Florida’s Medicaid Reform

1. Florida’s Medicaid Reform What’s the Right Prescription For Floridians?

2. Understanding Medicaid • Medicaid is the nations “health insurance ” program for the poor. • Differs from Medicare - which provides health insurance to the elderly

3. Understanding Medicaid • Medicaid program serves over 2 million Floridians • 1 in 8 people in the State participant in Medicaid for nursing home care, prenatal for the uninsured during pregnancy, people with disabilities, and people with catastrophic health crises

4. Understanding Medicaid • Medicaid is funded both by the State and Federal Government • In 2004, the federal government is anticipated to provide 6.7 billion dollars in funding. • The state will contribute 4.6 billion dollars.

5. Who Participates in Medicaid? • Currently serves over 2.1 million Floridians • Over 1.2 million are children • 582,395 are persons with disabilities • 304,122 are seniors

6. Who Participates in Medicaid? • Medicaid plays a vital role in Florida’s Health Care system • Finances over 43% of births in the state • Serves 52% of people with AIDS • Pays for 66% of all nursing home days

7. UnderstandingMedicaid Waivers • “Waivers” allow states to modify the Federal requirements of the Social Security Act which established Medicaid. • Florida has successfully submitted and operates 13 “waiver programs.”

8. UnderstandingMedicaid Waivers • On March 30, 2004, the Agency for Health Care Administration announced their intent to restructure Florida’s Medicaid program by submitting a waiver to “modernize the program and test a new model that leads to a sustained and affordable program in the decades to come.”

9. What are the Issues? • Cost • Proponents claim Florida’s rising costs of Medicaid are too high-overwhelming the state’s ability to meet the need.

10. Costs • Analysis of costs trends over time suggest that Medicaid expenditures are cyclical • When the economy slows-enrollment into Medicaid increases. • During the recent recession, Medicaid and the State Children’s Health Insurance Program picked up 4.1 million children and their parents nationally.

11. Why AreMedicaid Cost Rising? • In recent years, health care costs have been rising for both public and private health insurance. • This increase in health care cost is due to a number of factors, most prominently prescription drug and hospital costs. Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

12. Why AreMedicaid Cost Rising? • Children coming from families living below the poverty level increased 45% since 2000-2001. • Florida’s low income elderly population is increasing at a rate eight times the national average. Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

13. Why AreMedicaid Cost Rising • Over the past 5 years, analysis documents that enrollment increase account for on average, 62% of Florida’ Medicaid cost increase • The remaining 38% can be attributed to increase in health care cost. Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

14. Why AreMedicaid Cost Rising? • During this same time, the private insurance market cost rose even more. • “Despite the fact that Medicaid serves a sicker and older population, Florida’s Medicaid cost, when look at on a per capita basis to account for increases in enrollment, have been increasing much more slowly that private insurance premiums.” Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

15. What are the Issues? • Modernizing the program • Proponents want to “modernize” Medicaid by charging nominal co-pays, increasing consumer choice and privatizing operations.

16. “Modernizing” Medicaid • Other states have undertaken similar initiatives • Some have experience “unintended consequences” of massive overhauls of their Medicaid system.

17. Modernizing Medicaid • Tennessee initiated “TENNCARE about 10 years ago. • Unintended consequences include fewer physicians • Co-pays created barriers-people didn’t get health care • Changes resulted in series of class action law suits.

18. Modernizing Medicaid • The combination of a low per person expenditure and rising enrollment needs places Floridians at risk for a number of unintended consequences. • Some proponents want to “cap” the funds coming from Federal Sources

19. Modernizing Medicaid • Under cap scenarios-if the state underestimates both costs and enrollment growth by 1 percent, it loses 3.38 billion dollars. Floridians will either have to cover those cost (taxes) or cut the services or number of people served. • Critics argue it won’t decrease health care costs-just shift the cost to Florida tax payers.

20. Other Unintended Consequences • Studies document a potential “domino” effect in response to massive health system overhauls. • For example, Medicaid expenditures inject a huge flow of revenue into the general economy.

21. Other Unintended Consequences • Medicaid cuts impact jobs, income and business activity. Economic models show that at the state level, Medicaid match supports 120,950jobs, $4.3 billion in income and 8.7 billion in business activity. Penny Wise and Pound Foolish. Why Cuts to Medicaid Hurt Florida Economy. October 2003 Human Services Council, Produced by CHAIN

22. Summary • Florida’s Medicaid Program is cost effective • Florida spends less on Medicaid that most states • Our recent rising cost are likely the result of a a slight economic downturn, from which we are already recovering • Cost in Medicaid have risen at a slower pace that cost in the private insurance market

23. Summary • Under many of the proposed changes, the State assumes risk of future cost. • Any proposal that includes limiting the Federal funds to support Medicaid will likely be insufficient to meet the growing health care needs of Floridians.

24. Summary • We can do better • Reforms which provide for more efficient delivery of services and encourage preventative care should be given priority consideration. • Reform initiatives should not shift costs to other pockets.