State Strategies to Cover the Uninsured:

The Public Sector

December 7, 2005

Charles Milligan, JD, MPH

Adequate Health Care Task Force

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Preview State Coverage of the Uninsured: Medicaid State Coverage of the Uninsured: Pooling A Closing Thought on “Being Insured”

State Coverage of the Uninsured: Medicaid

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Medicaid covers the uninsured in three ways.

Outreach: Enroll eligible but enrolled individuals (no policy change needed)

Expand eligibility to optional eligibility groups (no federal approval needed)

Use a “demonstration” (1115) waiver to cover an expansion group (federal approval needed)

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Outreach by itself may target the uninsured who are in the lower income categories . . .

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. . . and who comprise 65% of the uninsured.

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In fact, most uninsured children already qualify for Medicaid or SCHIP.

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Beyond outreach, states may expand eligibility to optional eligibility groups without a federal waiver . . .

Children up to 185% poverty (Medicaid) or 200% poverty (SCHIP)

Pregnant woman up to 185% poverty

Poor seniors to 100% poverty

Yet a few states are cutting back,too, such as MO and TN

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. . . or seek an 1115 federal waiver to cover expansion groups

Must be “budget neutral” Thus, savings must be made in other parts

of Medicaid to provide coverage In 2001, CMS created a template for this,

known as the “HIFA” waiver

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Coverage expansion in Medicaid has been successful . . .

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. . . growing by 8.4 million people from 2000-2003 . . .

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. . . yet this growth reflected substitution as much as coverage of the previously uninsured . . .

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One outcome of substitution is that pressure is increasing on Medicaid provider rates . . .

Providers

1. Cannot cost shift onto Medicare or private insurance (due to “prudent purchasing” by these purchasers)

2. Increase in Medicaid enrollment/patient load heightens the importance of Medicaid rates

3. Providers: “social mission diluted by Medicaid expansions”

State Medicaid Program

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. . . and another is the so-called “Wal-Mart” bill in Maryland.

In the 2005 legislative session, Maryland’s legislature passed a bill on “pay or play” that singled out Wal-Mart.

Governor Ehrlich vetoed the bill.

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These dynamics are leading to new thinking in Medicaid reform and coverage of the uninsured Create disincentives for substitution of

Medicaid for ESI Mirror ESI movement to defined contribution

(per capita cap) Create “tiered” programs

Benefits Cost sharing Enrollment caps

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1. Create disincentives for substitution of Medicaid for ESI

Premium assistance Idaho, Illinois, Michigan

Mirror benefits and cost sharing New Mexico, Oklahoma, Utah, Oregon, Tennessee

Goals: link to private insurance to:• Shore up that market for employer purchasing• Shore up provider fees

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2. Mirror ESI movement to defined contribution (per capita cap)

Defined contribution: Health Savings Account South Carolina Florida

• Similarly, one goal is to shore up private insurer and provider markets

• Another goal is to convert beneficiaries into prudent purchasers

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Create “tiered” programs

Expansive benefits for mandatory Medicaid eligibles, limited benefits with cost sharing for others Michigan New Mexico Iowa Tennessee Oregon

State Coverage of the Uninsured: Pooling

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Other States Are Advancing “Pooling” Approaches to the Uninsured

Maine’s “Dirigo” Initiative

Connecticut’s “MEHIP” Initiative

Yet, absent new finances, underlyingeconomic challenges for

coverage expansion remain

Questions

Charles Milligan

Executive Director, UMBC/CHPDM

410.455.6274

cmilligan@chpdm.umbc.edu

www.chpdm.org