States’ Projections for Medicaid Expansion Were Accurate

Medicaid spending and enrollment has increased in all states during fiscal years (FYs) 2014 and 2015 due to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), according to a report from the Kaiser Family Foundation (KFF). Overall spending on Medicaid has increased 10.2 percent during FY 2014 with spending from state source increasing by 6.4 percent. These increases were in line with projections made by state Medicaid administrators. KFF projects that overall spending on Medicaid in FY 2015 will grow 14.3 percent. The higher rate of growth is due to the fact that FY 2105 will be the first full year of Medicaid expenditures since expansion occurred.

As would be expected, the majority of these increases occurred in the states that expanded Medicaid, but enrollment and spending also increased in states that did not choose to expand Medicaid eligibility to all adults with incomes below 133 percent of poverty. These findings are based on KFF’s 14th annual survey of Medicaid directors in all 50 states and the District of Columbia and conducted in conjunction with Health Management Associates. The findings of this study reflect earlier findings (see Hospital financials, access to care, state budgets improve under Medicaid expansion, September 17, 2014).

Medicaid Expansion

The ACA required states to expand eligibility to all individuals with incomes below 133 percent of poverty or lose all federal Medicaid funding. The Supreme Court in National Federation of Business v Sebelius found that this expansion radically changed the nature of Medicaid from a voluntary program providing states with funding to care for the poor and disabled to a program of limited universal coverage—and that those changes were unconstitutional. Following the Supreme Court’s decision states could decide to expand Medicaid or not. During 2014, 25 states and the District of Columbia choose to expand Medicaid and received 100 percent federal funding for the individuals enrolled under the expanded criterion. Those states will receive 100 percent funding for 2014, 2015 and 2016. In 2017 the federal funding will decrease to 95 percent. Funding will continue to decrease to 94 percent in 2018, to 93 percent in 2019, and to 90 percent in 2020 and beyond. During 2015, an additional two states expanded Medicaid eligibility and an additional two states are seeking CMS approval of a waiver to expand Medicaid coverage in their states.

Overall Spending

The average growth in spending on Medicaid was 10.2 percent in FY 2014. In the states that expanded Medicaid the increase in spending averaged 13.1 percent, and in states that did not expand Medicaid the average increase in growth was 5.6 percent. State legislatures did a good job of appropriating sufficient funds to cover this growth, KFF reported. State legislatures appropriated an additional 13.1 percent for Medicaid spending in states that expanded Medicaid, and state legislatures that did not expand Medicaid appropriated an additional 6.8 percent for Medicaid expenditures, which was more than the growth amount of 5.6 percent.

Enrollment Growth

Across the country Medicaid enrollment increased 8.3 percent in FY 2014 and is projected to increase 12.2 percent during FY 2015, KFF reported. Enrollment in states that expanded Medicaid grew by 12.2 percent, and in states that did not expand enrollment Medicaid enrollment increased 2.8 percent during FY 2014. In FY 2015 enrollment in states that have expanded Medicaid is projected to increase 18 percent and 5.2 percent in states that have not expanded Medicaid, according to KFF.

The increase in enrollment in states that did not expand Medicaid eligibility is attributed to individuals who were eligible for Medicaid prior to the ACA but who never applied. The reasoning is that due to increased media attention and outreach efforts these individuals now learned that they might be eligible for Medicaid, even though they were eligible all along. Medicaid directors have estimated that 20 percent of new enrollees were eligible prior to the ACA expansion of Medicaid eligibility, reported KFF.

KFF expects these trends to continue as additional states decide to expand Medicaid eligibility. KFF notes that Congress has increased the amount of federal funding to states for Medicaid during recessions and that this may occur again. Finally, the economy can also impact Medicaid funding, as legislatures have to make decisions based upon receipt of tax revenues. All of these factors could change the rates of change in Medicaid enrollment and spending.

Will Health Care Spending Improve by 2014’s End?

An October 2014 installment of the New England Journal of Medicine (NEJM) reported discrepancies in health care spending trends based on the Bureau of Economic Analysis (BEA) comparative 2013 and 2014 data. Although the BEA noted a marked gain in the first quarter of 2014, a second look two months later found that health care spending actually had dropped. The NEJM questioned how it could be that health care expansion had little effect on health care spending.

Calculation Method

The initial May 2014 BEA report realized a 10 percent gain, but the reassessment showed a spending loss of 0.9 percent. The NEJM noted that the discrepancy may have occurred due to the types of methods used to calculate the spending growth rates. Spending in the first quarter of 2014 was compared with spending in the fourth quarter of 2013, and the percent change was compounded to convert it to an annual rate. The NEJM noted that other methods could produce different outcomes.

Enrollment Conditions

The BEA and CMS projected growth in health care spending (CMS 5.6 percent; BEA 6.3 percent) attributed to the Patient Protection and Affordable Care Act (ACA) (P.L.111-148) and the improving economy, but BEA reported expanded coverage had little effect on health care spending in the first quarter of 2014. The NEJM attributes this to the fact that “many ACA enrollments occurred toward the end of the quarter and even people who enrolled earlier did not begin spending health care dollars right away.” The NEJM also points to the harsh winter conditions of 2013.

Economy

The NEJM further reports that despite the close tie between long-term health spending and economic growth, sudden economic changes, such as the recession rebound, are slow to impact health care spending. The BEA compared two potential economic growth scenarios: (1) the estimated growth path for a situation in which the recession did not occur; and (2) the estimated growth path for a situation in which health care spending responded immediately to the recession. The BEA found that the no-recession scenario assumed a “continuation of pre-recession real per capita economic growth,” while the second scenario showed a downward trend on health spending.

Nonetheless, the NEJM says that prescription drug costs and use, higher patient volumes, and continued expansion of health care benefits through the ACA will increase health care spending by approximately 5 percent.

Highlight on Idaho: Your Health Idaho is Ready to Roll, but Fear Remains Over Costs

“Your Health Idaho,” the state’s Health Insurance Exchange is readying to open this fall, and this time, with its own technology platform. Last year, more than 76,000 Idahoans used the Exhange to obtain health insurance coverage, making Your Health Idaho per capita, the third most popular Exchange in the country. Idahoans will be able to shop for health insurance plans on Your Health Idaho beginning November 15. They will have through February 15 to choose an insurance plan and apply for a tax credit to help lower monthly premium costs. With the new technology platform, expectations are even greater for this year, as Idaho will be the first state to transition off the federal platform.

New Platform

Your Health Idaho is using information from the current insurance carriers to create accounts for Idahoans who bought health insurance plans on the federal Exchange last year and make eligibility determinations for tax credits in 2015. The state plans to use its own eligibility determination system to calculate 2015 tax credits. In order to determine tax credits, the Idaho Department of Health and Welfare will need to confirm the information provided by the carriers with each consumer who received a tax credit in 2014. Consumers will have a variety of ways to confirm their information is accurate, such as filling out a form over a secure website at www.YourHealthIdaho.org/renewals, working with an agent or broker, calling 1-855-YH-Idaho or filling out a form which was mailed to them.

Your Health Idaho was established by state law in 2013 to provide an online marketplace where Idaho families and small businesses can go to compare and purchase health insurance. The Health Insurance Exchange is governed by an 18-member Board authorized by the Idaho legislature to set the rules and regulations for implementing a state-based health insurance exchange. Your Health Idaho has a new Executive Director, Pat Kelly, who has been serving as the interim executive director since July.

Cost Concerns

Despite the positive atmosphere surrounding the success of Idaho’s transition, some are still wary of new costs they believe might be associated with insurance coverage requirements from the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). This is because, under the ACA, employees working 30 or more hours in 2015 will be eligible for full insurance benefits in 2016.

In late September, a south-central Idaho school district took proactive actions to avoid incurring these ACA-mandated costs and voted to cut hours for more than 150 workers. The Twin Falls school board cut weekly hours for teaching aids, food service employees and other non-professionals down to 27.5 hours from previous workweeks of 30 to 34 hours, thereby also cutting their pay by $535 to $2,100. Cuts were made after school administrators said the move was necessary to provide necessary funding for the classrooms. Other school districts in the area, however, have indicated that they have no intention of cutting hours and benefits for their part-time employees.

Global Health Budget Tracker Eases Funding Analysis

In August 2014, the Kaiser Family Foundation (KFF) launched a new interactive tracking tool designed to provide the latest data on the U.S. government’s global health funding budget in an easy-to-use format. The U.S. Global Health Budget Tracker is a regularly updated tool that enables users to monitor the entire budget process and budget trends, from the President’s budget request through the appropriations process in Congress, with dates ranging from 2006 to 2015. The tool tracks funding data for program areas such as HIV, Tuberculosis (TB), Global Fund, Neglected Tropical Diseases (NTD), Family Planning and Reproductive Health, and Malaria.

The user-friendly tracker has four menus from which to view funding information. Users can click on the Fiscal Year (FY) Snapshot (FY appropriations status), Agency, Program Area, and/or Initiative menus. Funding information is calculated in U.S. million dollar increments for each category.

Each page of the four menus has unique filter data features. The FY Snapshot contains a legislative financial comparison feature that allows users to analyze the difference in millions spent by the House and Senate and the difference between those amounts and the requested funding amount.

The Agency function breaks down what each federal agency, such as the Centers for Disease Control and Prevention (CDC) or Department of Defense (DOD), has allowed or will allow for each program area. For example, in FY 2015, USAID requested $330 million for HIV and $14.5 million for Vulnerable Children (VC) programs. Users may also choose all agencies’ budget data to compare in one window.

The Program Area highlights the dollar amounts certain agencies have funded or will fund per each global health problem. For FY 2015, using the same program areas as above, the DOD has not budgeted any funding for HIV, while overall agency requests for HIV funding in 2015 total approximately $4.9 billion. Overall agency requests for VC remained at $14.5 million.

The federal Initiative menu provides cumulative amounts for the President’s Emergency Plan for AIDS Relief (PEPFAR) budgets for HIV and the Global Health Initiative (GHI) budgets, which can be customized by either using a sliding scale to view varying time ranges between 2006 and 2015 or by selecting a two-year comparative button.

Each Agency and Initiative page provides informative historical background at the bottom of the page. The tracking tool is up and running. Those interested in U.S. health budget analysis should find the tool useful.