Medicaid Expansion

1. Medicaid Expansion

2. Recap… What the law says.

3. Federal ACA Directive • Medicaid Expansion Scheduled January 1, 2014 • Removes Categorical Medicaid Requirement • Links to Health Insurance Exchanges • Core Services Identified • Includes Mental Health, Substance Abuse • Fed. Government Pays for Expansion Population • 100% First 3 Years • Eventual 90/10 Split (Expansion Population Only) • States Opting Out Lose All Medicaid Funding

4. Supreme Court Ruling • Ruled Medicaid Expansion is Legal • Removed Threat of Losing Medicaid Funds • Doesn’t Prevent Other Federal Penalties • Rather Than Opt-Out, States Have to Opt-In • Many Republican Governors Already Saying “No Expansion” • Concerns About State, Federal Funding long-term

5. Iowa Implications • Expansion Population: • Childless Adults 18-65 • Incomes Below 133% of Fed. Poverty Level • Approx. 150,000 Eligible Iowans • Governor Claims Up to $800 Million in New Iowa Medicaid Payments • However, there are likely offsets already within system: • Reductions in Charity Care • Reductions to Business Health Care Costs

6. Expansion is Good For the State of Iowa

7. Expansion is Good For the State of Iowa • Iowa currently provides a limited set of health insurance benefits to more than 60,000 Iowans through the IowaCare program. • IowaCareis a Medicaid “waiver” program that insures a very similar population that would be covered through Medicaid expansion. • Program set to expire December 31, 2013 • Failing to expand Medicaid would require re-authorization of IowaCare or would leave this population uninsured.

8. Expansion is Good For the State of Iowa • States that opt-in would receive 100% federal funding for the newly-covered population for the first three years of the program. Phasing to 90% by 2020 • Many state governors (including Iowa’s) are concerned that these federal funds will not be available, leaving the state on the line for funding the full cost of the expansion. • But the ACA is already paid for through Medicare spending cuts and other specified revenue.

9. Expansion is Good For the State of Iowa • County governments currently are required to provide mental health care services to residents without financial resources or health insurance coverage. • Medicaid expansion allows for the coverage of mental health and substance abuse benefits, and could relieve counties across the state of millions of dollars of mental health care obligations, freeing up resources for other purposes.

10. Expansion is Good For Community Hospitals

11. Expansion is Good For Community Hospitals • Approximately $158 billion of the ACA’s cost is funded through Medicare payment reductions to hospitals, whether or not a state chooses to expand its Medicaid program. • Hospitals agreed to those payment reductions with the expectation that more people would have access to health care coverage, thereby lowering the cost of uncompensated care.

12. Expansion is Good For Community Hospitals • Coupled with other Medicare reductions, cuts to Iowa hospitals will total more than $2.3 billion over the next 10 years. • Expanding Medicaid to uninsured Iowans is essential to help offset those Medicare cuts as intended by Congress during the creation of the ACA.

13. Expansion is Good For Community Hospitals • Charity care and bad debt levels at Iowa hospitals are at historic highs and growing by more than 10 percent each year. • Iowa hospitals currently provide more than $600 million in charity care each year and have an additional $350 million of bad debt, largely coming from uninsured and under-insured Iowans.

14. Expansion is Good For Community Hospitals • Such increases in uncompensated care limit a hospital’s ability to maintain a complete line of health care services as well as its ability to attract and retain the working professionals that are essential to care delivery. • Expanding Medicaid would provide relief to this growing financial burden and help limit health care cost increases for Iowa businesses and individuals.

15. Iowa Hospital Uncompensated Care (in Millions)2001-2010

16. Expansion is Good For Community Hospitals • Expanding Medicaid also would take pressure off hospital emergency rooms, the most expensive entry point into the health care system and the safety-net access point for care of the uninsured.

17. Expansion is Good For Community Hospitals • People who do not have health insurance often delay treatment until their condition is poor enough to warrant a trip to the emergency room. • Expanding Medicaid provides more primary care opportunities for Iowans to address their health needs before they reach a critical state. • Iowa is already disadvantages by lower Medicare and Medicaid provider payments… why make this situation worse?

18. Expansion is Good For Business

19. Expansion is Good For Business • Expanding Medicaid would also have positive effects for Iowa’s business community. • The reality is that when some people receive “free” care, those costs don’t disappear—they are absorbed by other payers in the health care marketplace. • Because most people receive health insurance coverage through their employer, Iowa businesses are indirectly bearing some of the cost of uncompensated care through higher insurance premiums.

20. Expansion is Good For Business • As Iowa seeks to enhance its business climate, failure to expand Medicaid ultimately doesn’t alleviate any pressure on the employer community regarding health care costs, making Iowa less competitive with other states that choose to take advantage of this opportunity.

21. Expansion is Good For Business • Additionally, businesses are more productive when they have a healthy workforce. Keeping people on the job by adequately addressing health care needs before they become so severe that productivity time is lost is also a hidden component of health care costs.

22. Expansion is Good For Business • Today many small businesses are challenged by the financial cost of providing health care coverage. • An important element of the ACA is the creation of state health benefit exchanges, which can help provide individuals and businesses access to health insurance. • Fundamental to the success of a health benefit exchange is the need to expand Medicaid.

23. Expansion is Good For Business • The ACA envisions Medicaid as part of the full continuum of health insurance products that would be available through a health benefit exchange. • Failure to expand Medicaid could leave some people unable to qualify for the subsidies that will be available through the exchange and raises questions about the overall viability of this model.

24. Expansion is Good For Individuals

25. Expansion is Good For Individuals • Generally, Medicaid expansion would apply to people with incomes at or below 133 percent of the federal poverty level (although states may have flexibility in lowering that threshold). • For a single adult, that income limit would only be $14,856. People in this income group do not have the resources to purchase private health insurance, which in many cases could have annual premiums as high as their annual salary!

26. Expansion is Good For Individuals • Perhaps more importantly, for a single parent of one child that income limit would rise to only $20,123. • In such cases today Medicaid is already providing coverage for the child, but not for the parent. • Medicaid expansion is simply the easiest and most cost effective manner to provide health insurance coverage to Iowa’s working poor.

27. Expansion is Good For Individuals • Having health insurance coverage via Medicaid would allow people to access primary health care services rather than to delay care. • Nowhere would this be more demonstrable than in the IowaCare program, where beneficiaries now travel extensive distances to get to a participating provider for limited services.

28. Expansion is Good For Individuals • Expanding Medicaid would allow these individuals to receive care in their local communities and to access pharmaceuticals and other services that can be more effective in managing their illnesses or disabilities.

29. Expansion is Good For Individuals • Numerous studies clearly indicate that people are healthier if they have access to health insurance. • Failure to provide reasonable access to health insurance coverage is detrimental to population health and would indicate that Iowa is not really serious about its stated goal to become the healthiest state in the nation.

30. Expansion is Good For Individuals • The Centers for Disease Control and Prevention recently reported that 29 percent of Iowans are now obese, the major precursor to a variety of chronic disease conditions that require the most expensive care to address. • Expanding Medicaid not only helps identify and treat chronic conditions at the early stages, but also provides a vehicle for moving people into health homes or other types of programs where their care can be managed more effectively.

31. IHA Position • Iowa hospitals and the Iowa Hospital Association strongly support expanding Medicaid as a way to address many of the challenges in Iowa’s health care system. • Failure to seize this historic opportunity to significantly address the plight of uninsured Iowans has negative consequences for population health, Iowa’s health care infrastructure, and Iowa’s national competitiveness both economically and regarding overall quality of life. • IHA supports state government action to expand Medicaid in Iowa in 2013.