1 office of administration division of budget and planning
TRANSCRIPT
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MEDICAID EXPANSIONBUDGET BACKGROUND
January 2013
Office of AdministrationDivision of Budget and Planning
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MEDICAID EXPANSIONBUDGET BACKGROUND
Cost for new Medicaid eligibles
Savings in state share for existing populations
Additional revenue
Summary of budget impact
Provider payments
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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
259,499268,039
276,579292,061
307,542
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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
Milli
on
s o
f D
oll
ars
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 POPULATIONS
Current 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 POPULATIONS
Current 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 REVENUE
Key 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
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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
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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 REDUCTIONS
Each 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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