New England Journal of Medicine: Risks of ACA Repeal without a Replacement

This commentary from President Barack Obama describes the risks of repealing the Affordable Care Act (ACA) without simultaneously replacing it with legislation that would maintain health insurance coverage for the millions of Americans who have obtained or been able to continue their coverage because of the ACA.

The President writes:

…there is more work to do to ensure that all Americans have access to high-quality, affordable health care. What the past 8 years have taught us is that health care reform requires an evidence-based, careful approach, driven by what is best for the American people. That is why Republicans’ plan to repeal the ACA with no plan to replace and improve it is so reckless. Rather than jeopardize financial security and access to care for tens of millions of Americans, policymakers should develop a plan to build on what works before they unravel what is in place….[the] approach of “repeal first and replace later” is, simply put, irresponsible….“Repeal and replace” is a deceptively catchy phrase — the truth is that health care reform is complex, with many interlocking pieces, so that undoing some of it may undo all of it.

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This is the second time that the President has published a commentary in a medical journal. His first commentary was in the Journal of the American Medical Association:

Obama B. United States health care reform: progress to date and next steps. JAMA. 2016;316(5):525-532.

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Center for Budget and Policy Priorities: Repealing Health Reform’s Medicaid Expansion Would Cause Millions to Lose Coverage, Harm State Budgets

This issue brief from the Center for Budget and Policy Priorities describes the impact of repealing the Affordable Care Act (ACA) expansion of Medicaid, which would result in millions of Americans losing their health insurance coverage, and severe pressures on state government budgets with rising health care costs.

An estimated 11 million Americans in 32 states and the District of Columbia are now receiving health insurance coverage through the expanded Medicaid program; another 4 million uninsured Americans could be covered in the remaining 18 states.

Through the ACA’s 100% funding for Medicaid expansion in Fiscal Years 2014-2016, states have received tens of billions of dollars in federal funding to provide health insurance to their residents. If the Medicaid expansion is repealed, states would have to use state funds to continue such coverage.

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Kaiser Commission on Medicaid and the Uninsured: What Coverage and Financing is at Risk Under a Repeal of the ACA Medicaid Expansion

This issue brief from the Kaiser Commission on Medicaid and the Uninsured describes how a repeal of the expansion of Medicaid under the Affordable Care Act (ACA) would impact both tens of billions of dollars in state government budgets and millions of Americans who now rely on the expanded Medicaid program for their health insurance coverage.

32 states and the District of Columbia have implemented the expanded Medicaid program, covering all individuals residing in those states with incomes below 138 of the Federal Poverty Level ($16,394/year for an individual and $33,534/year for a family of four in 2016). As of 2015, an estimated 10.7 million Americans were enrolled in these expanded Medicaid programs and are risk of losing their health insurance coverage if the expansion of Medicaid under the ACA is repealed.

Under the ACA, almost all the costs for Medicaid expansion have paid by the federal government (100% for Fiscal Years 2014 through 2016, and phasing down to 95% this Fiscal Year 2017, eventually to 90% in Fiscal Year 2020). States that wanted to maintain some health insurance coverage for some or any of those 11 million Americans would have to use state funds to pay for such coverage. This is a cost shift of tens of billions of dollars from the federal government to state governments. During the first 18 months of the implementation of the Medicaid expansion, states received an estimated $79 billion to cover their costs. All these federal funds would become unavailable to the states with repeal.

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Center for Budget and Policy Priorities: Per Capita Caps or Block Grants Would Lead to Large Cuts in State Medicaid Programs

This issue brief from the Center for Budget and Policy Priorities describes how changing the current Medicaid program to per capital caps would result in large, and over time, increasing cuts to state Medicaid programs, ultimately resulting in millions of low-income, elderly, and sick Americans losing health insurance coverage.

The issue brief notes that while the growth in Medicaid expenditures has been slower than other parts of health care expenditures, any proposal is based on reducing overall federal government Medicaid expenditures, which means cuts in funding available to the states for their Medicaid programs.

The issue brief also notes the impact of the continued aging of the U.S. population, with more and more seniors enrolling in both Medicaid and Medicare. Seniors have higher per enrollee costs in Medicaid. It will be challenging to establish a per capita cap funding formula that will account for these increasing per enrollee costs while achieving overall reductions in expenditures.

In order to sustain their Medicaid programs with reduced funding under per capita caps, states would have to limit eligibility, increase cost-sharing requirements with higher premiums and co-payments, and/or limit the scope of health care and services covered. Any and all of these policy options would result in less access to Medicaid, decreased enrollment, individuals losing their current Medicaid coverage, and less access to needed care and services for those remaining on Medicaid.

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Kaiser Commission on Medicaid and the Uninsured: Overview of Medicaid Per Capita Cap Proposals

This issue brief from the Kaiser Family Foundation provides an overview of proposals to change the current funding for Medicaid to a formula based on the per capita number of residents in each state, with overall caps. To achieve federal budget savings, the per capita caps would have to be set below the projected rates of growth in spending under current law, in order to reduce the total amount of federal funding for Medicaid.

The key challenges in designing a per capita cap for the Medicaid program are determining the base per enrollee amounts to be awarded to each state, setting annual growth rates that would achieve reductions in federal spending, and authorizing what additional flexibility to the states to define or limit eligibility and benefits for Medicaid enrollees.

The primary difference between a per capita cap and a block grant funding formula is that a per capita cap does allow for increased future funding to a state that has increased Medicaid enrollment while a block grant would lock in a fixed allocation for each state, without consideration of increased enrollment. Per capita cap proposals have used various indices to determine the annual growth rate, including various inflation indices and increases to the Gross Domestic Product.

However, a per capita cap does “lock in” the current wide variation in per enrollee spending for Medicaid among the states, and among covered populations such as seniors, individuals with disabilities, adults under age 65, and chidden. It is not clear how a per capita cap would accommodate changes in overall per enrollee costs in a state, and the more likely changes in the proportion of these populations covered by Medicaid in any state over time, e.g. an increase in the number of seniors covered, who have among the highest per enrollee spending.

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Kaiser Commission on Medicaid and the Uninsured: Medicaid Per Enrollee Spending

This 2015 issue brief from the Kaiser Commission on Medicaid and the Uninsured reports on the wide variation in per enrollee spending in the Medicaid program among all the states. Although the current Medicaid program establishes a federal minimum for health care and services to be covered, states have significant flexibility in expanding those benefits and services, and in how much to pay health care providers (which in turn, impacts the actual availability of those services – for example, even if a state covers adult dental care, if there are insufficient numbers of dentists willing to accept Medicaid payments, then the actual availability of dental care may still be limited).

In Fiscal Year 2011, the national Medicaid spending per enrollee each year was $6,502; as expected this spending per enrollee was much higher for seniors on Medicaid ($17,522/year) and for individuals with disabilities on Medicaid ($18,518/year) than for adults under age 65 on Medicaid ($4,141/year) and for children on Medicaid ($2,492/year). These per “full-benefit” enrollee spending figures do not include individuals with only partial Medicaid coverage during the year (for example, low income seniors dually eligible for both Medicaid and Medicare, where Medicare pays for most of the health care).

Among states, the Medicaid spending per enrollee varied from $11,091/year in Massachusetts to $4,010/year in Nevada. States in the northeast tend to have higher spending per enrollee, and states in the south tend to have lower spending per enrollee.

And combining these variations, the Medicaid spending per enrollee for seniors varied from $32,199/year in Wyoming to $10,518/year in North Carolina; the spending per enrollee for individuals with disabilities varied from $33,808/year in New York to $10,142/year in Alabama; the spending per enrollee for adults under age 65 varied from $6,928/year in New Mexico to $2,056/year in Iowa; and the spending per enrollee for children varied from $5,214/year in Vermont to $1,656/year in Wisconsin.

Appendix Table 1 includes these spending per enrollee figures for each covered population in each of the 50 states and the District of Colombia.

These wide variations in spending per enrollee among Medicaid populations and among states is highly relevant to any changes in funding Medicaid, especially block grant or per capita cap formulas. If national spending averages are used, then those states that currently spend more, or have more seniors or individuals with disabilities, would be unfairly penalized (and those states that spend less, or have less expensive covered populations, would receive an unfair windfall). If current state spending averages are used, the current variations would be locked in, probably for at least a decade, without any ability to work with states to reduce spending in more rational ways.

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Center for Budget and Policy Priorities: Medicaid Block Grant Would Slash Federal Funding, Shift Costs to States, and Leave Millions More Uninsured

This issue brief from the Center for Budget and Policy Priorities describes how changing the current Medicaid program to block grants to states would shift costs to states, and ultimately result in millions of low-income and sick Americans becoming uninsured. Using  a House Budget Committee proposal to reduce Medicaid funding by $1 trillion over the ten years between Fiscal Year 2017 and Fiscal Year 2026 with block grants, it is estimated that the states would experience a 25% reduction in federal funding over those ten years.

In order for states to balance their budgets, they would have to freeze/cap enrollments into Medicaid, limit the health care and services available, and/or increase cost-sharing requirements for Medicaid beneficiaries. All these policies would be permissible with block grants because Medicaid would no longer be an entitlement program. One estimate is that between 14 and 21 million Americans would lose their Medicaid coverage if block grants are implemented.

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Kaiser Commission on Medicaid and the Uninsured: Implications of a Federal Block Grant for Medicaid

This 2011 analysis from the Kaiser Commission on Medicaid and the Uninsured describes the implications of changing the Medicaid program into a block grant. A block grant would provide a fixed amount of federal support to the states for their Medicaid programs, eliminating the guarantee of coverage for all eligible Medicaid beneficiaries as well as the guarantee of matching federal funding to the states based on actual needs. Instead, states would have to use their fixed block grant amounts to cover all their costs. If the need for Medicaid increases (enrollment increases during an economic downturn), and/or a state fails to properly manage its Medicaid costs, states would have to freeze or cap new enrollments, create waiting lists for new enrollments, limit the scope of health care and services provided, or require increased cost-sharing from Medicaid beneficiaries themselves (higher premiums, co-payments, deductibles, etc.). Without the current level of federal regulation of Medicaid, states also could introduce non-health related requirements for continued eligibility, including requirements to seek/find employment or attend job training programs.

Since the stated goal of changing Medicaid into block grants would be to reduce federal government spending, the level of block grant funding would decrease over time. The current variations in spending among the states would be locked in. Ultimately, costs would be shifted to the states, to health care providers receiving Medicaid funding, and to Medicaid beneficiaries themselves.

The issue brief also references how other federal government programs that have been changed to block grants, e.g., the Children’s Health Insurance Program and the Temporary Assistance for Needy Families, have resulted in decreased enrollments, increased barriers and requirements for eligibility, and higher costs for states.

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Kaiser Commission on Medicaid and the Uninsured: Medicaid Financing – The Basics

This issue brief from the Kaiser Commission on Medicaid and the Uninsured describes how the Medicaid program is funded by both the federal government and state governments under complex funding formulas. The federal share of Medicaid, is based on the Federal Medical Assistance Percentage (FMAP), which varies by state, from 50% in California to 74.6% for Mississippi. The FMAP is based on the average per capita income for each state relative to the national average, with the states with lower average per capita income getting a higher FMAP. The actual federal share of Medicaid is calculated using both the FMAP and a multiplier that varies each fiscal year. In Fiscal Year 2015, the total federal share of Medicaid expenses nationally was about 60%.

The Affordable Care Act (ACA) included special FMAP rules for the expansion of Medicaid to individuals with incomes below 138 percent of the Federal Poverty Level, with a 100% FMAP for Fiscal Years 2014 through 2016, and then a phased down match to 95% this Fiscal Year 2017, and then to 90% by Fiscal Year 2020. 32 states and the District of Columbia have implemented this expansion of Medicaid.

Medicaid currently is an entitlement program, with no limit on how much in federal matching funds each state can obtain; as the need for Medicaid goes up, especially in times of economic downturn, the program is designed to grow to meet those needs.

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Kaiser Commission on Medicaid and the Uninsured: Medicaid Pocket Primer

This updated fact sheet, or “pocket primer”, from the Kaiser Commission on Medicaid and the Uninsured describes the Medicaid program, the changes made to Medicaid by the Affordable Care Act, and the over 70 million Americans who rely on Medicaid for health insurance coverage.

The Medicaid program is the largest insurance program in the nation, providing 16% of national health care spending (about $532 billion in Fiscal Year 2015). About half of Medicaid beneficiaries are children, one-quarter are adults under age 65, and one-quarter are adults age 65 and older and individuals with disabilities. 60% of children with disabilities and 30% of adults under age 65 are covered by Medicaid. Medicaid also helps 1 out of every 5 adults age 65 and older pay their Medicare premiums, deductibles, and co-payments and often provides benefits these seniors with benefits not covered by Medicare, including long-term care, dental care, and vision care.  32 states have implemented the expansion of Medicaid under the Affordable Care Act, and at least 11 million Americans have been able to enroll in Medicaid because of the expansions.

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