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Medicare and Medicaid Should Be Protected in Trade Agreements

CBPP, AARP, the AFL-CIO, Consumers Union, and ten other national organizations have written to the U.S. Trade Representative asking that Medicare, Medicaid, and other health programs be excluded from the investor-state dispute settlement (ISDS) provisions of pending trade agreements.

ISDS would give companies a new legal avenue to challenge U.S. pricing and patent policies for drugs and medical devices: the ability to sue the U.S. government before an international arbitration panel that wouldn’t be subject to normal democratic checks and balances.  In our letter, we say:

ISDS . . . would allow global pharmaceutical firms to challenge mechanisms that state legislatures, the Congress and public agencies use to manage pharmaceutical costs in public programs.  For example, a pharmaceutical company could challenge a state’s Medicaid preferred drug list or drug utilization management rules that limit access to a certain drug under specific circumstances.  Reimbursement policies for medicines under Medicare Part B could be challenged.  If adopted, the President’s own proposal to establish rebates under the Medicare Part D program for low-income beneficiaries could be subject to an ISDS challenge.  Simply stated, ISDS would impose an unnecessary risk to government administered health programs by limiting what policy makers can do to keep these programs affordable for taxpayers and beneficiaries.

Concerns about ISDS are growing and span the political spectrum.  In a recent editorial, The Economist suggested various ways of defining and narrowing the scope of ISDS, including exempting measures “to protect legitimate public welfare objectives, such as health, safety, and the environment,” allowing only governments to bring complaints against another government, and making proceedings public and subject to appeal.  As The Economist concludes, “Firms need protection; but so does the right of governments to pursue reasonable policies.”

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22

10 2014

Indiana Should Revise Medicaid Waiver Proposal

Indiana has proposed to expand Medicaid and extend health coverage to as many as 374,000 uninsured Hoosiers through the Healthy Indiana Plan (HIP) 2.0.  As currently designed, however, the proposal would create barriers to coverage for low-income individuals and cause substantial numbers of people to remain uninsured, as we explain in a new paper.  The state should modify its proposal to ensure that all newly eligible adults are actually able to participate and receive necessary health care services on a timely basis.

HIP 2.0 would be a new demonstration project, or “waiver,” that incorporates features from the state’s existing Medicaid waiver, which was approved prior to the enactment of health reform and offers limited coverage to about 40,000 low-income adults.

Although Medicaid waivers give states additional flexibility in how they design their Medicaid programs, the Medicaid statute requires that waivers must test new approaches to Medicaid while promoting the program’s objective of delivering health care services to vulnerable populations that can’t otherwise afford care.  As proposed, HIP 2.0 falls short of meeting this standard in several important respects: aspects of the plan would almost certainly result in substantial numbers of low-income people being unable to receive health insurance and access care for significant periods of time.  Indiana should modify those parts of the proposal to ensure that newly eligible Medicaid beneficiaries can actually enroll in coverage and receive necessary health care services.

HIP 2.0 does drop some problematic features of the state’s existing Medicaid waiver, such as a cap on the number of enrollees and annual and lifetime dollar limits on coverage, to comply with changes that the health reform law made to Medicaid.  But the state is seeking approval to maintain certain other features of its current waiver that are inconsistent with the Medicaid expansion, such as charging premiums to people with little income and delaying the start date for coverage.  A substantial body of research, including Indiana’s own experience under its existing Medicaid waiver, demonstrates that charging premiums to people with low incomes discourages them from enrolling in and maintaining coverage.

Click here to read the full paper.

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17

10 2014

Do Medicaid and SNAP Reach Those Who Most Need Them?

Millions of low-income people qualify for both Medicaid and SNAP (formerly food stamps), but the federal government doesn’t regularly assess how many of them actually receive both.  That’s a significant omission: Medicaid and SNAP address the most basic needs of our poorest citizens, and health care and nutrition assistance likely produce more powerful results when provided together.  A new Urban Institute paper examining joint participation among eligible children and non-elderly adults in five states — something the federal government could do for all states every year — suggests there is substantial room for improvement.

Urban Institute researchers calculated joint participation rates for 2011 in Colorado, Idaho, Illinois, North Carolina, and South Carolina.  (These states participate in the Work Support Strategies initiative, which is developing and testing better ways to deliver key supports for low-income working families.)  They found significant gaps in joint enrollment: in four of the states, only about two-thirds of non-elderly adults and children who were eligible for both Medicaid and SNAP actually received both (see graph).

The findings are consistent with our 2011 report’s finding that a large share of poor children — who are very likely eligible for both Medicaid and SNAP — aren’t enrolled in both.

(To be sure, both findings predate health reform implementation, so they don’t reflect participation of many newly eligible low-income adults in states that expanded Medicaid.  Nor do they reflect the major changes in Medicaid application and enrollment systems that health reform requires in order to improve participation.)

Over 40 states co-administer Medicaid and SNAP for low-income families, often using joint forms, the same computer systems, and the same eligibility workers, so one program’s performance often depends on the other’s.  Yet the federal agencies that oversee the two programs issue program policy, oversee operations, and assess state performance on the two programs separately.

States are key partners in delivering the safety net, so it’s important to take a holistic view of their performance, not just a program-by-program approach.  An annual federal assessment of the share of Medicaid- and SNAP-eligible people in each state who actually receive both would better inform federal and state officials on how well we serve our poorest families and individuals.

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30

09 2014

Coverage Gap Widening Between Medicaid Expansion States and Others

People in states that have adopted health reform’s Medicaid expansion had a lower uninsured rate in 2013 (before the expansion took effect) than people in non-expansion states — and non-expansion states are falling further behind in 2014, several recent government and independent surveys reveal.

Some 14.1 percent of the people in the 27 states (including Washington, D.C.) that have expanded Medicaid lacked health insurance in 2013, compared to 17.3 percent in the 24 non-expansion states, according to the Census Bureau’s American Community Survey (see chart).

Next year’s Census data, which will reflect the substantial coverage gains expected in expansion states in 2014 due to the expansion (which took effect January 1), should show a further widening of this coverage gap.

Results from several independent surveys — and this week from the Centers for Disease Control and Prevention (CDC), the first government survey data showing health reform’s early impacts — show that this is already happening.  For example, the Urban Institute’s Health Reform Monitoring Survey found that the uninsured rate for non-elderly adults in expansion states fell from 16.2 percent to 10.1 percent between the third quarter of 2013 and the second quarter of 2014, compared to a decline from 20.0 percent to 18.3 percent in non-expansion states.

Health reform’s Medicaid expansion creates a pathway to coverage for all non-elderly adults with incomes up to 138 percent of the poverty line, including, for the first time, low-income adults without children.  However, the 2012 Supreme Court decision upholding health reform made the expansion a state option.  States can opt in to the expansion at any time; the federal government will pick up all of the cost through 2016 and nearly all of the cost thereafter.

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18

09 2014

Hospitals Benefiting From Medicaid Expansion, Report Finds

Hospitals in states that have expanded Medicaid as part of health reform are seeing a large drop in uninsured patients and higher-than-expected revenues, a new report from the PricewaterhouseCoopers (PwC) Health Research Institute finds.  It’s the latest evidence of the Medicaid expansion’s benefits for states, their businesses, and their residents.

Examining financial data for the first half of the year from the country’s three largest health care providers, PwC found a 47 percent drop in admissions of uninsured patients at affiliated hospitals in Medicaid expansion states.  This suggests a sizable drop in uncompensated care — consistent with a nationwide survey of hospitals by the Colorado Hospital Association after the first quarter of the year.  PwC also found that the rise in the share of patients with health coverage boosted providers’ revenues even more than they had anticipated.

Meanwhile, the Urban Institute projects that hospitals in the 23 states that have not yet expanded Medicaid (see map) will lose out on $157 billion in reimbursements between 2013 and 2022.

This PwC report is one of several indicators of the growing gap between states that have expanded Medicaid and those that haven’t.  The Medicaid expansion is driving large gains in health coverage, while states that haven’t expanded risk forgoing those gains as well as millions of dollars in savings.

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05

09 2014

New Study Shows Link Between Medicaid Coverage of Prenatal and Infant Care and Better Long-Term Health Outcomes

The benefits of good prenatal and infant care for a child’s development are well documented, so it makes sense that improving access to care by expanding Medicaid coverage to pregnant women and children would produce long-term gains.  A new study suggests that as well.

University of Michigan researchers examined the health in young adulthood of people born during the 1980s and early 1990s, when states significantly expanded Medicaid to cover more low-income pregnant women and children in response to new federal requirements and added state flexibility.  Building on a large body of research documenting the benefits of Medicaid, they found that people who were more likely to be eligible for Medicaid during their prenatal and infant stages had better health and fewer preventable hospitalizations as young adults than those who were less likely to be eligible for Medicaid.

Specifically, a ten-percentage-point increase in the share of women of childbearing age who were eligible for Medicaid was linked to the following positive outcomes for young adults (ages 19-33) born during the expansion:

  • lower body mass index and a 7 percent drop in the likelihood of obesity;
  • a nearly 2 percent decline in preventable hospitalizations overall and a 9 to 10 percent decline in preventable hospitalizations related to chronic conditions; and
  • an 8 to 10 percent drop in hospitalizations related to conditions that benefit from regular medical evaluations in early childhood, such as diabetes.

As noted, other studies have shown the health benefits of expanding Medicaid, but this study shows the link between Medicaid coverage and positive long-term health outcomes as well.  It’s one more reason why states that haven’t yet adopted health reform’s Medicaid expansion should get off the sidelines.

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04

09 2014

Wisconsin and Wyoming Tally Fiscal Cost of Rejecting Health Reform’s Medicaid Expansion

Recent budget reports from Wisconsin and Wyoming show that their failure to adopt health reform’s Medicaid expansion is costing them millions of dollars in forgone budget savings.

In Wisconsin, the legislature’s nonpartisan Legislative Fiscal Bureau estimates that the expansion, which covers non-elderly adults with incomes up to 138 percent of the poverty line, would have saved the state $206 million in the 2014 and 2015 fiscal years combined.

Governor Scott Walker chose instead to extend Medicaid coverage to adults only up to 100 percent of the poverty line through a separate waiver.  This means that the federal government is paying for the expanded coverage at the state’s regular Medicaid matching rate of 59 percent, rather than the much higher matching rate for health reform’s Medicaid expansion.  (For states that expand to 138 percent of poverty, the federal government will pick up 100 percent of the cost through 2016 and no less than 90 percent thereafter.)  The difference in matching rates is the main reason for the $206 million in forgone savings.

Wisconsin could still save between $261 million and $315 million over the 2016 and 2017 fiscal years by adopting the expansion during next year’s legislative session, the report estimates.  Gov. Walker has justified his opposition to it by arguing that the federal government would ultimately renege on its financial commitment, but those fears are unfounded.

In Wyoming, the state health department projects that the Medicaid expansion would save the state $50 million a year on other health programs for low-income uninsured residents.  As a result, Governor Matt Mead is moving to advance the Medicaid expansion during the coming legislative session.  More than 17,000 uninsured residents would gain access to coverage under the expansion, the Urban Institute estimates.

The 27 states (including Washington, D.C.) that have adopted the Medicaid expansion are already seeing dramatic gains in health coverage and reductions in the cost of providing uncompensated care to the uninsured.  Wisconsin, Wyoming, and the other 22 states that have not done so could realize similar benefits.

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28

08 2014

States Seeking to Expand Medicaid Through Waivers Can Learn From Arkansas, Iowa, and Michigan

The federal government is considering proposals from Pennsylvania and Indiana to adopt health reform’s Medicaid expansion through a demonstration project, or waiver, and New Hampshire will soon submit its own.  The experience of the three states — Arkansas, Iowa, and Michigan — that have expanded through a waiver suggests that while the federal government will work with states to craft reasonable expansion plans, there are limits to the programmatic flexibility it will grant, as we explain in a new paper.

Waivers provide states with additional flexibility in how they operate their Medicaid programs, but they cannot be used to impose onerous requirements that make it difficult for eligible individuals to gain and maintain Medicaid coverage.  This principle has informed how the Department of Health and Human Services (HHS) has responded to waiver proposals so far.

Among the takeaways:

  • States may not disenroll people with incomes below the poverty line for non-payment of premiums.  While Iowa has received approval to charge beneficiaries with incomes between 50 and 100 percent of the poverty line modest premiums starting in 2015, the state will waive premiums for individuals who complete health risk and wellness assessments or attest to financial hardships.  Importantly, the state cannot disenroll individuals from coverage if they do not pay their premiums.
  • States may not require individuals to pay cost-sharing charges above what is allowed under Medicaid rules.  Medicaid cost-sharing rules provide states with significant flexibility while providing significant protections for beneficiaries that are intended to minimize barriers to necessary health care services.  The rules include special protections barring cost-sharing for children and pregnant women and for certain services such as family planning, emergency services, and maternity care.  People with incomes above the poverty line may be charged higher amounts, and providers cannot deny services to people with incomes below the poverty line who cannot afford to pay.  States must apply these protections to the newly eligible adults regardless of whether states expand Medicaid through a waiver.
  • States may not overly restrict certain benefits.  States have significant flexibility regarding benefits for newly eligible adults and can largely align their benefits with the benefits that private market plans provide.  Still, HHS has provided very limited waivers of Medicaid benefits.  And in Arkansas and Iowa, which are enrolling some or most of their expansion populations in private plans offered in the health insurance marketplaces, HHS has required that states augment marketplace benefits to ensure beneficiaries have access to the same benefits than if they were enrolled in regular Medicaid.
  • States can’t condition Medicaid eligibility on employment or participation in work search activities.  In December 2013, Pennsylvania Governor Tom Corbett proposed a Medicaid expansion waiver that would require anyone working fewer than 20 hours a week to register with the state’s unemployment compensation program and engage in 12 work search activities per month to remain eligible for Medicaid coverage.  Those judged not to be in compliance would have their health coverage revoked.  Gov. Corbett subsequently submitted a revised proposal to HHS that would charge beneficiaries differential premiums based on whether they are working or engaged in work search activities.  In response to Pennsylvania’s proposal, HHS has indicated that it is unlikely to approve waivers that condition either Medicaid eligibility or premium amounts on compliance with work search or other work-related activities.

Click here to read the full paper.

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22

08 2014

Federal Medicaid Matching Rates Have Remained Stable, New Study Shows

Some state policymakers opposed to health reform’s Medicaid expansion continue to argue that the federal government will likely renege on its commitment to permanently pick up nearly all of the cost.  Some 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).  As we noted in February, that’s false, and a new report from the Urban Institute concurs.

The report finds that policymakers have only cut the FMAP once, in 1981, when President Reagan and Congress enacted a temporary cut.  The most recent FMAP changes were temporary increases to give states fiscal relief during the past two economic downturns.

States are headed down divergent paths based on whether they have expanded Medicaid.  The 27 states (including the District of Columbia, see map) that have taken up the Medicaid expansion are experiencing large gains in health coverage.  As a result, hospitals are providing much less uncompensated care than just a year ago.

Unfounded concerns of a future drop in the federal matching are no reason for the remaining states to stay on the sidelines and miss out on the many benefits of expansion.

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14

08 2014

GAO Medicaid Data Show Per Capita Caps Would Lead to Disparate, Harmful Funding Cuts

We’ve previously warned that proposals to change the formula for federal Medicaid funding for states to a fixed dollar amount per Medicaid beneficiary — known as a “per capita cap” — would mean cuts in federal funding for all states.  The change would hit some states particularly hard due to substantial differences in per-beneficiary spending and how fast such costs grow over time.  A recent Government Accountability Office (GAO) analysis backs up our warning.

GAO’s analysis shows that states vary widely in how much they spend per beneficiary, consistent with our own analysis and that of the Kaiser Family Foundation.  GAO estimated average spending in 2008 for each state for different groups of beneficiaries — a child, a person with a disability, a senior, and a non-disabled, non-elderly adult — using federal expenditure and enrollment data.  As one would expect, overall, on average, Medicaid spending on people with disabilities and on seniors was significantly greater than spending on other adults and on children.

But spending on these enrollment groups varied considerably among states.  For example, Medicaid spending per child beneficiary was $5,877 in Vermont and $1,702 in California.  And average Medicaid spending per senior beneficiary was $28,564 in Montana and $9,882 in Alabama.

House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Senate Finance Committee Ranking Member Orrin Hatch (R-UT), who requested the GAO analysis, responded to the findings by reiterating their proposal to establish a per capita cap, under which the federal government would no longer cover a fixed share of each state’s overall Medicaid costs but instead would limit each state to a fixed dollar amount per beneficiary.

Rep. Upton and Sen. Hatch previously argued that a per capita cap would “normalize” Medicaid spending across states, implying that states with higher-than-average spending per beneficiary have inflated costs.  In reality, states with relatively low Medicaid spending per beneficiary would likely fare disproportionately worse than higher-spending states under such a cap, because they would receive relatively less funding due to federal funding formulas that are typically based on current spending per beneficiary.

GAO tried to identify the factors driving this spending variation.  It concluded that while some factors were within the states’ control, such as optional benefits offered and optional eligibility levels, many significant factors were clearly not, including geographic variation in health care wages, differing enrollee service needs, and demographic differences among states such as the percentage of enrollees who are seniors.  In other words, just as overall health care spending and utilization among the states vary, so does Medicaid spending per beneficiary.  As a result, nothing in GAO’s report indicates that states with higher spending per beneficiary were somehow “overspending” relative to those with lower spending per beneficiary.

GAO’s findings don’t justify proposals to alter Medicaid’s financing structure.  They do, however, emphasize that while all states would face cuts in federal funding under proposals like a per capita cap, some states would disproportionately face larger ones.

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30

07 2014

Medicaid Expansion Decisions Leading States Down Divergent Paths

As a growing number of reports increasingly make clear, a state’s decision whether to expand Medicaid as part of health reform has real-life effects on its residents and its businesses.  In the 26 states and the District of Columbia that have expanded Medicaid (see map), the positive benefits are already playing out.  Here’s some of the latest information:

  • Hospitals are providing less uncompensated care.  In Arizona, hospitals reported that the Medicaid expansion is the chief reason for a 30 percent decline in the amount of uncompensated care they have provided so far this year, compared with a year ago.  The Colorado Hospital Association found a similar decline in charity care through April when it surveyed hospitals in 15 states that have expanded Medicaid and 15 that have not.
  • Medicaid expansion is driving large gains in health coverage.  A survey conducted by the Urban Institute finds that while the uninsurance rate is dropping across the country, states that have expanded Medicaid have seen a drop in the percentage of non-elderly adults who are uninsured by more than one-third — a 37.7 decline — while the uninsured rate fell by only 9 percent among states that haven’t expanded.  A survey from the Commonwealth Fund found a similar trend.

States can opt in to the Medicaid expansion at any time, allowing them to extend coverage to millions with the federal government picking up all of the cost of the expansion through 2016 (and nearly all of the cost in the years after), as we have written.  New Hampshire recently started accepting applications for its expansion, with coverage first available on August 15.

But states that refuse to expand leave a coverage gap, where people below the federal poverty line have income too high for Medicaid under prior eligibility rules but too low to qualify for federal subsidies to purchase coverage through the marketplaces.  This means we’re likely to see more stories as in Tennessee where, due to the coverage gap, a couple separated so the wife’s income would be low enough to maintain her Medicaid coverage.

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16

07 2014

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