April 14, 2016
The Civic Federation co-hosted a conference with the Federal Reserve Bank of Chicago on April 4, 2016 entitled, “Medicaid Expansion and the Affordable Care Act: A Fiscal Checkup.” Experts, practitioners and academics from around the country gathered to discuss the choices states have made with regard to expanding coverage to previously uninsured populations. Attendees to the sold out conference included civic and business leaders and representatives of the healthcare community.
- Opening Remarks
- Session I – To Expand or Not to Expand: A Question for States
- Session II – The ACA’s Impact on Mental Health Services
- Keynote Address
Trish Riley, Executive Director, National Academy for State Health Policy, provided a wide-ranging introduction to the Medicaid program, the interaction of the Affordable Care Act (ACA) with Medicaid and the options states have in expanding and reforming Medicaid. Medicaid has nearly 68 million enrollees and is the source of 17% of health expenditures in the United States. The expansion of Medicaid coverage to previously ineligible populations such as childless adults was key to the ACA’s goal to reduce the population of uninsured Americans. After the rollout of the ACA, the nation’s uninsured population was reduced by 20 million and healthcare cost inflation slowed, particularly in states that expanded Medicaid coverage. But costs are projected to pick up again in coming years. There are still significant populations that do not have access to care, including undocumented residents and people earning less than 100% of the federal poverty limit (FPL) in the 19 states that have chosen not to expand Medicaid coverage.
Ms. Riley noted that of the 31 states (32 including the District of Columbia) that have chosen to expand coverage, it is Midwestern states that are pioneering an innovative third way to leverage federal Medicaid expansion funding. They are creating programs that incorporate cost sharing and engender cost-consciousness among enrollees. Most states are also working to reform their traditional Medicaid plans, which make up an average of 15% of state spending through programs such as managed care, payments for positive outcomes and chronic disease prevention. While some of these programs appear to slow spending growth, there are other issues that pose a challenge to states. Primary among these issues is administrative capacity that has not kept pace with the size of the Medicaid program. Additionally, there are often social and environmental determinants of health that require housing and social programs that fall outside the normal purview of Medicaid.
Session I – To Expand or Not to Expand: A Question for States
The first panel explored the reasoning behind four Midwestern states’ choices on Medicaid expansion and the impact of those choices on budgets and health outcomes. The Honorable Julie Hamos, Principal, Health Management Associates and former Director of the Illinois Department of Healthcare and Family Services moderated an informative discussion among four panelists with vast experience in directing and designing Medicaid programs. Within the Midwest there are examples of the three choices states have made with regard to expanding Medicaid coverage under the ACA: 1) fully expanding, 2) not expanding, and 3) implementing special versions of ACA Medicaid expansion with a waiver from the federal government.
Felicia Norwood, Director of the Illinois Department of Healthcare and Family Services, explained the impact of Illinois’ decision to fully expand Medicaid under the ACA and how the State is managing costs even in the absence of a budget. She projected that by the end of fiscal year 2016 two-thirds of the Medicaid population in Illinois would be enrolled in risk-based managed care. In addition to the problems caused by the fragility of the state’s budget, Director Norwood emphasized that in 2017 Illinois’ costs for the expanded Medicaid population are projected to be $60 million and grow to $130 million in 2018. This is because the federal government is scheduled to reduce its reimbursement level for the Medicaid expansion population from the initial 100% to 95% in 2017 and continuing to fall thereafter until it reaches to 90% in 2020.
In contrast to Illinois, the Michigan state legislature balked at a full Medicaid expansion initially proposed by Governor Rick Snyder. Lawmakers instead required that the administration work with CMS on a waiver plan that would require cost sharing by enrollees and reward healthy behaviors. Chris Harkins, Director of the Office of Health and Human Services, Michigan State Budget Office, described the plan that eventually emerged: the expansion population between 100% and 138% of FPL has some cost sharing in the form of premium payments and copayments, with reductions for healthy behaviors. Individuals at 100% of FPL and below must pay some premiums, again with reductions for healthy behaviors. However, they are not responsible for copayments. The response has been overwhelming, with current enrollment of around 600,000, compared to initial projections of half that amount. Director Harkins said that the uninsured rate and uncompensated care at hospitals have both fallen, and Michigan is making plans to incorporate a cost of $108 million into its budget for the expansion population in fiscal year 2017.
Seema Verma, President and Founder, SVC, INC, based in Indianapolis, Indiana, is the architect of many states’ Medicaid waivers, including Governor Pence’s Medicaid expansion waiver proposal in Indiana. The Healthy Indiana Plan 2.0 (HIP 2.0) was intended to emphasize incentives for positive behaviors and healthy outcomes and include consequences for negative behaviors in order to teach enrollees how the private health insurance market works. HIP 2.0 is modeled after high deductible private insurance plans and includes several options for enrollees. The HIP Plus option includes vision and dental and requires a minimum contribution of $1 per month. The HIP Basic is the default program for people with income less than 100% of FPL who do not make a monthly payment. It has less comprehensive coverage and requires copayments ranging from $4 to $75. Ms. Verma said that one of the crucial areas of the program is that enrollees are allowed to keep their unused monthly contributions, even if they leave the program. The disincentives for non-payment of the monthly contribution include a six-month lockout from benefits for those with incomes greater than 100% of FPL and being moved to HIP Basic and paying copays for all services for people at incomes less than the FPL. While the program has only been in place for a year, Ms. Verma said that an initial survey of participants showed high levels of satisfaction of 87%. The program also led to a 42% decline in the use of emergency rooms. Future work for the program includes additional education for enrollees who still do not understand the plan.
Wisconsin is one of the 19 states that have chosen not to expand Medicaid coverage under the ACA. However, it is unusual among that group of states because there is no coverage gap due to a Medicaid waiver program that predated the ACA. Kevin Moore, Wisconsin Medicaid Director, walked the attendees through Wisconsin’s decision-making process and the outcomes the state has experienced. Before the ACA, Wisconsin’s Medicaid program covered single adults without children or disabilities up to 200% of FPL without additional funding from the federal government other than Wisconsin’s usual Medicaid matching funds. However, the plan was capped at a maximum of 90,000 and had long wait lists. Instead of expanding Medicaid to cover adults up to 138% of FPL under the ACA and getting a 100% federal funding, Wisconsin’s Governor Scott Walker and the legislature decided to ratchet back its waiver coverage to 100% of FPL, but with no cap on enrollment. Wisconsin residents over 100% FPL are required to join the ACA’s health care exchanges. The state reasoned that the federal government would not be able to maintain its promise to provide significant funding for the expansion program in perpetuity and it was therefore a better choice to invest in Wisconsin’s existing Medicaid program.
Session II – The ACA’s Impact on Mental Health Services
The second panel, moderated by Alexa James, Executive Director, NAMI Chicago, took a look at the possibilities Medicaid expansion under the ACA opened up to treat low income persons with mental illnesses. This group has often lacked access to services.
Chuck Ingoglia, Senior Vice President, National Council for Behavioral Health, explained that because of Medicaid expansion, 2.7 million low income, previously uninsured individuals who need substance use or mental health treatment are eligible for treatment, while there are 1.9 million people in non-expansion states who could also benefit. Mr. Ingoglia said it was a positive development that Medicaid was used as the vehicle for expanding health coverage to more low income people because Medicaid has better mental health and substance abuse benefits than most insurance. It also keeps cost sharing down, which helps to ensure access to care for those with less means. However, a challenge with Medicaid expansion has been the different ways that states have experimented with plan design and payment. In some cases this has led to payment delays and has not necessarily been directed at assisting those with serious mental illness.
Dr. Jay Shannon, CEO, Cook County Health and Hospitals System (CCHHS), described the extraordinary impact the ACA and Medicaid expansion have had on the Health System’s financial viability and its ability to care for residents of Cook County with mental health and substance use disorders. The expansion of Medicaid eligibility has changed the Health System’s payer mix from 30% Medicaid and 50% no insurance to 50% Medicaid and 33% no insurance. The change in payer mix has in turn has generated sufficient funding to enable a significant reduction in the taxpayer subsidy to CCHHS. Dr. Shannon said that the Health System treats nearly 3,000 unique behavioral health patients every month, including patients at the Cook County Jail. Prior to the ACA, he said that many low income people with mental health issues only received care while they were detained, but now with more people gaining access to care, over time the population of individuals with a mental illness in the jail should decline. Dr. Shannon then reviewed the many programs CCHHS is pursuing in order to integrate behavioral and physical health, including a new triage center that will work with the Chicago Police Department and a case management model that matches the high risk patients with additional levels of care management. By improving comprehensive mental healthcare, Dr. Shannon said the Health System would be gaining control of a significant cost driver and allow the system to continue to become more fiscally sustainable.
Mark Ishaug, CEO, Thresholds, presented the provider community’s perspective on Medicaid expansion. Thresholds is one of the oldest and largest providers of community-based healthcare for persons with mental illnesses in Illinois. It has been significantly impacted by innovations in the Medicaid program in Illinois over the past decade. Mr. Ishaug said that while the ACA has been helpful in expanding Thresholds’ ability to provide care to a larger population, the State of Illinois’ move toward managed care has also helped by allowing for more integrated care that does not silo out behavioral healthcare from other types of healthcare. However, to continue to improve mental health and substance abuse outcomes, there is a lot of work that remains to be done, from providing wraparound services such as affordable housing to increasing community capacity to developing the police co-responder program in Chicago.
Vikki Wachino, Director, Center for Medicaid and CHIP Services (CMCS) within the Centers for Medicare and Medicaid Services (CMS) at the U.S. Department of Health and Human Services, gave the keynote address at the luncheon that concluded the conference. Director Wachino shared the federal government’s vision for how Medicaid’s transformation under the ACA will continue to expand coverage, simplify eligibility requirements, improve health and reform how care is delivered.
She highlighted research that has shown improved health outcomes in expansion states, including higher access to primary care, higher rates of preventive visits and increased rates of diabetes diagnosis, among other positive outcomes. Medicaid is also encouraging states to experiment with different kinds of reforms that continue to move the program away from paying for volume toward paying for value and that embrace a coordinated care standard. A majority of states are participating in these innovation model grants, including Illinois. Medicaid’s eligibility standards have also been transformed under the ACA to align with coverage in the exchanges, which is of great administrative assistance to states. Because of this change and some functional support the federal government has provided with data analytics, eligibility can be determined for children and non-disabled adults in real time in 37 states. In sum, Director Wachino noted that the federal government’s goals were to both build a stronger Medicaid program while simultaneously working toward improving the healthcare system in the United States as a whole.
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On behalf of the Federal Reserve Bank of Chicago and the Civic Federation Board of Directors, many thanks to all of our moderators, panelists and attendees. Thanks also to the staff of the Federal Reserve for their assistance. Participants’ presentations are available on the Civic Federation website.