Florida’s Florida’s Medicaid ReformMedicaid Reform

What’s the Right Prescription

For Floridians?

Understanding MedicaidUnderstanding Medicaid

• Medicaid is the nations “health insurance ” program for the poor.

• Differs from Medicare - which provides health insurance to the elderly

Understanding MedicaidUnderstanding Medicaid

• Medicaid program serves over 2 million Floridians

• 1 in 8 people in the State participant in Medicaid for nursing home care, prenatal for the uninsured during pregnancy, people with disabilities, and people with catastrophic health crises

Understanding MedicaidUnderstanding Medicaid

• Medicaid is funded both by the State and Federal Government▪ In 2004, the federal government is anticipated

to provide 6.7 billion dollars in funding.▪ The state will contribute 4.6 billion dollars.

Who Participates in Who Participates in Medicaid?Medicaid?

• Currently serves over 2.1 million Floridians▪ Over 1.2 million are children▪ 582,395 are persons with disabilities▪ 304,122 are seniors

Who Participates in Who Participates in Medicaid?Medicaid?

• Medicaid plays a vital role in Florida’s Health Care system▪ Finances over 43% of births in the state▪ Serves 52% of people with AIDS▪ Pays for 66% of all nursing home days

UnderstandingUnderstandingMedicaid WaiversMedicaid Waivers

• “Waivers” allow states to modify the Federal requirements of the Social Security Act which established Medicaid.

• Florida has successfully submitted and operates 13 “waiver programs.”

UnderstandingUnderstandingMedicaid WaiversMedicaid Waivers

• On March 30, 2004, the Agency for Health Care Administration announced their intent to restructure Florida’s Medicaid program by submitting a waiver to “modernize the program and test a new model that leads to a sustained and affordable program in the decades to come.”

What are the Issues?What are the Issues?

• Cost▪ Proponents claim Florida’s rising costs of

Medicaid are too high-overwhelming the state’s ability to meet the need.

CostsCosts

• Analysis of costs trends over time suggest that Medicaid expenditures are cyclical▪ When the economy slows-enrollment into

Medicaid increases.▪ During the recent recession, Medicaid and the

State Children’s Health Insurance Program picked up 4.1 million children and their parents nationally.

Why AreWhy AreMedicaid Cost Rising?Medicaid Cost Rising?

• In recent years, health care costs have been rising for both public and private health insurance.

• This increase in health care cost is due to a number of factors, most prominently prescription drug and hospital costs.

Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

Why AreWhy AreMedicaid Cost Rising?Medicaid Cost Rising?

• Children coming from families living below the poverty level increased 45% since 2000-2001.

• Florida’s low income elderly population is increasing at a rate eight times the national average.

Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

Why AreWhy AreMedicaid Cost RisingMedicaid Cost Rising

• Over the past 5 years, analysis documents that enrollment increase account for on average, 62% of Florida’ Medicaid cost increase

• The remaining 38% can be attributed to increase in health care cost.

Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

Why AreWhy AreMedicaid Cost Rising?Medicaid Cost Rising?

• During this same time, the private insurance market cost rose even more.

• “Despite the fact that Medicaid serves a sicker and older population, Florida’s Medicaid cost, when look at on a per capita basis to account for increases in enrollment, have been increasing much more slowly that private insurance premiums.”

Florida’s Medicaid Budget: Why are Costs Going Up? Winter Park Health Foundation Policy Brief, July 2004.

What are the Issues?What are the Issues?

• Modernizing the program▪ Proponents want to “modernize” Medicaid by

charging nominal co-pays, increasing consumer choice and privatizing operations.

““Modernizing” MedicaidModernizing” Medicaid

• Other states have undertaken similar initiatives

• Some have experience “unintended consequences” of massive overhauls of their Medicaid system.

Modernizing MedicaidModernizing Medicaid

• Tennessee initiated “TENNCARE about 10 years ago.▪ Unintended consequences include fewer

physicians▪ Co-pays created barriers-people didn’t get

health care▪ Changes resulted in series of class action law

suits.

Modernizing MedicaidModernizing Medicaid

• The combination of a low per person expenditure and rising enrollment needs places Floridians at risk for a number of unintended consequences.

• Some proponents want to “cap” the funds coming from Federal Sources

Modernizing MedicaidModernizing Medicaid• Under cap scenarios-if the state

underestimates both costs and enrollment growth by 1 percent, it loses 3.38 billion dollars. Floridians will either have to cover those cost (taxes) or cut the services or number of people served.

• Critics argue it won’t decrease health care costs-just shift the cost to Florida tax payers.

Other Unintended Other Unintended ConsequencesConsequences

• Studies document a potential “domino” effect in response to massive health system overhauls.

• For example, Medicaid expenditures inject a huge flow of revenue into the general economy.

Other Unintended Other Unintended ConsequencesConsequences

• Medicaid cuts impact jobs, income and business activity. Economic models show that at the state level, Medicaid match supports 120,950jobs, $4.3 billion in income and 8.7 billion in business activity.

Penny Wise and Pound Foolish. Why Cuts to Medicaid Hurt Florida Economy. October 2003 Human Services Council, Produced by CHAIN

SummarySummary

• Florida’s Medicaid Program is cost effective▪ Florida spends less on Medicaid that most

states▪ Our recent rising cost are likely the result of a a

slight economic downturn, from which we are already recovering

▪ Cost in Medicaid have risen at a slower pace that cost in the private insurance market

SummarySummary

• Under many of the proposed changes, the State assumes risk of future cost.▪ Any proposal that includes limiting the Federal

funds to support Medicaid will likely be insufficient to meet the growing health care needs of Floridians.

Summary Summary

• We can do better▪ Reforms which provide for more efficient

delivery of services and encourage preventative care should be given priority consideration.

▪ Reform initiatives should not shift costs to other pockets.