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Lower Recidivism: Yet Another Good Reason for States to Expand Medicaid

Some opponents of health reform’s Medicaid expansion have cited an estimate that 35 percent of adults newly eligible for Medicaid have been involved in the criminal justice system in the past year.  This figure is highly inflated.

In reality, only about 17 percent of newly eligible adults who enroll in Medicaid will have been in jail or prison.  But even though they will make up about one-sixth rather than one-third of new Medicaid enrollees, their number is significant — and connecting these low-income adults to the health care system can help them avoid returning to jail or prison, as we explain in a new paper.

On any given day, about 750,000 people are in jail; about 75 percent of them for nonviolent offenses.  As many as 90 percent of people in jail are uninsured.  This figure isn’t surprising; until health reform’s coverage expansions took effect this year, there was no pathway to health coverage for poor and low-income adults who weren’t parents living with their minor children, pregnant women, seniors, or people with disabilities.  Not many people with prison or jail stays fall into these categories.

Health reform opened up Medicaid eligibility for all adults with incomes below 138 percent of the poverty line.  So far, 26 states and the District of Columbia have decided to expand coverage.  In addition, adults who aren’t eligible for Medicaid or employer coverage and have incomes between 100 and 400 percent of the poverty line can qualify for premium tax credits to help them afford private coverage through the new health insurance marketplaces.  Roughly half of people leaving jail can qualify for coverage through Medicaid or the marketplaces.  (This figure takes into account that about half of the states have adopted the Medicaid expansion and half have not.)

A number of states and counties are working to connect people released from jail to health coverage for the first time, with a particular focus on people with mental illness and substance-use disorders, given the prevalence of these conditions in this population and the role of these conditions in increasing criminal activity.

States considering whether to expand Medicaid should consider the growing evidence that connecting the jail-involved population to treatment for mental illness and substance abuse can lower the rate at which they return to jail or prison.

For example, a study of a Michigan program to help recently released prisoners obtain community-based health care and social services found that it cut recidivism by more than half, from 46 percent to 21.8 percent.  Similarly, a study that the Justice Department funded in Florida and Washington found that “in both states, 16 percent fewer jail detainees with serious mental illnesses who had Medicaid benefits at the time of their release returned to jail the following year, compared to similar detainees who did not have Medicaid.”

Click here to read the full paper.

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25

06 2014

Medicaid Primary Care Payment Rate Bump Is Worth Extending

An increase in Medicaid primary care payment rates that was included in health reform is scheduled to expire at the end of this year.  But with the need for cost-effective Medicaid primary care rising across the country, the current physician rates should be maintained — and expanded to additional providers — as the Obama Administration and a group of hospitals and doctors have recommended.

Medicaid enrollment has risen by 6 million since October, according to the Centers for Medicare and Medicaid Services, and total enrollment now tops 65 million.  With increased enrollment comes increased need for providers, particularly those providing primary care.  Connecting patients to primary care makes it more likely that they will receive the preventive care and other services to remain healthy and makes it less likely that they will later have to visit the emergency room.

Health reform required states to pay for primary care services at the Medicare rate, which is typically higher than the Medicaid rate, for 2013 and 2014; the federal government picked up 100 percent of the cost of the increase over the state’s regular Medicaid rate for those years.  In boosting physicians’ rates, policymakers intended to increase the number of primary care providers participating in Medicaid in order to ensure access to primary care for Medicaid beneficiaries — both those newly eligible and those who were eligible before 2014.  In Connecticut, the number of primary care providers enrolled in Medicaid has more than doubled since January 2012 and state officials are pushing for an extension of the temporary increase.

Twenty-one organizations representing physicians and hospitals recently wrote to Senate and House leaders to promote a two-year extension of the current payment rate.  The group also asked that policymakers extend the enhanced Medicaid rate to physicians practicing obstetrics and gynecology if their practices provide significant amounts of primary care.  The President’s budget included a one-year extension of the primary care rate increase that would also extend the enhanced rate to include physician assistants and nurse practitioners who provide primary care services.  Both the expansions of the payment increase to additional providers and an extension of the rate increase for at least another year deserve support.

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19

06 2014

Virginia Should Be Wary of New Medicaid Poll

There’s a big reason to question the accuracy of a new poll of Virginians from Christopher Newport University, which the Washington Post and other news outlets have highlighted, that purports to find significantly less enthusiasm for expanding Medicaid as part of health reform.  Here’s what policymakers and media should keep in mind.

The pollsters say they found that Virginians’ support for expansion dropped from 56 percent on February 3 to 41 percent now.  What the pollsters do not fully acknowledge, however, is that they asked the question in two markedly different ways, making this a highly misleading, apples-to-oranges finding that doesn’t necessarily show a shift in public opinion:

  • On February 3 the question was asked:  Medicaid is a health care program for families and individuals with low income that is funded by both federal and state tax dollars. Currently, Virginia is faced with a decision about whether to expand the Medicaid program to cover an additional 400,000 mostly working poor Virginians who are uninsured. In general, do you support Medicaid expansion or oppose it?
  • But on April 24 poll the question was asked:  In [the Medicaid expansion] debate, the Democrats propose to subsidize private insurance for 400,000 uninsured and low income Virginians by using federal Medicaid money that would otherwise not come to Virginia. Republicans oppose this expansion because they fear the federal Medicaid money will not come as promised, and also say the current Medicaid program has too much waste and abuse and needs reformed before it is expanded.

Thus, unlike in February, Virginians in the most recent poll were asked whether the state should expand Medicaid only after they were read the straw man argument that the federal government will renege on its commitment to fund nearly all the costs of the expansion.  As we have explained, the history of Medicaid’s financing shows that federal funding has remained remarkably steady for decades.

Virginia policymakers should not be swayed by a misleading poll when deciding whether to expand Medicaid.  They should instead keep in mind that the state’s own analysis found that expanding will save the state more than $1 billion through 2022.  For the state, and the 400,000 uninsured Virginians who stand to gain health coverage from the expansion, the expansion remains an incredibly good deal.

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25

04 2014

Scare Tactics Shouldn’t Dissuade States From Expanding Medicaid

The Foundation for Government Accountability (FGA), a Florida-based conservative think tank, is using scare tactics in its campaign against Medicaid expansion.  It claims that Arkansas taxpayers will have to pay tens of millions of dollars to the federal government in 2014 cost overruns in the state’s “private option” Medicaid expansion.  But that claim doesn’t hold up, and it shouldn’t keep other states from pursuing the private option to expand Medicaid.

The federal government approved Arkansas’ Medicaid expansion through a demonstration project, under which the state will use Medicaid funds to buy private health insurance plans for newly eligible adults through its Marketplace.  The per-person cost of covering these new Medicaid beneficiaries for the first four months of the demonstration project was slightly above projections incorporated in the terms and conditions to which the state agreed with the federal government, prompting FGA’s claim.

Demonstration projects (which are usually called “waivers”), like Arkansas’ private option, must not cost the federal government more than it would have otherwise spent.  If the project is not budget neutral over its entire duration, a state could have to repay excess federal spending.  This is extremely unlikely to happen in Arkansas, for several reasons:

  • Budget neutrality is determined over the entire term of the demonstration project —three years in this case — not what happens in 2014, as FGA claims.  Arkansas would only have to repay the federal government if total three-year spending on the private option exceeds the three-year limit.
  • The terms of the waiver recognize that the budget neutrality limit is a forecast, and like all estimates, it could be off in either direction.  Arkansas can ask for an upward adjustment if the limits underestimate the actual costs of covering the new beneficiaries.  At the same time, the state won’t share in any federal “savings” if costs are lower than projected.
  • Arkansas is taking steps that will likely keep spending within the three-year limit.  In 2014, some health plans offered extra benefits that increased premiums and hence per-beneficiary costs under the waiver.  Starting in 2015, insurers will have to offer plans without these extra benefits to private option participants, which should bring down premiums and per-person costs to stay below the budget neutrality limits.  Other states that pursue the private option model can prevent health plans from offering these more expensive plans to begin with, thus avoiding this problem altogether.

More than 150,000 low-income adults have gained Medicaid coverage in Arkansas in 2014, and enrollment continues to grow.  That’s the lesson that the 24 states that have not expanded — where 4.8 million uninsured adults fall into the coverage gap that results from not taking the Medicaid expansion — should take away from Arkansas.

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23

04 2014

States’ Very Good Deal on Expanding Medicaid Gets Even Better

In a little-noticed finding in last week’s Congressional Budget Office (CBO) report on health reform, CBO sharply lowered its estimates of how much the Medicaid expansion will cost states.  We’ve noted repeatedly that the federal government will cover the large bulk of the expansion’s cost.  As our new report explains, these new figures make it even clearer that the expansion is a great deal for states.

  • CBO now estimates that the federal government will, on average, pick up more than 95 percent of the total cost of the Medicaid expansion and other health reform-related costs in Medicaid and the Children’s Health Insurance Program (CHIP) over the next ten years (2015-2024).
  • States will spend only 1.6 percent more on Medicaid and CHIP due to health reform than they would have spent without health reform (see chart).  That’s about one-third less than CBO projected in February.

Moreover, the 1.6 percent figure doesn’t reflect states’ savings in providing health care for the uninsured, many of whom will now have Medicaid coverage.  The Urban Institute has estimated that if all states took the Medicaid expansion, states would save between $26 billion and $52 billion from 2014 through 2019 in reduced spending on hospital care and other services provided to the uninsured.

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Ryan Budget Again Proposes a Medicaid Block Grant, Adding Millions to the Ranks of the Uninsured and Underinsured

House Budget Committee Chairman Paul Ryan’s new budget again proposes to radically restructure Medicaid by converting it into a block grant, and it would cut federal Medicaid funding steeply, by $732 billion over the next decade.  It would also repeal health reform’s Medicaid expansion.  The combined total cut to Medicaid would exceed more than $1.5 trillion over ten years, relative to current law.  All told, it would add tens of millions of Americans to the ranks of the uninsured and underinsured.

Repealing the Affordable Care Act’s Medicaid expansion means that 13 million people would lose their new coverage or no longer gain coverage in the future; 13 million is the Congressional Budget Office’s (CBO) current estimate of the number of people who would eventually gain coverage under the Medicaid expansion, though the number could rise as high as 17 million if all states adopt the expansion.  In addition, the large and growing cut in federal Medicaid funding from the block grant would almost certainly force states to sharply scale back or eliminate Medicaid coverage for millions of low-income people who rely on it today.  (More than 40 million people would likely become uninsured as a result of the Ryan budget overall after also taking into account the repeal of health reform’s exchange subsidies.)

Under the Ryan plan, the federal government would no longer pay a fixed share of states’ Medicaid costs starting in 2016.  Instead, states would get a fixed dollar amount that would rise annually only with inflation and population growth.

  • The block grant funding would fall further and further behind state needs each year.  The annual increase in the block grant would average about 3.5 percentage points less than Medicaid’s currently projected growth rate over the next ten years, which accounts for factors like rising health care costs and the aging of the population.  Federal Medicaid and Children’s Health Insurance Program (CHIP) spending in 2024 would be $124 billion less — or 26 percent less — than what states would receive under current law, according to the Ryan budget (see chart).  And the cuts would keep growing after that.
  • Altogether, the block grant would cut federal Medicaid spending by $732 billion from 2015-2024, according to the Ryan budget plan.  (It is conceivable that a small share of these cuts could come from CHIP, which the Ryan budget would merge into its new Medicaid block grant.)  This would be an estimated cut to federal Medicaid and CHIP funding of more than 19 percent over the ten years as a whole, compared to current law — and doesn’t count the loss of the large additional funding that states would receive to expand Medicaid under health reform.
  • The loss of federal funding would be even greater in years when enrollment or per-beneficiary health care costs rose faster than expected, such as during a recession or after the introduction of a new, breakthrough health care technology or treatment that improved patients’ health but increased cost.  Currently, the federal government and the states share in those unanticipated costs; under the Ryan plan, states alone would bear them.

As CBO concluded when analyzing the similar Medicaid block grant proposal from the Ryan budget plan from two years ago, “the magnitude of the reduction in spending . . . means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both.  Cutbacks might involve reduced eligibility . . . coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries — all of which would reduce access to care.”

In making these cuts, states would likely use the expansive additional flexibility that the Ryan plan would give them.  For example, the plan would likely let states cap Medicaid enrollment and turn eligible people away from the program; under current law, states must accept all eligible individuals who apply.  It also would likely let states drop certain benefits that people with disabilities or other special health problems need.

The Urban Institute estimated that Chairman Ryan’s similar block grant proposal in 2012 would lead states to drop between 14.3 million and 20.5 million people from Medicaid by the tenth year (outside of the effects of repealing health reform’s Medicaid expansion).  That would result in a reduction in enrollment of between 25 percent and 35 percent.  The Urban Institute also estimated that the block grant likely would have resulted in cuts in reimbursements to health care providers of more than 30 percent by the tenth year.  This year’s proposal likely would result in cuts that are similarly draconian.

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Two Takeaways From New Hampshire and Michigan’s Medicaid Expansions

New Hampshire’s legislature has passed and Governor Maggie Hassan has signed into law legislation that will expand Medicaid as part of health reform effective July 1.  This means that combined with Michigan, where expansion takes effect tomorrow, an additional 600,000 uninsured people will be newly eligible for Medicaid coverage.  It also means a majority of states have taken health reform’s Medicaid expansion, as our map shows.

For policymakers in Maine, Missouri, Utah, Virginia, and other states currently debating whether to expand, the news from New Hampshire and Michigan offers important lessons:

  • Federal officials are willing to work with states to craft reasonable expansion plans.  The legislation passed in New Hampshire directs state officials to pursue a demonstration project — often called a “waiver” — that would use Medicaid dollars to buy coverage for newly eligible beneficiaries through the marketplace.  If approved, this approach would be similar to those in place in Arkansas and Iowa.

    New Hampshire likely will gain federal approval for its demonstration project because it steered clear of onerous provisions being discussed in other states that would make it difficult, if not impossible, for people to gain and maintain coverage.  For example, policymakers in Pennsylvania and Missouri have discussed tying people’s Medicaid eligibility and premium obligations to whether they are working or actively looking for work.  Such provisions have no relation to the purpose of Medicaid, which is to provide health coverage to people with low incomes.

  • States can expand at any time, but the sooner, the better for states and the uninsured.  The Medicaid expansion is a great deal for states, but especially so from now through the end of 2016 while the federal government pays the entire cost of covering the newly eligible.  (The federal government will pay no less than 90 percent of the cost in the years thereafter.)  While New Hampshire’s proposed waiver will not take effect until January 1, 2016, newly eligible beneficiaries will be able to enroll in the state’s existing program on July 1 of this year.  This is a win for both the Granite State’s finances and for the uninsured.
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31

03 2014

President’s Budget Reaffirms Federal Commitment to Pay for Nearly All of Medicaid Expansion

As policymakers in a number of states debate whether to adopt health reform’s Medicaid expansion, opponents continue to claim that the federal government, in the name of deficit reduction, will inevitably renege on its commitment to fund nearly all of the cost and instead shift large costs to states.  As Florida state senator Jeff Brandes put it recently, “Why in the world would we take the federal government’s . . . promise that they’ll pay for [the] Medicaid expansion when we know that they will be unable to keep that promise in the long run?”

But, there’s no evidence to support that argument, as we’ve pointed out (see here and here).

The Obama Administration has repeatedly said that it will oppose any cost-shifts that would make states less likely to take up the Medicaid expansion.  And, the President’s new budget reaffirms yet again that the federal government will pick up nearly all of the expansion’s costs:  100 percent for the first three years (2014-2016) and no less than 90 percent on a permanent basis.

Like last year’s budget, the President’s budget has no Medicaid proposals that produce federal savings by shifting costs to states.  It instead proposes to achieve some Medicaid savings by lowering the program’s prescription drug costs.

Moreover, as we’ve pointed out, pressures to cut Medicaid and shift costs to states in order to reduce the federal deficit have dissipated.  In fact, the only federal lawmakers now pushing to shift Medicaid costs to states are not health reform proponents but instead those who oppose health reform and who would convert Medicaid to a block grant or set a per capita cap on federal Medicaid funding.

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13

03 2014

Failing to Expand Medicaid Costs Individuals, Too

We’ve written about the growing cost to states of not expanding Medicaid as part of health reform.  But let’s not forget that state policymakers’ decisions not to expand have a severe human cost, too, as an article in today’s Wall Street Journal makes clear.

The Journal details the plight of uninsured low-income workers in Alabama — one of the states that hasn’t expanded Medicaid — who are struggling to afford medications for chronic health conditions, or are forgoing needed care entirely because they lack health coverage.  These are some of the nearly 5 million individuals in 25 states caught in a “coverage gap” — with income too low to qualify for help buying private coverage through the new marketplaces and too high to qualify for Medicaid — that exists because their state has not expanded Medicaid (see chart).

While Alabama Governor Robert Bentley opposes the expansion, a growing number of policymakers in non-expansion states are realizing that it doesn’t have to be this way.  Utah Governor Gary Herbert has announced he will push to expand this year because “doing nothing is not an option.”  And lawmakers in Nebraska, New Hampshire, and a handful of other states are charting their own paths toward expansion.

The Medicaid expansion is a good financial deal for states, and they can expand with the knowledge that the federal financial commitment to the expansion is solid, as we’ve previously explained.  Today’s Journal makes it clear how much individuals stand to gain from expanding as well.

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10

02 2014

History Rebuts Claim That Federal Medicaid Matching Rates Are Unstable

As I explained last week, there’s no evidence to support claims that the federal government will renege on its commitment to finance nearly all of the costs of health reform’s Medicaid expansion.  Some critics also assert that Congress frequently changes the formula that determines what share of states’ Medicaid costs the federal government will cover (also known as the FMAP).  But a look at Medicaid’s history shows the exact opposite.

The federal government picks up about 57 percent of state Medicaid costs on average, and that average has remained remarkably steady for decades.  (Federal matching rates for individual states can vary from year to year, but that’s because the formula takes into account changes in states’ per capita income.)

In fact, the federal government has only modified the overall FMAP formula three times in the last 35 years.  And the past two times, it raised matching rates temporarily (for fiscal years 2003-2004 and 2008-2011) to provide state fiscal relief in response to economic downturns.

The only time the federal government cut Medicaid matching rates was in 1981, when President Reagan and Congress enacted a temporary reduction for 1982-1984.  The rates, however, returned to their previous levels in 1985.

That’s hardly a pattern of arbitrary cuts in federal Medicaid funding.

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03

02 2014

The Federal Financial Commitment to the Medicaid Expansion Stands

Health reform’s Medicaid expansion is a great deal for states.  The federal government will finance nearly all of its costs, picking up 100 percent of expansion costs for the first three years (2014-2016) and no less than 90 percent on a permanent basis.  In fact, as a recent analysis from Virginia shows, the Medicaid expansion can actually save states money.

Some policymakers who oppose health reform in states that have not yet taken up the expansion, however, continue to claim that the federal government will renege on its financial commitment to the expansion.  They argue that states shouldn’t adopt the expansion because federal deficit reduction efforts will inevitably lead to requiring states to pay for a greater share of the expansion costs.  There is no evidence to support this claim.

Federal spending on both Medicaid and Medicare has been growing much slower in recent years than previously projected.  The Congressional Budget Office (CBO) expects the federal government to spend $1.2 trillion less on Medicare and Medicaid between 2010 and 2020 than CBO estimated in March 2010 (see chart).  We have similarly found that projected federal Medicaid spending will be $311 billion — or 9.2 percent — lower between 2010 and 2020 than what CBO previously projected even after excluding the effects of the Medicaid expansion (such as the Supreme Court decision that made the expansion a state option, which had the effect of lowering federal spending).

As a result, pressures to cut Medicaid and shift costs to states as a strategy to cut the deficit have dissipated.  For example, policymakers didn’t seriously target Medicaid as a source of savings in crafting either of the last two major federal budget agreements: the 2012 “fiscal cliff” budget deal and the December 2013 budget deal between Senate Budget Chair Patty Murray and House Budget Chair Paul Ryan that funded the government for the rest of the fiscal year.

In addition, as we have previously pointed out, the Obama Administration has said that it will oppose any cost-shifts to states that would deter states from taking up the Medicaid expansion.  That’s why it dropped from its own budget last year two Medicaid proposals it once supported that would shift costs to states.  As National Economic Council Director Gene Sperling stated last January, states should expand Medicaid “with the understanding that the rug will not be pulled out from underneath them” and that “[w]e are not willing to accept even the Medicaid savings that we had once put on the table … Medicaid savings, Medicaid cuts, for this administration, are not on the table.”

In fact, as we have noted, the only federal policymakers now pushing for major cuts to Medicaid that would significantly shift costs to states — like converting Medicaid to a block grant or setting per capita caps on federal Medicaid funding — are congressional health reform opponents who would gladly undermine a key element of the Affordable Care Act.  But their proposals face intense opposition and have no prospect of becoming law.

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31

01 2014

More Evidence That Medicaid Expansion Makes Fiscal Sense for States

Armed with new data, Virginia’s Medicaid agency estimates that adopting health reform’s Medicaid expansion — which it originally estimated would cost the state $137 million through 2022 — would actually save the state more than $1 billion over that period.  That echoes what we’ve said all along:  expanding Medicaid is a good deal for states.

Opponents of the Medicaid expansion have often cited flawed studies that exaggerate its cost to states, such as by assuming that newly eligible Medicaid enrollees would be much sicker (and thus more expensive to cover) than current enrollees.  Analysis shows the opposite is true: non-disabled adults who newly enroll into Medicaid are more likely to be healthier than those who are already enrolled.

Virginia’s Department of Medical Assistance Services (DMAS) now agrees.  Looking at new data and other states’ experience with recent Medicaid expansions, DMAS found that uninsured adults who newly enroll into Medicaid would likely have the same, if not lower, costs than currently enrolled adults.

DMAS also significantly raised the estimate of how many uninsured people would newly qualify for Medicaid under an expansion.  This means Virginia would have to spend even less to reimburse hospitals for uncompensated care for the uninsured than under the earlier estimate, since more of the uninsured would have Medicaid.  And, the drop in Virginia’s uncompensated care costs through 2022 would more than offset Virginia’s cost of covering newly eligible Medicaid beneficiaries over that period (in part because the federal government will reimburse 100 percent of the cost of covering these new enrollees through 2016), producing a net saving for the state.

States that have not expanded Medicaid can’t keep ignoring the fact that expanding Medicaid has significant benefits for states.

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29

01 2014