Center on Budget and Policy Priorities

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MedicaidTo Expand or Not to Expand

ACA Implementation in Indiana:Challenges, Strategies and

Solutions

Judith SolomonMarch 15, 2013

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Center on Budget and Policy Priorities

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Status of State Medicaid Expansion in 2014

as of March 13, 2013

Center on Budget and Policy Priorities

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Relative Cost of Medicaid Expansion for Indiana is Low

• From 2013-2022:– IN Medicaid costs:

$33.42 billion

– IN Medicaid costs with expansion: $34.52 billion

– Difference: $1.1 billion

Center on Budget and Policy Priorities

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Federal government will bear nearly all costs of the ACA in Indiana

• From 2013-2022:– IN spending:

$1.4 billion

– Federal spending: $18.9 billion

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Can Healthy Indiana Plan be the Vehicle for Medicaid Expansion?

What we know:– Partial expansions, including those with caps on

enrollment, do not qualify for enhanced federal match (CMS 12/10/12 guidance letter)

– “Cost sharing for the expansion and current Medicaid populations. . .must conform to limits as established by statute and regulations.” (Letter from Cindy Mann to VA Secretary of Health and Human Resources)

– Demonstration projects will be judged against the purpose of the Medicaid statute “to extend coverage to low-income populations.” (Letter from Marilyn Tavenner to CT Commissioner of Social Services)

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Can Healthy Indiana Plan be the Vehicle for Medicaid Expansion?

What we know, continued:– Current demonstration projects (including HIP) providing

coverage for childless adults sunset on December 31, 2013– HIP approved for a one-year extension to “allow Indiana to

provide continued coverage under its Demonstration while allowing time for the state and CMS to continue our discussions as Indiana considers its options for 2014.” (Letter from Cindy Mann to IN Secretary of Family and Social Services Administration.)

– CMS did not approve minimum annual POWER account contribution for 2013.

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Can Healthy Indiana Plan be the Vehicle for Medicaid Expansion?

What we don’t know:– Will HHS approve demonstration projects charging

premiums to people with incomes below 138 percent of the poverty line?

• For all income levels?• Amount of premiums allowable?• Any limits on “lock-out” periods for non-payment?

– Will CMS allow limits on benefits?• Annual and lifetime caps?• No coverage of non-emergency transportation?• EPSDT for 19 and 20 year olds?

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Other Considerations• Suitability of HIP for broader expansion population

– Research shows that premiums lead to decreased participation of low-income people in health coverage

– Current program serves disproportionate number of older adults

• Data from American Community Survey (ACS) show 36% of uninsured in IN between 19 and 30 years old compared to 12% of HIP enrollees in 2012

• ACS survey shows 40% of uninsured in IN between 40 and 65 compared to 59% of HIP enrollees in 2012

• Other considerations?

Center on Budget and Policy Priorities

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What Flexibility does IN have?• Greater cost-sharing (including targeting) allowed for

people with incomes above the poverty line• Alternative benefit plans provide multiple options to

structure benefits for newly eligible• Premium assistance• Multiple options for delivery system reform and

better coordination of care– Incentives for higher-quality, lower-cost care– Enhanced match for health home coordination

Center on Budget and Policy Priorities

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Promoting Healthy Behaviors in Medicaid

• To date, “little published work” on the effectiveness of incentives within the Medicaid program in improving health outcomes and quality of care or in decreasing health care spending. (Health Affairs, March 2013)

• 10-state demonstration project to test effectiveness of incentives to encourage healthy behaviors now underway