June 20, 2013 Health Reform Task Force

Health Reform Task Force
20 June 2013 meeting


Two page Cost/Benefit analysis of potential Medicaid Expansion

Average annual impact of Medicaid eligibility expansions, by both the 5 expansion scenarios and implementation period

Summary of the above analysis, including estimates of the future for Utah’s Medicaid program under five scenarios

Recommendations on Medicaid Expansion from the Public Consulting Group who conducted the analysis

Utah’s response to the federal penalties and definitions regarding part-time employees

1. Part-time employees. Discussion on the status of part-time state employees under the federal Affordable Care Act. The ACA allows interpretation of single employer or “reasonable and good faith determinations as to whether an individual is a member of a group.” Financial impact on state as hours of part-time employees varies. The State could be fined when a part time employee goes to the Exchange and then each $2000 for remaining employees. If you offer something to all, but miss one, then the penalty (only for those who get a subsidy under the exchange) applies to ALL employees, even if you cover everyone else. The $3000 penalty is if you offer insurance that is not affordable and coverage is not adequate. That penalty only applies to that individual. The state is mandated to provide “minimal essential coverage” for every state employee. Full time employee is someone working 30 hours a week or more. There is pending federal legislation to increase the part-time definition to 40 hours a week.

2. Medicaid Expansion. See the above resources for the specific findings, analysis, and recommendations. As of today, 30 states (including DC) have opted in to full expansion, 15 have opted out, and 6 have not decided (including Utah).
Increased administrative costs were estimated for the three state agencies that have the highest administrative costs for Medicaid (per person, per year):

$11.22 Department of Health
$82.57 Department of Workforce Services
$11.98 Department of Human Services
Uncompensated Care (defined as hospital bad debt and charity care per American Hospital Association). This cost of $331M was divided by 407,000 uninsured individuals to create a unit cost of $814.14 per uninsured.

Public Assistance costs and savings:
1. Behavioral Health costs and savings. By 2023 state and county government spending is projected to increase by $14.5M.
2. Primary Care Network. Waive program providing primary care services to adults under 10 FPL who do not meet any current Medicaid eligibility criteria. This is expected to be closed under either expansion scenario as population will be covered under either program.
3. State and County Prisons and Jails. Inmates who leave institutions for inpatient stays longer than 24 hours are eligible for Medicaid claiming. Inmates will be largely newly eligible (assumed 90% newly eligible) for Medicaid and subject to increased FPL. This is a cost savings for the state and counties as these individuals primarily become covered under federal match increases. This population is projected to be between 200-250 individuals.
4. High risk pools. The current state high risk pool is not funded by Medicaid, thus Medicaid will not experience any savings from the elimination of the program. Individuals are modeled to enroll in Medicaid under expansion. Medicaid will accrue costs. State government is projected to gain overall savings due to increased FFP for individuals in Medicaid verses the cost of funding the high risk pool.
5. Medically needy. Serves individuals who meet Medicaid eligibility requirements but have more monthly income than Medicaid allows. Medicaid will provide coverage to these people but have to forgo the money they previously paid into Medicaid to receive coverage.
Estimated Revenues
Focused on additional revenue coming into the economy and savings to the state were removed from the additional revenue totals. They are split across the 5 scenarios, for three years, 2014, 2016, and 2023. GSP (gross state product) is expected to increase over 3 years studied for all five scenarios. The costs to state and county government for expansion, over 2014, 2016, and 2023.

$60M a year is the total cost to the state with a full Medicaid expansion, by full roll out in 2023.

Need to study the broader public health impacts of individuals who currently don’t have coverage. Impact on economic development with large firms considering relocating to Utah. Medical coverage is about more than just episodic care. It is about care and confidence for Utah’s families.

3. Risk Adjustment
Their goal is to provide services related to the development of a state-based risk adjustment methodology. We voted to allow the Department of Insurance to apply for a federal grant to study and build a model for the methodology. They have some grant dollars coming in, but if they decide by September or October that they do want to run Risk Adjustment then additional grant money will be needed.

4. HIP Utah (Utah Comprehensive Health Insurance Pool)
This state run (and the Federal-HIP Utah federally funded and state run program) program provides reasonable access to health insurance for Utahns with serious medical conditions who are considered uninsurable. Since 1991 3300 Utah citizens are currently served in this health insurance pool, which is state subsidized. The Federal-HIP Utah program received $63M to provide coverage for approximately 1200 Utah citizens. The Federal-HIP Utah is the state-run Preexisting Condition Insurance Plan (PCIP) and operates as a parallel program alongside HIPUtah. The Federal-HIPUtah program has enrolled over 2900 Utah citizens in the past 33 months. Additionally they have paid over $56M to satisfy more than 65,000 claims and have received over $63M from the federal government for the laims incurred through June 2013. Both these pools will be rolled into the ACA individual market coverage, by 2017 at the latest. CMS will run the temporary reinsurance program which will assess fees to the entire insured and self-insured market to reimburse the individual market insurers for high cost claimants. The sooner the shift to the exchange occurs the greater the reinsurance protection for carriers.

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