, Office of the Actuary.

Medicaid’s Role in the Health System,2000

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Medicaid at a Glance

Federal/state program (55 variations) Optional—large financial incentive

Federal gov’t pays 50% of CO’s services

(Dollar for dollar match)About $1.5 billion for Colorado

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Medicaid at a Glance

Three programs in one:A health insurance program for low-

income parents (mostly mothers) and children

A funding source to provide services to people with significant disabilities

A long-term care program for the elderly

“Medicaid makes Medicare work”

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Medicaid Perceptions

One view:A black hole

Another view:A cash cow

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People & ServicesEntitlement: all who qualify are eligible

PEOPLE: Mandatory “categories” (e.g., children & PG women to 133% of poverty; SSI recipients)

Optional (e.g., additional children & PG women; “medically needy”)

SERVICES: Mandatory (e.g., hospital, nursing facility, physician, rural health clinics) Optional (e.g., Prescription drugs, hospice)

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Who’s Not Covered?

Everybody else . . .Anyone not in a “category”

– 700,000+ uninsured Coloradans– Adults without children or SSI eligibility– Parents who makes more than

$6,111/year (family of 3) in Colorado (39% of poverty)

– Elderly or people with disabilities who don’t meet SSI or other criteria

– High medical users who don’t meet criteria

– etc.

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Beneficiaries and Expenditures

(2002 -- U.S. average)

Children50% Adults

25%

Elderly9%

Blind & Disabled

16%

Children18%

Adults12%

Elderly27%

Blind & Disabled

43%Enrollees51 million

Expenditures*$210 billion

Source: Kaiser Commission on the Future of Medicaid and the Uninsured, January 2004. * Excludes disproportionate share hospital payments, vaccines for children, and administrative costs.

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Medicaid Expenditures Per Enrollee

by Acute and Long-Term Care, 2002

-$3,000

$0

$3,000

$6,000

$9,000

$12,000

$15,000

Children Adults Blind &Disabled

Elderly

Long-Term Care

AcuteCare

$1,475 $1,948

$11,468

$12,764

SOURCE: Kaiser Commission on Medicaid and the Uninsured, January 2004

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“Waiver” OptionsComprehensive health reform 1115 waivers

(e.g., DE, HI, MA, MN, OR, TN)New twist: Utah’s 1115 waiver

Primary and preventive services only for adults to 150% of poverty

Specialized 1115 waivers“Pharmacy Plus” — low-income senior

prescription drug benefit (only) up to 200% poverty (IL, SC, WI approved)

“Discount-only” waiver — extend Medicaid drug price reductions to other populations (ME operating; court challenges)

Family planning services — extend post-partum time for family planning (and primary care)

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Medicaid: New Flexibility

HIFA (Health Insurance Flexibility & Accountability initiative) —6 approved

Special 1115 demonstration waiver Purpose: to expand health

insurance coverage to the uninsured

Targeted to people below 200% of poverty

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Medicaid Expansions Pros and Cons

Pros:• Federal share (50% in Colorado: $1 for $1)• Existing administration/provider network• New flexibility & options• “Better than nothing” for 700,000+

uninsuredCons:

• Financing constraints (economy, TABOR, 6% limit) • Federal mandates (although getting better)• Potential “maintenance of effort”

requirements• Colorado’s political climate: “less

government”

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Medicaid Cost Savings/CutsTypical:

• Cut eligibility for optional people• Reduce or eliminate optional services• Freeze or reduce provider rates

Other:• “Prudent purchaser”• Prevention/primary care• Disease management• LTC reforms

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Beware Unintended Consequences

Eligibility cuts may increase # of uninsured

Pharmaceutical cuts may result in adverse health conditions & resulting costs

Provider rate cuts could mean decreased access & increased emergency room visits

Cuts may result in cost-shifting (e.g., other programs without match, providers, local gov’t, insurance premiums)

Medicaid is a big contributor to the medical services economy

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Opportunities & Challenges What are your goals?

Universal coverage? Universal access?Healthy population?More personal responsibility?

What is the appropriate role of government?

The private sector? Individuals?

Are you getting what you pay for?Services, quality, health status improvements?

How can you control (not shift) costs?

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SCHIP State Children’s Health Insurance

ProgramChildren’s Health Plan Plus (CHP+)

· Non-Medicaid insurance option· More flexibility than Medicaid expansion· 65% federal matching rate· Federal share $41.8 million in FY 2004-05· State share $22.5 million· Covers kids under 19 to 185% poverty· Covers about 48,168 kids/month· Added PG women (est. 9,565/month)