PLEASE NOTE: This is an unedited transcript. Please refer to the video to confirm exact quotes.
KARL EISENHOWER: Good afternoon and welcome. We’re glad you could join us today. My name is Karl Eisenhower. I’m the Communications Director at the Alliance for Health Reform. Today’s webinar is a project of the Alliance for Health Reform, the National Institute for Health Care Management Foundation and in collaboration-excuse me, get my presentation going here-in collaboration with the Association for Health Care Journalists.
Today, we’ll be discussing Medicaid, which is the largest public source of health coverage in the United States. As a part of this discussion, we will focus on how Medicaid changed under the Affordable Care Act, how it would change again under the House Bill, the American Health Care Act, and under the Trump budget that was released yesterday. We’ll also look at how states have used waivers granted by the Centers for Medicare and Medicaid Services, and what new waivers we can expect under the Trump administration.
We’re very fortunate to have on our panel today, Robin Rudowitz from the Kaiser Family Foundation, Chris Pope from the Manhattan Institute, Hemi Tewarson from the National Governors Association, Tony Leys from the Des Moines Register, and again, my name is Karl Eisenhower.
We’ll do a little housekeeping here real quickly. On the right-hand side of your screen, you’ll see a little toolbar with an orange arrow. You can use to open and close the webinar tool settings, download handouts, which include the presentation, and that’s how you’ll send us questions for the Q…A segment at the end of the webinar. There are additional handouts for this webinar that are available on our website. Our website is allhealth.org.
Finally, if you’re new to this topic or other topics in health policy, we want to make sure you know about the Alliance’s Sourcebook on the Essentials of Health Policy. It provides background on health policy issues and current data. The Sourcebook now is a purely electronic publication, and it lives on the allhealth.org website. Thanks to support from the NIHCM Foundation, we’re able to make continuous updates throughout the year.
Okay. Our first speaker-give me one moment here-our first speaker is Robin Rudowitz from the Kaiser Family Foundation, who will give us an overview of how Medicaid works and where it stands today. Robin, I’ll pull up your presentation and hand off to you.
ROBIN RUDOWITZ: Great. Good afternoon, everyone, and thank you so much for the invitation to participate in this webinar. There are certainly a lot of things going on with Medicaid. I’m going to try to provide an overview of the program and highlight some of the key issues in the next eight minutes or so. It’s a lot to cover and I’ll move quickly, and then I look forward to the discussion and questions from those of you who are listening.
I wanted to start-so, next slide-I wanted to start by reminding folks about the two foundational aspects of the Medicaid program that have been in place since the program was enacted in 1965. First, Medicaid is a double entitlement. It’s an entitlement to eligible individuals for coverage, and it’s also a guarantee to states for federal matching dollars. And, second, unlike Medicare, which is administered by the federal government, Medicaid is a partnership between the states and the federal government. The federal government sets core program requirements, and then states have a considerable amount of flexibility to administer their programs.
Next slide. Medicaid has a number of key roles in our health care system. It provides coverage to one in five Americans, assistance to 10 million low-income Medicare beneficiaries. It’s the largest payer of long-term services, so that includes nursing homes as well as community-based long-term care. Medicaid accounts for one in six of all health care dollars spent in the U.S., and is an important revenue source for safety net hospitals and clinics. And, as we already mentioned, it’s an important source of financing for states.
Prior to the ACA-next slide-prior to the ACA, eligibility for Medicaid was based on income and categorical requirements. So, a person had to be pregnant or have a disability or be a child to be eligible, and many adults were excluded from coverage. The Medicaid expansion in the ACA was designed to fill gaps in coverage for low-income people, and the ACA also included enhanced federal funding for that new coverage.
As a result of the Supreme Court ruling, the Medicaid expansion effectively became a state option, and there are now 32 states that are implementing the Medicaid expansion.
While the Medicaid program is not perfect, you may sometimes hear that access in Medicaid is poor. However, looking at this slide and data show that nationally, Medicaid is comparable to private insurance for access and satisfaction metrics. And, far better compared to those who are uninsured.
Congress is currently debating the American Health Care Act, and that was passed in the House. There were two really key changes for Medicaid included in the bill. The AHCA would end the enhanced match for newly enrolled expansion adults as of January 1, 2020. And, it would also cap federal Medicaid matching dollars through a block grant or a per capita cap.
To understand some of the effects of these changes, this slide provides a snapshot of the coverage and financing tied to the Medicaid expansion. As of the beginning of 2016, there were 14 million people in the expansion group, 11 million who were made newly eligible by the ACA. And, in fiscal year 2015, the expansion accounted for $73 billion in funding, the vast majority of which were from the federal government.
Research collected from over 100 studies released since the implementation of the ACA in 2014 shows that the Medicaid expansion has resulted in changes beyond the Medicaid program, including a reduction in the uninsured, increased access to care and financial security for new enrollees, reductions in uncompensated care for hospitals and savings in other areas of state budgets. Studies also point to net fiscal benefit for states from implementing the expansion.
So, the other major change included in the AHCA for Medicaid, and was also included in the president’s budget that was released yesterday, is the conversion of Medicaid to a block grant or a per capita cap. These policies are generally designed to cap federal spending and generate savings relative to current law projections of Medicaid and savings typically grow over time.
These policies could shift costs to states if spending exceeds the amounts of the capped funding. So, inflationary growth factors typically do not account for unexpected costs for new drugs like the new Hep C drugs or costs to respond to health care epidemics like the new crisis related to the opioid epidemic, or changes in case mix for enrollees such as the rapidly growing elderly population. Block grants or per capita cap policies typically choose a base year and impose a uniform growth rate to the base across states. This creates two issues. First, due to the current flexibility in the program, state spending varies significantly across states. In 2011, per enrollee spending varied from a low of about $4,000 in Nevada to over $11,000 in Massachusetts. This state variation is even more pronounced when you look across different Medicaid enrollment groups. And, second, Medicaid spending growth varies across states. So, from 2001 to 2011, average annual growth and spending for Medicaid averaged about 3.7%, but was over 5% in 14 states.
We are, of course, all waiting for the new CBO estimate that will be released later this afternoon. But, the current CBO score of the AHCA projected 839 billion in federal savings for Medicaid and a reduction in enrollment of 14 million by 2026. The president’s budget released yesterday included additional cuts to the Medicaid program. Taken together, if they were additive, which we’re not 100% sure that they are, that could mean up to 1.3 trillion in reductions for the Medicaid program over the next 10 years.
Reductions in federal financing could leave states with difficult choices, cut Medicaid or fill gaps in federal spending with new revenues or other reductions in state spending. States with certain characteristics may face more challenges than others in making these choices.
I am running out of time, but beyond the legislation, I wanted to talk a little bit about waivers. So, there’s been a lot of attention to Section 1115 Medicaid Demonstration Waivers. These are not new. Most states have a waiver in place, sometimes more than one waiver.
Next slide. What is new are some of the things that states are asking for. More states are seeking waivers to impose work requirements as a condition of eligibility for Medicaid. This is something that has never been approved through waivers. When thinking about a Medicaid work requirement, it is important to consider the data that show 59% of adult Medicaid enrollees are working, and among those not working, 35% report the reason why they’re not working is related to illness or disability, or another 28% say they have caretaker responsibilities.
States are also seeking more waivers to impose premiums and cost-sharing, and here there’s a large body of research that suggests that these policies result in coverage losses as well as decreased use of services.
So, to wrap up, I just want to leave you with two slides. This one is from our polling data that shows that Medicaid is not unpopular, but an important program to more than half of all Americans.
And, finally, I’ve gone over a lot of data and statistics, but behind all these numbers are people, and there’s really no better way to understand those numbers than to watch some of these short videos that show different faces of the Medicaid program and all of these videos are available on our website.
KARL EISENHOWER: Robin, thank you. I’m going to switch presentations here. Both the American Health Care Act, as Robin mentioned, and the Trump budget propose shifting Medicaid to a system of per capita caps. And, Chris, I don’t know, I don’t think I’ve got the first slide of your presentation here. Excuse me, everybody. So, Christopher Pope from the Manhattan Institute will explain the thinking behind per capita caps and how they would work. Chris?
CHRISTOPHER POPE: Thank you, Karl. Thank you, Robin. It’s great to be able to be here this afternoon with you all. So, I’d like to start talking about, really, the context for all this, which is the challenge of cost in the Medicaid program. Medicaid is, obviously, a unique program with the management and the financing is split, the management of the program done by the states and the financing of mostly by the federal government with the states pitching in funds as well. There is, the big focus, I think, the motivation for the per capita caps is the inequity between the states, and what I’ll look at here is really what exactly are the highest states getting. So, what it is at the margin, the Medicaid spending is going at. Well, what is it that we are essentially getting more of from a state spends more than the average in the Medicaid program? And, then I’ll assess the per capita cap that the House put forward as a way to address the spending challenge in Medicaid. And, really, address it relative to what one might hope an ideal per capita cap system might look like or potentially what the Senate might come up with.
So, if we look at the background of the program, this is really just looking at the changes in federal spending over the past 50 years or so. And, you’ll notice the two very steep upward lines here, Medicare and Medicaid programs relative to all of the federal spending. They’re increasingly crowding out other budget priorities. Defense has been reduced substantially since the ’60s. And, you’ll see that these are ordered and that other priorities are increasingly being squeezed. Medicaid figure here is obviously just the federal figure, but it’s increased steadily as projected increase well into the future as well.
So, the challenges that are unique to Medicaid is that it’s, we talk a lot about third party payment in health care, where insurers are essentially paying for the bulk of the care rather than patients and providers arranging pricing directly. Well, in Medicaid, we have a fourth party, which is the federal government that’s essentially paying for the states to administer, for patients to choose providers, and then for providers to receive funds. So, there’s an additional player here, which adds complexity to the cost of the program and the task of providing cost-effective care. There is no objective cost that’s covered. There is no set of fees that kind of delimits the way that Medicare Advantage does per individual, per kind of diagnostic group, how much they essentially have to purchase care. And, there’s also been a challenge over the past couple of decades with states really trying to classify spending as part of Medicaid to get federal matching funds for things that they were doing anyway. They want to have federal funds be provided to essentially claim additional revenues. We also have the problem that, from a federal taxpayer point of view, the management of the programs really at arms-length. It’s hard to kind of figure out what exactly is the value that’s being gained. Is Massachusetts getting better value for its Medicaid program than North Dakota? There are so many variables in play that it’s really hard to kind of assess that question. And, then there’s also the fundamental problem distribution that the allocation to the states are really in many ways the inverse of needs.
So, this is, in theory, what Medicaid is intended to do. It’s intended to provide the highest rate of assistance to the poorest states. The states with the highest matching funds are the ones with the lowest economic output per capita, for the lowest tax basis. And, in practice, we see the federal subsidies to states go the other way. The states that are the wealthiest states get higher per capita subsidies from the federal government for its Medicaid program. That’s really the opposite of what the program was intended originally to operate according to.
So, it’s often quite complicated, because Medicaid is so multi-dimensional to track exactly what’s going on. So, I’ve really picked out two states, Alabama and Connecticut as an example of a high spending and then low spending states. Alabama has much higher percentage of its population under the poverty level than Connecticut, but it receives a much lower subsidy from the federal government for its Medicaid program than Connecticut. And, related to that, one might argue in consequence of that, Connecticut is able to enroll a much larger proportion of its population. Now, the matching fund system does provide higher rate of matching funds to the poorer states than wealthier states, but really, all states live under budget constraints, and so it’s often the wealthiest states that are able to put forward the most funds to essentially matching funds from the federal government. Every state would like as much matched as it could, and it’s the wealthiest that are able to take best advantage of that.
So, what are these states spending their money on? What distinguishes them? Surprisingly, actually, if you look at hospital care, despite the fact that Connecticut is an expansion state, that Alabama is not, that one might expect Alabama to sort of run like a tighter program with much narrower access to providers, hospital care spending doesn’t vary that much between those two states. There’s a slightly greater variation with other medical providers such as physicians, dentists, drugs, medical equipment, but the real larger share of the disparity between a high-spending and low-spending Medicaid state is really on long-term care. It’s the extent of the long-term care entitlement that accounts for the greatest in the variation. So, we often talk about Medicaid primarily as a medical program for low-income individuals. When we’re talking about interstate variation, it’s really the long-term care costs that are driving a large amount of the differences between what the wealthier states are getting and what the poorer states are getting.
So, what is this per capita cap proposal? Well, some of, one of the things to bear in mind that I think the media hasn’t sufficiently touched on is that per capita caps do nothing to constraint future congresses. It’s being changed in the budget legislation this year. It could be changed in future years’ budgets every year, so it doesn’t, it doesn’t really alter the path in a great sense. But, what it does do is it prevents states unilaterally expanding their benefits beyond the current spending path in any current year. And, that really will sort of the first time establish a real discussion about priorities in the program. Now, one might expect that the lower spending states like Alabama are unlikely to much constrained if all that they’re doing is really bringing up their spending towards the national average. One might imagine Congress to essentially make future Congresses to accommodate that spending. But, for the first time, it will mean that the above-average states, the states that already have expanded their Medicaid benefits and eligibility far beyond the national levels, that they for the first time will be forced to justify the spending, and they might have good reasons for it and reasons that will persuade future Congresses. But, for the first time, we’ll be able to have a discussion about whether that’s an appropriate thing for them to be doing.
The rhetoric of the deep cuts to Medicaid really is, really shouldn’t be applied to the per capita caps. The average, so the cap is tied to the medical consumer price index, which is a rate that’s been growing at 3.7% since 1999. Current enrollee spending in the Medicaid program has been growing at 2% over that same time, over the past, most of the past two decades. And, so for the most part, it really wouldn’t have been much of a constraint to states spending. It really, the only occasions when states are going to trigger these caps are essentially when they’re legislating to expand their benefits. In a recession, there will be an influx of healthier beneficiaries into each state’s program, so that actually will automatically reduce their per enrollee spending by increasing the denominator. So, there’s a built-in cyclical stabilizer into per capita caps.
There are a few tweaks that I think really will be worthwhile as the Senate begins to consider what revisions it might make to the House’s version. Firstly, defining per capita as per enrollee is problematic, because states pretty simply could just increase their enrollment and get around the caps. They could enroll normally costly beneficiaries to really loosen any impact that the caps might have, and the caps might end up being completely ineffective as a result. And, secondly, the point that Robin mentioned earlier, that low-spending and high-spending states are constrained equally by the caps. I think, when you consider maybe the fact that Congress might essentially loosen caps or kind of invent waivers from caps, I think that’s unlikely to be such a huge concern. But, I think there really would be a justification having a slower growth rate in the per capita caps for relatively higher spending, but it’s relative to the lower-spending states.
Okay. Thank you.
KARL EISENHOWER: Chris, thank you very much. As Chris and Robin both discussed, Medicaid is a state and federal partnership. So, we want to make sure we focus on the state perspective. That’s why we’ve invited Hemi Tewarson from the National Governors Association to discuss what governors are doing and how states are responding to the changes coming from Washington. Hemi?
HEMI TEWARSON: Great. Thank you. And, I’m really happy to be here today. So, I’m going to try to keep my presentation to my eight minutes, but I wanted to just start out with just, for those of you that aren’t familiar with the National Governors Association-next slide, please-we are the oldest organization serving governors. We are a bipartisan organization, so our chair is Governor McAuliffe, who’s in Virginia, in a state that has not expanded Medicaid, Democrat. And, then our vice-chair is Governor Sandoval, a Republican governor in a state that has expanded Medicaid. So, I think it really does provide us with a unique perspective on the current debate going on in the Congress.
One of the things I just wanted to clarify from my remarks, I am on the Center for Best Practices side. We have two parts of the organization. It’s the Office of Government Relations, which is really the lobbying arm of NGA. And, then the Center for Best Practices, where I’m the Division Director, where we’re really about, you know, helping governors succeed by bringing evidence-based practices forward, and really, you know, breaking down complex challenges into actionable steps that they can actually make progress in their programs.
Next slide, please. Well, let’s get to the current conversation. So, you know, I think we’ve heard some really wonderful facts from the last two presenters. I just wanted to highlight a couple of facts that we think are often sort of most asked about and raised in conversations that we have with governors and their staff. One is really about sort of the scope of Medicaid. They, you know, it covers roughly 68 million, one of five Americans, and covering one in two births nationally. So, from a governor’s perspective, it is, you know, one of the primarily in their state for many of their residents. In terms of spending, you know, the spending continues to rise. In 2016, nationally, Medicaid totaled $576 billion, but the stat that we focused on from a C perspective is that Medicaid accounted for approximately 29% of all state spending. So, in a particular state, on average, it’s anywhere from between 25% and 30% of the state budget. And, from a governor’s perspective, that is a very large budget item that is always fraught with conversations each year when they have to balance their budget and decide, okay, what do I need to invest in Medicaid compared to sort of all the other programs that they have to finance.
One of the things that I also wanted to focus on, on that slide was, you know, Medicaid is the largest single payer for behavior health and long-term services and support. And, so from a state perspective, it is, you know, they view that program as critical in terms of addressing behavior health needs, including the opioid epidemic and I’ll talk a little bit about that later. But, also long-term services and support, so, you know, because Medicare doesn’t cover those services, Medicaid is there for a really large part of the population. And, you know, as what you just heard in that last presentation, that is one of the, you know, cost drivers for the program currently. But, yet, Medicaid is responsible.
Okay. Oh, back one slide, please. So, one of the things that I wanted to talk about is how governors are active on health reform. You know, there are certain principles we here at the NGA have shared collectively from, you know, the bipartisan set of governors that we serve. And, one of the things that, you know, as we talk about how to improve the Medicaid program and, you know, congressional efforts to do that, you know, I think, you know, governors are in agreement there can be improvements made to the program. But, one of the things that we have constantly sort of been talking about is, you know, the responsibility for rural populations should be shared between the federal government and the states. And, so, you know, all of the reforms that are being talked about should not be merely a cost-shift to the states, because frankly, if it is a cost-shift to the states, the states aren’t going to have the budget to sustain all of the different changes and different-they’ll have to make different choices.
Next slide, please. In thinking about kind of the path we’re on, I’m not going to spend too much time on this, because we all are pretty familiar with this, but, you know, right now, we’re in the repeal and replace conversation and see where that’s going to go in the Senate. There’s also a second piece that I wanted to talk a little bit about in terms of administration actions and, you know, primarily, frankly, through flexibility, through waivers that are, that are being offered by the current administration. The states are very excited about and figuring out different ways to use that, and that’s sort of this third phase of other legislative action, which, I think, you know, it’s all to be determined, depending on what happens in phase one.
Okay. Next slide, please. So, in thinking about the impact of all of these reforms, you know, there’s a lot of things that we’re talking about with governors and their staff. One is, you know, what is the states’ current federal match rate, that’s going to be an impact. Have they expanded Medicaid? What is their current Medicaid eligibility criteria? What does their population growth and demographics look like? What benefits are they currently covering? What’s the regional cost of health care and what’s their trajectory in terms of their, you know, growth rate? What is the role of managed care, and then how are they effectively, you know, helping to finance their programs through things like provider taxes? These are all pieces that are very relevant to states. And, you know, in terms of talking about an impact of a potential per capita cap or block grant, I think they’re, you know, slightly different scenarios, depending on these factors on the individual states.
Okay. Next slide, please. So, one of the things I thought might be helpful is to just provide two examples of states. And, this is all publicly available information so, you know, I’m not sharing any secrets. But, you know, one state, Ohio, a state that’s expanded Medicaid, had, you know, crunched a number of different scenarios about what would happen if, you know, the current form of the American Health Care Act was actually enacted. And, this is basically what they predicted. One would be if they kept their expansion to 138% of the FPL, the regular F map, 123,000 people would lose coverage, $6.4 billion would be reduced in total Medicaid spending. And, they would be required to raise $7.8 billion in state share. If they were to limit the expansion to 100%, because they couldn’t afford that $7.8 billion in increase, there would be a higher number of people losing coverage, 284,000, with 14 billion reduction in total Medicaid spend, and then they would have to raise 4.9 billion. If they phase out the expansion altogether in their state, 750,000 people would lose coverage, 37 billion would be reduced in total Medicaid spending, and they would still have to, and then they have $3.7 billion decrease in their state share. So, that’s just to show the choices between, you know, you know, raising the sort of state revenue side and if they’re not able to do that kind of the choices that they have to make on the coverage side, just on the Medicaid expansion piece.
Next slide, please. I also wanted to show you a scenario for a state that has not expanded, Virginia. And, they actually took a look at the per capita cap proposal and ran their own numbers to make some projections. And, they project that they would have a $1.8 billion reduction in Medicaid funding between 2020 and 2026. They predicted that they would either have to raise taxes to increase the state share spending, or the flip side would be they’d have to figure out a solution around cutting enrollment, benefits and provider payments. So, I think a question kind of comes up with, okay, you know, CPI medical growth rate that we just heard about in the last presentation, why wouldn’t they be, why wouldn’t that be enough? Because, this is a state that isn’t sort of facing the Medicaid expansion question.
Let’s see, actually two slides ahead, I want to skip to the drug costs. One of the things that governors are about, a number of governors, are there are certain growth areas that are trending above CPI medical. And, one of them is drug cost. So, on this chart, it just shows you have the average CPI medical versus the percent increase in Medicaid prescription drug spend compares. And, you can see on the top line in 2014, there was a much higher growth rate for the drug costs than CPI medical. And, some of that was due to Hepatitis C, the high cost of that drug. I think states are concerned about, you know, what is the next innovator drug that’s going to be out there that we can’t predict in our budgets, and that we would be essentially at risk for if we were in a situation like a per capita cap or block grant. And, so one of the things in, you know, thinking about ideas for, you know, reform proposals is how do you provide some protections for states for those types of scenarios when they really are things that out of their control. What kind of tools can they get?
If you can go back one slide. The other thing I wanted to raise was the opioid epidemic that is really a hot, probably a top priority other than health reform for governors right now. You know, research has shown that the opioid epidemic has a disproportionate impact on Medicaid beneficiaries. Medicaid beneficiaries are prescribed painkillers at twice the rate of non-Medicaid patients, and are at three to six times the risk of prescription painkiller overdoses. In this chart, you see 30% of adults with opioid addiction have Medicaid, 20% are uninsured and, you know, through the Medicaid program they are covering a range of over 650,000 non-eligible adults with opioid addiction and covering a range of treatment. So, one of the same questions that, you know, the governors, especially in the states that have expanded Medicaid, where they’re providing a lot of sort of behavioral health and substance abuse treatment, if those individuals were to lose access to coverage, would that limit our ability to really continue to address this crisis? So, that is something that is on the mind and in many of our conversations.
Next slide, please. And, we can go past that, I got that one already. So, I wanted to just take a minute to talk about waivers. And, so, you know, this administration has really welcomed and opened the door for states in saying that, you know, there’s a lot of opportunity for new flexibility and really wanted to engage with state ideas. And, so, you know, there was an executive order issued, as you probably know, on January 20th, and then a letter from Secretary Price to the states on March 14th that really addressed, you know, the ability of doing these types of waivers and state plan amendments. And, one of the things I think the states that we’ve been working with have really focused are, you know, there are the states that are interested in more work requirements that Robin mentioned, Wisconsin, Maine, Kentucky, a couple of those to mention. But, there are also other states thinking about how can we use waivers more creatively? Are there areas, you know, from our perspective, we work on social determinants of health, because we really believe that some of the reason we have such high spend in the inpatient and emergency department is because of all the other needs that a person may be experiencing. And, so, you know, ideas around how do we better use the system to help address those needs through, you know, you know, funding, thinking about new innovations is something that a number of other states are thinking about. So, I think, you know, states are really welcoming the opportunity for new flexibility and really looking forward to it. I think the one question for them continues to be sort of what is the backdrop of federal reform and how is that all going to work together.
So, I want to stop there, because I’m probably at my eight minutes, and so thank you.
KARL EISENHOWER: All right, Hemi. Thank you very much. Our next speaker is Tony Leys. We’re very fortunate to have a journalist who have been covering health care since 2000 for the Des Moines Register, and he’s going to talk to us about how he has approached covering Medicaid and what kinds of stories reporters and other people interested in health policy should be looking for as we move forward. And, Tony, I’ve got that page up to your front slide. Here we go. Thank you, thank you, Tony.
TONY LEYS: Thanks, Karl. I’ll try to go quick so we can get to questions. The one thing that I think we shouldn’t try to do in the media is try to explain this all at once, try to write what I term book reports. If you try to explain even the whole Medicaid expansion issue in one story, you wind up with a story that’s a mile wide and inch deep, and even your mom won’t read the whole thing, which doesn’t do anybody any good at all.
What we need to do in the media is try to piece these things out, one concrete issue at a time-next slide, Karl-so that people can digest it. And, I think the thing that most people really don’t understand and need to is who this affects, and especially with the Medicaid expansion, folks really don’t know what that means and who is covered. And, so every time we write about it, we need to have actual people who are affected by it and are using it, and explain each time that these are working-age adults, many of them working, who are poor and without expansion and in states that haven’t expanded, most poor adults don’t qualify for coverage, pretty much no matter how poor they are, depending on the state. And, a lot of people don’t understand that and I think that’s a really critical point that we need to keep making and we need to keep making it with real examples.
The other, one of the other pieces that anybody in the media can do is how this affects hospitals. The hospitals love Medicaid expansion. It has really eased their charity care burdens and improved their bottom lines in a lot of them to do other things. There’s readily available data. We built a database so that everyone in Iowa could check their local hospital and how their finances have done before and after the expansion took effect, and what their charity care is and what it is as a percentage of their overall budget. And, if you do that with real patients, it is a very clear example of how this affects your community and how it might affect your care, even if you’re not covered.
In another example-next slide, please-is the kind of programs that tend to benefit a lot of the people on the expansion. There’s a lot of folks who have chronic mental illness or addiction issues. They happen to quality, because they tend to have trouble holding a steady, fulltime job with benefits. And, so the programs that help those folks have done very well, at least in Iowa, and I’m sure in other states, too. That photo is a new clinic that got built at our public hospital, which had been struggling near bankruptcy before this happened. They’ve got mental health, they’ve added mental health beds, which is almost unheard of in this state, and they also have a new dental clinic, which is another big beneficiary of the Medicaid expansion. So, that’s another concrete example.
Next slide. A couple of the speakers have talked about this. This is a very concrete thing that we can be writing about, is when a drug comes along like the Hepatitis drugs, the states are already really struggling to pay for those, and there are a lot of people who the doctors say could be cured by these drugs. But, the Medicaid is not being very excited about paying for them. And, so what happens if, the next time that happens. You know, because you know there’s going to another blockbuster drug coming down the pike. What are states going to do if there’s a cap in place? In Congress really going to move quickly to spend a whole bunch more federal money to cover those? Does Congress move quickly to do anything is an open question. That’s a very concrete story that we can be doing.
And, then next slide, Karl. And, then we haven’t talked very much about this, but the biggest waiver that states are getting, including my state, are they’re going to private Medicaid management increasingly. That can be, there can be benefits from the flexibility of doing that. The transition can be very rocky, both for patients and for providers. I’m sure that the managed care companies are going to expect looser federal reins under the Trump administration to try new things. Those are, we should be keeping an eye on that in the media and explaining exactly how this works. And, again, using actual examples of people that their readers or viewers can imagine being in their shoes. In this case, that’s a story that I did where the companies have been really cracking down on in-home care for people with disabilities here, saying that, making families justify why they’re getting several hours a day of in-home care. And, in this case, it was a guy who lives alone with quadriplegia, who they said he only needed half as much as he had been getting.
Those are the kind of stories I think we need to do for the general public. If we try to explain this in wonk terms, not only won’t they, will they not get it, they won’t even read past the second paragraph. And, so it really doesn’t do anybody any good. So, we have to try to be creative and we have to spend time and do the legwork to find people in the public who are willing to be examples of how this works. That’s the most important thing.
KARL EISENHOWER: All right. Well, thank you very much, Tony. We’re going to move on to questions from the folks who’ve been listening in. Pull up my question slide here. I want to start off, though, Tony, just to follow up on one of your examples, you said that hospitals love the Medicaid expansion. Before the Medicaid expansion, the federal government made what were called dish payments to hospitals that had a disproportionate share of uncompensated care. So, there was the mechanism to try to help them balance the books when they had costs that they were not getting paid for. What, when you talked to hospital executives, how do they compare those two and why would they prefer the Medicaid expansion to the dish payments?
TONY LEYS: In general, well, not every hospital qualified for those, whereas every hospital qualifies for the Medicaid expansion. In general, they’re doing quite a bit better under the Medicaid expansion. And, one of the real drivers of enrollment under the Medicaid expansion is the hospitals, because if you come in uninsured now, the very first thing they do is check, they have a counselor check to see if you might be qualified for Medicaid. And, they get you signed up right there at the hospital. And, so, yeah, it, they’re doing better. But, yeah, the dish, for some of the hospitals that were getting quite a bit of dish money, it’s been a little bit of a tradeoff.
KARL EISENHOWER: Does anybody else want to jump in on that one? Okay. We’ve got a question from …
ROBIN RUDOWITZ: I’m sorry, Karl …
KARL EISENHOWER: Oh, yeah, sure.
ROBIN RUDOWITZ: … this is Robin, I just wanted to say the other key point about dish dollars is that they’re capped. So, there’s a federal cap or a specific allotment for states, and they’re also capped at the hospital level. So, unlike the expansion dollars, that’s low based on the people that are eligible and the services that they’re using, those dish dollars were also capped and never covered the full amount of hospitals uncompensated care costs.
KARL EISENHOWER: Okay. Well, we’ve got a question from someone in the audience for you, Robin. What accounts for the reduction by 14 million enrollees by 2026? Is that a gradual reduction that states control? To what extent do state decisions factor into how many people will lose their coverage if the expansion is rolled back?
ROBIN RUDOWITZ: Yeah. So, the 14 million was the estimate that CBO had put out in their current, in their current estimates of the AHCA. And, they don’t break out the difference between what would happen under the elimination of the expansion dollars versus the per capital cap policies. But, much of, in their discussion, a lot of that reduction is tied to states making decisions to not continue with the expansion, because of the elimination of those enhanced matching dollars.
KARL EISENHOWER: Anybody else want to jump in on that? Chris, I’ve got a follow-up question for you, and just, you just unmuted your phone. So, my follow-up question for you, Chris, is one of the points you made in your presentation is that future congresses will be able to override whatever level of caps are set when per capita caps are put in place. Would you have some experience with that, and those of us who’ve been following health care for a while remember the annual December scramble to find funds to fill what was called the doc fix, which was when Congress tried to set a cap on growth for Medicare, they had a problem where they, the only way they were able to balance the books was to cut payments to providers. And, there was a worry that providers would stop accepting Medicare if those payments weren’t increased. And, because these costs compound every year, that hole got deeper and deeper. Why would a system of caps on Medicaid not end up in the same place as the system on Medicare, just from caps on Medicare did?
CHRISTOPHER POPE: Well, I actually think that the experience of SGR or the docs fix is actually not necessarily such a terrible one. It ensured that every year there was congressional scrutiny as to the program. Members of Congress don’t like, as a general principle, having to find pay-fors for various additional pieces of spending. Or, at least, they think very hard about it. And, it seems to me that having a Medicaid program, that as an aggregate from a taxpayer point of view receives scrutiny year in, year out in terms of how states are increasing, which changes above baseline increase of spending are merited. It seems to me that that kind of annual scrutiny would actually be a relatively healthy process. For the vast majority of the years SGR was in place, Congress did find real pay-fors for it. And, it did ultimately motivate Congress to enact the macro legislation, which was a real reform of physician payment that I think probably wouldn’t have gone through if the SGR hadn’t been in place. So, I think it’s, it’s a genuine alternative to just sort of, the path of least resistance, which is letting the program continue on autopilot without any real scrutiny.
HEMI TEWARSON: Karl, I’d like to comment.
KARL EISENHOWER: Please.
HEMI TEWARSON: Hi, this is Hemi. So, you know, I think that’s sort of an interesting perspective. From a purely state perspective, states have to forecast their budgets ahead of time for some states, because of many of their legislatures sometimes a biannual budget. So, it’s a two-year budgeting process. If we were really to sort of introduce, you know, every year uncertainly around whether, you know, the per capita caps are going to be raised or lowered or, you know, what Congress is going to do with pay-fors, that would really throw a lot of chaos, I think, into state operations. And, not just impacting healthcare, but all the other programs that states have to make decisions on. So, you know, from a, from a state perspective, understanding with better certainty and better clarity around what, you know, what the budget is for a program is really important.
KARL EISENHOWER: Yeah, there’s also potentially an analogy there with CHIP, which has to be reauthorized periodically and is up for reauthorization this year. CHIP has not yet been reauthorized, but some states are beginning to work on their next year’s budgets. Is that, what’s the dynamic there with CHIP and state budgets?
HEMI TEWARSON: Yeah. And, it’s a real concern, and I think that’s why from NGA perspective, we came out with a letter saying, you know, five-year extension with the enhanced match just to provide certainty for a five-year period. So, you know, a number of states are making assumptions that, you know, some states are making assumptions that they will get the enhanced match and some states are not. And, so, you know, if they’re not, they have to have the reserves to be able to make up the difference, if in fact, they’re not, the enhanced match will not be there. So, you know, there’s a slot of sort of complicated budgeting processes that happen, and certainly with CHIP, I think, you know, given sort of the bipartisan nature of the program and, you know, the longevity of it, you know, states are assuming it’s going to continue. Whether we have the enhanced match or not, I think, is the question. But, you know, Medicaid is a lot bigger, much larger budget, a lot more people, so I think, you know, it would be a harder thing to manage from a state perspective.
ROBIN RUDOWITZ: Karl, can I just add onto, I was going to…
KARL EISENHOWER: Please.
ROBIN RUDOWITZ: …this is Robin, I was going to make a similar point to what Hemi said about state budgeting. I would also just say since you brought up the CHIP example, it’s a state budget issues, but it’s also an issue for coverage, because states need to balance their budgets and figure out what they’re going to be spending. They can’t make these last-minute decisions in terms of coverage and states not knowing about what might happen with CHIP reauthorization, might need to make decisions about, you know, should, do we need to send out letters. And, that affects, you know, people and their coverage status as well as state budgets.
KARL EISENHOWER: Okay. Well, we’ve got a few questions, I think understandably. We’ve seen some different presentations of different data. Chris, your presentation indicated that the impact would not be dramatic, which is different from those CBO numbers that Robin had in her presentation. And, I’m wondering, maybe start with you, Chris, if you could sort of help the people following along here to understand why the numbers differ and how best to understand what the future impact of per capita caps would be.
CHRISTOPHER POPE: So, I think it was Robin that made the point that she thought-and, maybe I’m mischaracterizing that she thought that most of the impact was from the expansion. That’s only my view, that the big coverage drop is from the rolling back of the expansion, right. And, specifically, CBO’s estimate of two things, which are ultimately estimates of two political factors. One, would the states retain coverage for this expansion population? That’s really a political assessment the CBO really had to make there. And, their guess is probably as good as anyone’s.
And, secondly, the fact which is a lot of, or essential portion, or there is a substantial overlap between the Medicaid expansion population and the population that will be eligible for substantial subsidies at the bottom end of the income distribution covered by the exchange. The section, individuals who are in the expansion population above 100% of the poverty line would be eligible for 94% actuarial value plans on the exchange with deductibles capped at $150 or so. So, even without the Medicaid expansion, these individuals are going to be in a very different situation to the one that they were in prior to the Affordable Care Act, assuming that, obviously, the exchanges are unchanged. So, there is, the forecasting on this is, obviously, very complicated, and it really kind of depends on the moving parts on the insurance and expansion side.
My sense is that the per capita caps as such aren’t really going to be driving very substantial changes in the amount of people that are covered under Medicaid.
KARL EISENHOWER: Robin, do you want to …
ROBIN RUDOWITZ: Karl, can I, yeah, can I jump in? So, right, the CBO did not break out their estimates, so we don’t know how much is attributable to the elimination of the enhanced match for the ACA compared to the per capita cap. But, in one of the slides that I presented, and one of the points about these per capita caps is that the savings and the implications of that caps increases over time. So, the caps would go into place in 2020 and implications of that restriction and growth in federal spending would compound over time. So, the effects would be larger as you go out.
We did an analysis that looked at what might happen if Medicaid per enrollee growth had been limited to the growth of the medical component of the CPI from 2001 to 2011. And, in that analysis, we did see that most states would’ve seen less federal financing and while on average, maybe growth was not growing that much faster than the CPI. There was dramatically different growth rates across states, so the implications across states would have been quite significant.
HEMI TEWARSON: And, this is Hemi. I just, I just wanted to chime in. You know, we’ve, we’ve worked within individual states on doing their analyses, and I think, it’s interesting, I think, Robin is absolutely right. There was definitely a variation among the states. In some states, their growth rates are very similar to CPI medical, and so they felt like, you know, even over through even the out years, they’d be fairly stable unless there was like a blockbuster drug that sort of created unsustainable budget situations. But, for other states, it was consistently going to be above CPI medical. So, over time, that gap was going to continue, and you know, by the end of five to seven years, they were going to have to think about disenrollment, because they weren’t going to be able to fully finance the program.
TONY LEYS: This is Tony. If you’re talking about having some of these folks go into the subsidized market, you know, we’re about to lose all of our carriers in the entire state. There aren’t going to be any carriers on that market. And, so, I mean, maybe they can patch something together to keep that jalopy rolling for a while. But, it’s not looking good. I mean, it’s a different subject, but it’s related.
HEMI TEWARSON: Yeah. And, I think that’s one of the questions the states have had. So, it’s like if they come off of Medicaid, what is the alternative? Is there going to be an individual market that would be able to pick these people up? And, you know, depending on how it’s structured, I think, you know, in some states, that’s going to be a question.
KARL EISENHOWER: Okay. I apologize for delay here, I’m trying to read through some of these questions we’ve got. Let’s change gears a little bit. We’ve been talking about per capita caps, but an important part of your presentation, Hemi, was about the waivers. Got a question here I’ll ask you to respond to first. How are governors and states planning to evaluate the new waivers? How can we better communicate the results of these evaluations when they’re reported?
HEMI TEWARSON: That’s a great question. So, you know, there have been a couple of states, as we all know, that have, you know, gotten approval through the last administration for what we call alternative Medicaid expansions, that have tried to, you know, incorporate additional personal responsibilities into, you know, cost-sharing and premiums. And, I think the new, the new ideas around work requirements is something that we can’t evaluate yet, because we haven’t really had the first one out of the gate yet in terms of approvals. For the ones that have already been approved, you know, there are some evaluation s that the states have done, and Mathematica has, of course, done evaluations on behalf of CMS, which haven’t been released yet publicly. From our perspective, there’s a lot, there’s been a lot of state-to-state learning, where states have talked to one another about, you know, how are you doing, you know, what are the challenges, what are the things that you’ve seen that have worked. I think one big question for states thinking about sort of different waivers is the administrative piece of it, how do you operationalize them. You know, some of the alternative Medicaid expansion waivers have been more complex than others. And, I think, you know, when we’re, start doing, we’re starting to think about work requirements, I think there’s an even bigger question of how do we connect systems and what are the real outcomes we want to see from it, how do we want to define work requirements. There’s a broad range, frankly, of what qualifies and who could be exempt. So, I think, you know, we’re working with a number of states now on those questions, on how to think about that and really getting to the outcomes that they want for their residents.
KARL EISENHOWER: Well, I’m going to ask Robin to field this. I think it would help the folks listening to have, have an understanding of the history of waivers, why they were put in place, what they’re intended for and sort of what the statutory limitations are in terms of how, how CMS can use them. For example, they’re all temporary and my understanding is they’re intended to sort of be pilots, not for ways to go off in a different direction. Can you talk about that little bit, Robin?
ROBIN RUDOWITZ: Sure. I mean, there is, the waiver authority exists as Section 1115 of the Social Security Act, and it does allow the secretary the authority to allow states to do these demonstrations that advance and promote the objectives of the Medicaid program. So, they have been part of the Medicaid program, really going back to the ’80s and ’90s. Many states used them before managed care was a delivery system model that states could do under a state plan. States were using waivers to test using managed care. Some states used waivers earlier on to advance coverage, so using their dish dollars in a different way to promote coverage. So, different states have used waivers over the years of the Medicaid program, and my presentation noted that, you know, a large majority of the states, so 33 states have, you know, 41 waivers in place to do various things, including seven that have waivers approved to implement the Medicaid expansion and others that are doing delivery system reforms.
I think some of what we’re seeing now with these new waivers, some that have, you know, there was an invitation by the administration for states to advance some of these proposals. They’ve never, some of these topics have not been approved before, and you know, I think we need to see how, how the new administration will treat some of the current waiver proposals that are out there. Certainly, in the last administration, there were guideposts in terms of, you know, states did get waivers to do many things, but there were lines in the sand and not able to do others, like work requirements was one of those issues.
HEMI TEWARSON: This is Hemi. Can I add one thing?
KARL EISENHOWER: Please.
HEMI TEWARSON: Yes, and Robin, I completely agree with you. The one thing I would add, too, in the last couple of years, you know, health system transformation, a number of states go waivers, I think there were nine of them, for additional federal dollars to help move to words health system transformation through something called DISRIP, delivery, gosh, delivery system reform incentive payments. And, so states like New York, Washington, Alabama, Massachusetts, they got, you know, big upfront federal investments to help their providers and plans move to, you know, more risk-based systems, really trying to pay for value, trying to get away from fee-for-service. So, you know, one of the questions that we are getting from the states are, you know, are these sort of DISRIP waivers over, you know, what are going to be the opportunities for states to kind of move on health system reform. You know, health system transformation, if we don’t have sort of, you know, this type of opportunity with federal investments. So, that’s just another use of waiver that was very, you know, was a practice in the last administration, which we’re really questioning whether that will continue for this one.
KARL EISENHOWER: Okay. Here’s a question, what I think is an interesting question, but it does call for a little bit of speculation. If the American Health Care Act does not pass, what will be the next vehicle for Medicaid changes? And, I just want to sort of remind people that letter C and R in macro stand for CHIP reauthorization, that what started out as a CHIP reauthorization bill ended up also making major changes to Medicare. So, what’s sort of on the calendar for 2017 that could end up being a vehicle for changes to Medicaid? And, Chris, I’ll ask you to start with that one.
CHRISTOPHER POPE: I think you really answered your own question, actually. Yeah, I mean, there is obviously a CHIP reauthorization coming up and it’s due this fall. Speaking to people on the hill, my sense is that, well, Medicaid changes of the sort that we’re talking about, really, the reconciliation process would be the only way for changes of this far-reaching nature to be made. But, a CHIP reauthorization would tend to be saying that would require 60 votes to get through, to get through the Senate. And, so it would tend to be more of a bipartisan piece of legislation. So, I think that would be a very different type of conversation that would be had, although, certainly one that would, that will be had to some extent.
KARL EISENHOWER: Anybody else want to weigh in on that? Okay. Got another question here, a technical question, to explain the difference between CPI and CPI plus one. There’s a world CPI, there’s medical CPI, what, what are the different options, if you’re going to index health spending, what are the, what are the different options and what are the pros and cons of using different, different measures for that? Robin, do you want to start, help us define some terms?
ROBIN RUDOWITZ: Sure. I’m not sure I can get all of those technical details, but essentially, the CPI is a general inflation measure. The CPIM, which is what is included in the AHCA is the medical component of the CPI. So, it accounts for some inflation in medical costs, and it’s typical higher than the general inflation factor. And, then the bill also included the CPIM plus another one percentage point for, for certain groups under the per capita cap. I would say, I think we’ve heard that there’s some debate, you know, in the Senate about what that inflation factor, you know, could be. And, certainly, we don’t know what was included in the president’s budget, but there were comments from the ONB director that suggested that they were ratcheting down the growth rates included in the AHCA to produce additional savings. So, you know, how much you allow for these inflation factors and growth rates has a large implication for, you know, how restricted federal financing will be.
KARL EISENHOWER: Anybody else want to weigh in on that one?
CHRISTOPHER POPE: Yeah. I think there’s an interesting, oh, sorry.
KARL EISENHOWER: Go ahead, please, Chris.
CHRISTOPHER POPE: I think there’s an interesting sort of auxiliary game here, which is that we said earlier that CBO essentially had to estimate what the political activities of states would be on expansion versus non-expansion. And, it had to make a decision there. It’s actually quite different with the future activities by the federal government and by Congress, is the CBO is essentially required to assume that Congress makes no further changes. And, so any cap that is proposed in a bill and scored in a bill, CBO has to really take that as a sincere commitment on behalf of future Congresses not to sort amend it. So, that’s, there’s an important sense in which the nature of the growth rate for a per capita cap is about setting a future baseline for congressional scoring purposes, even it actually doesn’t end up being the real growth of the program. It sort of sets, in a real sense, sets the bargaining positions and the bargaining terms that future legislators have to deal with.
KARL EISENHOWER: We’ve got some questions here, and Hemi, I’ll ask you to field this one first. We’ve got some questions here about the opioid crisis, and I think it was in your presentation where you pointed out that that’s been a major tool in the toolbox for states to deal with this crisis. If Medicaid spending is reduced, what, what other options do states have to fund things like addiction treatment for people struggling with opioids?
HEMI TEWARSON: Yeah. That’s a great question. And, I think the states are thinking about that. So, one of the things that, you know, and non-expansion states, obviously, don’t have that population covered by Medicaid. So, there are certainly some state programs that they’ve been using. They’ve also had sort of other federal funding sources like from areas like SAMSA. I think there’s a question around, you know, if the SAMSA budget’s cut, and sort of Medicaid’s cut, with respect to sort of the coverage for the expansion, for those states, where else would they go to besides state funding. And, I think options are somewhat limited. Some states have been creative in terms of getting some foundation funding to help them, you know, set up some new treatment centers, for example. That’s been one creative use of funding. But, it’s kind of more of a patchwork, Medicaid really provides a more sustainable stream of funding that’s really helpful. So, I think there’s a real concern at the state level for, for if that goes away, kind of what are the real solid alternatives.
KARL EISENHOWER: Tony, in your reporting, have, sort of from the perspective of the person seeking treatment, what sort of options do people really have in the real world if they don’t have health insurance for opioid treatment?
TONY LEYS: Well, I mean, there, there certainly are some block grant money, but like that might get cut, too. There has been an influx of money under Medicaid to some of these programs, but they are having a hard time keeping up. So, there still are waiting lists to get in for treatment for a lot of folks, which can be devastating. Because, the professionals say that when someone is ready for treatment is when they need to get in for treatment. If you make them wait a few weeks or a couple of months, the window might’ve closed for them. So, they’re already having trouble keeping up, even with the Medicaid money. If that money goes away, I don’t know where they’d go for that, to be honest.
KARL EISENHOWER: Anybody else want to jump in on that one? Okay. Chris, I got a question here for you about your comparison between the spending in Alabama and the spending in Connecticut. And, this question is, is to what extent do health outcomes and the quality of care factor into that sort of spending and this person, say it’s commonwealth fund report that finds better health outcomes in Connecticut than in Alabama.
CHRISTOPHER POPE: Yeah. I mean, obviously, comparing outcomes, the patients then begin, begin is the same. So, it’s always very hard to compare exactly, like what the treatment effect is of Medicaid. First of all, given the Medicaid program is not the same, but also the patients vary. I think it’s, I mean, I think it’s almost certainly the case that there is a difference in access, not necessarily on the hospital side. As I said, the access to physicians between those states, I think that’s very likely to be the case. And, certainly, even though, as was said in the initial part, in the initial presentation, the access to physicians under Medicaid is to some extent, is certainly close to private coverage. I think there are well-recognized differences between the states.
The point that I was really making on that was how, how small a proportion of disparity in spending on the, on Medicaid between states is actually down to, is on the medical care side. It’s really long-term care that was sort of driving the differences in spending. And, so it’s hard, it’s very hard to sort of get a robust answer to these questions. The short answer is if you spend more, you get more. I think everyone recognizes that.
KARL EISENHOWER: Anyone else want to weigh in on that one? We’ve got some questions here about an issue within Medicaid that we haven’t talked about yet, and that is payments for home and community-based services. And, I think several states are making an effort to find ways to provide more care at home and in the community as opposed to an institutional setting. What would a switch to per capita caps, would that have an impact on being able to move forward in that direction? Robin, you want to start on that one?
ROBIN RUDOWITZ: Sure. And, I would say just like a lot of things, states are in different places in terms of their movement from institutional care to home and community-based care. Nursing home care is required in the statute, and home and community-based care is not. And, as was pointed out, a lot of what’s provided in terms of long-term care, both the coverage of people and services is, you know, not required by the statute. So, to the extent that states are faced with financing caps or limited federal support, you know, that movement towards home and community-based services, as well as, you know, the overall, those services in general are certainly at risk in terms of the one of the things that states might need to look at if, if they’re under federal, you know, facing caps in federal financing.
HEMI TEWARSON: Yeah. This is Hemi. One thing I would add, it’s been interesting, we’ve talked to a couple of states that are Medicaid expansion states, and they reported that they actually have been able to shorten their wait list for-because, you know, a number of the states have wait lists for home and community services. That’s how those waivers are built, so that states have protection against the spending. That they’ve been able to shorten those wait lists because they had Medicaid expansion, because there was some additional funding in the program. And, so I think they’re wondering, you know, if they’re no longer going to have access to sort of the Medicaid expansion funding, will that require them to kind of go back to much longer HCBS wait lists.
ROBIN RUDOWITZ: Karl, let me, thanks for that, and I just would add one other point that I forgot to mention, is that, you know, we are, all states and the country is anticipating an aging population. Some states are projecting higher growth in their elderly population. So, the demand and need for these services will increase. And, again, that’s something that’s not accounted for in a typical inflation factor, that, you know, the change in the case mix of the population is not accounted for and the need, the growing need for these kinds of services.
TONY LEYS: This is Tony. We’ve seen a real push and pull on that. There’s, it seems logical that if you have folks in their homes, it’s going to be cheaper in the long run than having them in a nursing home. But, the short-run costs are still there, and sometimes there’s a short-term cost to getting that set up. And, we’re seeing the Medicaid managed care companies squeezing a lot of those families. And, the advocates are saying you’re going to have more people wind up in the nursing home in the long run if you keep squeezing this. But, they look, they’re looking at the short-term cost, is what, is what they’re doing, allegedly. And, I think that is an inherently, that’s the inherent struggle on that is the short-term costs versus the long-term costs. And, if you’re trying to make budget right now, you go on the short-term costs.
HEMI TEWARSON: Yeah. And, Tony, are those like the states that have newly expanded with their managed care plans to LTSS populations, or are those …
TONY LEYS: Well, we, we …
HEMI TEWARSON: … in states that are more experienced?
TONY LEYS: … we last year switched our entire Medicaid program to managed care …
HEMI TEWARSON: Yeah. So, you’re, so you’re relatively new, yeah.
TONY LEYS: But, that’s what I know. But …
HEMI TEWARSON: Yeah.
TONY LEYS: … but it’s a long-term/short-term cost. I mean, you can say we’re going to save money by having home and community-based services, but you have to set them up in the first place, and that takes some money.
HEMI TEWARSON: Yeah. Yeah. And, Robin, I’d be curious to get your perspective. From our perspective, some of the states that have had sort of MLTSS plans that have been in place for a while and have a lot of experience and so just don’t understand sort of the longer term, you know, gains and the ability and have gotten through the startup costs, have, I think, fared better on that front. But, I think your experience with kind of like switching the whole population right away and sort of having plans, sort of clamping down on sort of that in-home cost at the outset is, sounds like it’s creating conditions where people are going to get pushed to the nursing facilities. So, that’s interesting to hear.
TONY LEYS: And, I think it’s the kind of thing that we, that we as journalists need to keep an eye on going forward as …
HEMI TEWARSON: Yeah.
TONY LEYS: … the reins get loosened on the managed care companies.
HEMI TEWARSON: Yeah.
KARL EISENHOWER: Okay. We’re running out of time. I’m going to ask Chris one more question based on something that Robin raised. And, that is under a system per capita caps, sort of a strict definition of per capita is that everybody is the same and there’s a cap purely based on the number of people. Do these proposals, the one from the House and the one, I mean, we’ve only seen the president’s budget for a day, so you may not be able to answer that question. Do they, do they account for demographic differences between the states, or are they, are they, and changes in the rate of, you know, for example, some states having a population aging more quickly than in other states. Is that something that’s factored into these proposals or not?
CHRISTOPHER POPE: Yeah. I think this is one of the big challenges that Congress has had to deal with, with this issue. And, it’s the reason why it’s essentially a per enrollee cap. The, certainly, the House proposal, what the House does is it has, it segments the Medicaid population into five sections. So, like the elderly, children, disabled and a couple of other segments, and they, and the pace on the enrollment, and there is an average spend for each of these five sub-categories beneficiary. And, the cap increases based on the growth of enrollment into each of these categories. So, actually, to think, for instance, on the home and community, essentially, the elderly population that’s needing a large amount of LTSS, it might even be the case that the per capita caps might encourage rebalancing to home and community-based services. Because, if you bring in more people who receiving long-term care in the home and community relative to the nursing home, because it cost about like a half to a third as much to provide long-term services in the home. You’d be reducing your per capita average for that category. And, then the aggregated, like per, the aggregated averages times by the amount of enrollees in each category are all added together to produce an aggregate cap for the state as a whole. So, it is, it is, the cap, proposed caps are weighted by the cost in each category and by the enrollment in each category.
KARL EISENHOWER: Okay. Anybody else want to weigh in on that?
ROBIN RUDOWITZ: Well, Karl, I think that your question was do they adjust for the demographics in the state. And, I would say one issue, and I think this was raised in Chris’ presentation, too, is that there is quite a bit of variation across states. And, these policies tend to lock in that variation across states, and then apply a more uniform growth rate. So, states that, you know, had high spending, you know, that would be their base. But, states that had historically made decisions that had lower per enrollee spending, you know, they’re locked into that variation. And, then everyone, you know, gets, all states would get a more uniform growth rate. So, I do think that that’s one of the issues with, or for consideration in these, in these policies.
KARL EISENHOWER: Okay. Well, we’re out of time. Very grateful to all of our presenters and for all of you who sent us terrific questions today. We will be doing more of these webinars throughout the year. If you’re not signed up to receive email notifications from us, please to allhealth.org and sign up for our mailing list to learn about future webinars. Also, in about an hour, you’re going to get a request to fill out an evaluation. There evaluations help us to make sure that these are useful as possible for you. So, please take a few moments to fill out the evaluation. And, one of the questions we ask is for you to suggest topics for us for future webinars.
Thank you again, everybody. Have a good afternoon.