Medicaid’s Evolving Role in Health Coverage Alice Burton, Director AcademyHealth

1. Medicaid’s Evolving Role in Health Coverage Alice Burton, Director AcademyHealth National Governor’s Association Health Policy Advisors Meeting September 9, 2004

2. 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

3. Total State Medicaid Spending as a Percentage of Total State Spending, FY93 - FY03 Source: National Association of State Budget Officers

4. 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

5. Medicaid cushions recent growth in the uninsured Health Insurance Coverage, individuals under 65 Source: CPS March 2003 Supplements 1997-2002

6. Regardless of perspective – likely challenge • Growing enrollment in Medicaid, growing cost • Growing uninsured despite expansions in public coverage

7. 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

8. States with expanded coverage for parents through Medicaid AK WA ME MT ND MN OR VT NH ID WI SD NY MA MI CT WY RI IA PA NE NJ NV OH IN MD * IL DE UT WV CO KS VA CA MO KY * NC TN AZ OK NM AR SC 0 – 49% FPL 50 - 99% FPL 100 – 199% FPL 200%+ FPL no new enrollment or capped enrollment MS AL GA LA TX FL * Program not implemented HI

9. States that cover childless adults through Medicaid AK WA ME MT ND MN OR VT NH ID WI MA SD NY MI CT WY RI IA PA NE NJ NV OH IN MD IL DE UT WV CO KS VA CA MO KY * NC TN AZ OK NM AR SC no coverage under 100% FPL 100 – 199% FPL 200% FPL and greater no new enrollment or capped enrollment MS AL GA LA TX FL * Program not implemented HI

10. 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

11. 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

12. 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

13. What problem are you trying to solve? Different problem requires different solution… • Problem: Coverage offered by employer but not taken up by worker Solution: Subsidize employee premium -or- • Problem: Employer doesn’t offer coverage at all Solution: Create affordable product targeting employers and workers

14. A small portion of workers decline employer sponsored insurance SOURCE: Kaiser Comissionon Medicaid and Uninsured, Key Facts, December 2003

15. 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

16. 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

17. New approaches to benefits • Fewer benefits for higher income groups • Primary care programs • Pharmacy Plus – Rx only benefits

18. One state’s example of redesigning Medicaid benefits for new populations Medicaid & SCHIP Benefits Inpatient Services & Outpatient Services Physician & Specialty Services Prescription Drugs OT, PT, ST, DME & Supplies (prosthetics & orthotics) Lab & X-ray Emergent & Urgent Care Home Health Mental Health & Substance Abuse (limits for adults) Increased Benefits Expansion Benefits Inpatient & Outpatient Services Physician & Specialty Services Prescription Drugs OT, PT, ST DME & Supplies (prosthetics & orthotics) Lab & X-ray Emergent & Urgent Care Home Health Mental Health & Substance Abuse Podiatry Dental Optometry & Eyeglasses Long Term Care - ICFMR/Nursing Home/Pre-PACE Personal Care & Home Nursing for Children EPSDT & Early Intervention & Nutrition Targeted Case Management Hospice Transportation & Lodging No Annual Maximum $100,000 Annual Maximum Some limits on services offered Service limits based on medical necessity

19. 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

20. New approaches to premiums • Greater use of premium and “buy-in” to public programs • 26 states collect premiums under SCHIP

21. 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

22. 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