Medicaid’s Evolving Role in Health Coverage

Alice Burton, DirectorAcademyHealth

National Governor’s Association Health Policy Advisors MeetingSeptember 9, 2004

Presentation outline

Pressure for reform and redesign

Medicaid’s changing role in health coverage

-New groups covered by Medicaid

-Private sector partnerships

-Benefits and cost-sharing

Total State Medicaid Spending as a Percentage of Total State Spending,

FY93 - FY03

Source: National Association of State Budget Officers

1818.5

1919.5

2020.5

2121.5

2222.5

2323.5

2424.5

1993 1996 1999 2002

Only a few ways to control budget

Enrollment – eligibility cuts, premiums, changes to enrollment process

Utilization – benefit cuts, limits on services, co-payments, shifting to lower cost services

Provider reimbursement – limited ability to cut

71.8 71.9 70.9 68.6

13.7 13.9 14.5 15.2 15.8

14.5 14.2 14.6 15.2 15.6

69.6

0%

20%

40%

60%

80%

100%

1999 2000 2001 2002 2003

Private Public Uninsured

Medicaid cushions recent growth in the uninsured

Health Insurance Coverage, individuals under 65Source: CPS March 2003 Supplements 1997-2002

Regardless of perspective – likely challenge

Growing enrollment in Medicaid, growing cost

Growing uninsured despite expansions in public coverage

New options for Medicaid coverage

SCHIP (1997) 1115 waivers and HIFA (2001) Breast and Cervical Cancer (2000)

– 50 states (including DC) Ticket to Work – Working individuals with

disabilities (2001 – Medicaid expansion)– 32 states, some states with no income limit

States with expanded coverage for parents through

Medicaid

0 – 49% FPL

50 - 99% FPL

100 – 199% FPL

200%+ FPL

no new enrollment or

capped enrollment

OR

WA

CA

NV

UT

ID

MTND

SD

WY

NE

CO

AZ

NM

TXLA

MN

IA

MOKS

OKAR

WI

MI

ILIN

OH

KY

FL

TN

VA

NC

SC

MS AL GA

PA

NY

ME

VTNH

MA

MDDE

NJ

RICT

AK

HI

WV*

*

* Program not implemented

States that cover childless adults through Medicaid

no coverage

under 100% FPL

100 – 199% FPL

200% FPL and greater

no new enrollment or

capped enrollment

OR

WA

CA

NV

UT

ID

MTND

SD

WY

NE

CO

AZ

NM

TXLA

MN

IA

MOKS

OKAR

WI

MI

ILIN

OH

KY

FL

TN

VA

NC

SC

MS AL GA

PA

NY

ME

VTNH

MA

MDDE

NJ

RICT

AK

HI

WV

* Program not implemented

*

Illinois covers parents Sept. 02 HIFA – Expanded coverage to parents of

Medicaid and SCHIP (phases in expansion)– KidCare Rebate: Premium assistance available to

children 133% - 185% FPL - Informed consumer choice model

July 03 expansion: – Children from 185% to 200% FPL; – Parents of Medicaid and SCHIP children with incomes

from 49% to 90% (Goal is to raise to 185%) FY 2005 expansion to cover an additional 56,000

working adults to 133% FPL

Arizona covers parents & childless adults December 2001 HIFA waiver allowed state to use

unspent SCHIP funds to cover the following expansion groups in phases: – Phase 1: childless adults to 100% FPL– Phase 2: parents of Medicaid/SCHIP children

between 100% and 200% FPL Studied feasibility of ESI pilot program – determined

not feasible Strengthening Arizona Health Care Group to address

crowd-out

Private sector partnerships

Sustained interest by states because programs meet a broad set of policy and political goals

Currently operating premium assistance models pay the employee’s contribution for qualifying employer sponsored insurance when it is cost-effective – 14 states, just over 50,000 enrolled out of over 50

million enrolled in Medicaid and SCHIP Newer models create a new product, targeting

working uninsured– Target either employer or employees

What problem are you trying to solve?

Different problem requires different solution…

1. Problem: Coverage offered by employer but not taken up by worker

Solution: Subsidize employee premium

-or-

2. Problem: Employer doesn’t offer coverage at all

Solution: Create affordable product targeting employers and workers

A small portion of workers decline employer sponsored insurance

50

13

37

93

3

4

0%10%20%30%40%50%60%70%80%90%

100%

Low-IncomeWorkers

High-IncomeWorkers

Covered by Ownor Spouse'sEmployers

Declined offerfrom Own orSpouse'sEmployer

Not offeredthrough Own orSpouse'sEmployer

SOURCE: Kaiser Comissionon Medicaid and Uninsured, Key Facts, December 2003

Making new private insurance options more affordable: Arkansas HIFA proposal

January 2003 HIFA proposal Employers that previously (>12 mo) were not

offering coverage may insure workers through new program– 100% worker participation requirement– Safety-net benefits insurance package

For workers with incomes below 200% FPL, participating employer fees paid to the state qualify as federal match

Making new private insurance options more affordable: New Mexico’s HIFA

Goal is to help small employers provide insurance to low-income workers

Expand coverage to individuals under 200% FPL – Must have been uninsured >6 mo

New product ($300/month) – Employer share $75, may not have provided insurance

>12 mo– Employee share $25, individuals without participating

employer pay employee and employer share– Medicaid share $200 ($36 state funds)

Coverage similar to basic commercial plan

New approaches to benefits

Fewer benefits for higher income groups Primary care programs Pharmacy Plus – Rx only benefits

One state’s example of redesigning

Medicaid benefits for new populations

Some limits on services offered Service limits based on medical necessity

Inpatient & Outpatient ServicesPhysician & Specialty ServicesPrescription DrugsOT, PT, STDME & Supplies (prosthetics & orthotics)

Lab & X-rayEmergent & Urgent CareHome HealthMental Health & Substance Abuse

$100,000 Annual Maximum

Expansion Benefits

No Annual Maximum

Inpatient Services & Outpatient Services Physician & Specialty ServicesPrescription DrugsOT, PT, ST, DME & Supplies (prosthetics & orthotics)Lab & X-rayEmergent & Urgent CareHome HealthMental Health & Substance Abuse (limits for adults)

Medicaid & SCHIP Benefits

Increased Benefits

Increased Benefits

PodiatryDentalOptometry & EyeglassesLong Term Care - ICFMR/Nursing Home/Pre-PACEPersonal Care & Home Nursing for ChildrenEPSDT & Early Intervention & NutritionTargeted Case ManagementHospiceTransportation & Lodging

Utah’s Primary Care Network 1115 waiver expands coverage to parents & childless

adults to 150% FPL Some reductions in benefits Medicaid

– Reductions in speech, dental, PT, transportation and psych services

Primary care benefit package for expanded population:– Office visits - DME– Immunizations - Basic dental– Emergency/Urgent care - Hearing and vision screening (no glasses)– Lab/X-ray - Rx (4 per month)

Donated care - $10 million hospital care, outpatient specialty care, health education services, referral to Rx assistance programs

New approaches to premiums

Greater use of premium and “buy-in” to public programs

26 states collect premiums under SCHIP

New approaches to premiums

New experience with collecting premiums Few states have studied impact

– Higher income group (>150%) – approx 20% don’t take up coverage when asked to pay premium

• About ½ end up with other insurance

– For very low income groups – impact of premium is much greater

• About ¾ remain uninsured

Administrative process has a big impact on enrollment

State Coverage Initiatives (SCI)

An Initiative of The Robert Wood Johnson Foundation

Direct technical assistance to states– Onsite technical assistance– Meetings for state officials– Web site: http://statecoverage.net– Publications

Grant funding