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The Effects of the Medicaid Expansion on State Budgets: An Early Look in Select States

Executive Summary
  1. Researchers found fiscal estimates of the Medicaid expansion in 16 states that were deemed “comprehensive” because they estimated increased state costs resulting from higher enrollment, state budget savings both inside and outside Medicaid programs, and state revenue effects.   Stan Dorn, Megan McGrath, John Holahan. What Is the Result of States Not Expanding Medicaid? Urban Institute, August 2014. http://www.urban.org/UploadedPDF/413192-What-is-the-Result-of-States-Not-Expanding-Medicaid.pdf.

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  2. The calculations are those of the authors based on (1) savings figures provided by state officials (2) compared to state general fund spending across all budget categories for SFY 2013 as reported by the National Association of State Budget Officers in its State Expenditure Report: Examining Fiscal 2012-2014.

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  3. New Mexico noted that the state costs for enrollment among those previously eligible but not enrolled were significant. However, as noted earlier, the enrollment growth among those previously eligible but not enrolled was primarily driven by other ACA changes, such as the streamlining and simplifying of Medicaid enrollment processes that occurred in all states, regardless of expansion decisions, as well as broader outreach efforts.

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Issue Brief
  1. Report on Medicaid Expansion in 2014. (Deloitte commissioned by the Commonwealth of Kentucky, February 2015.) http://governor.ky.gov/healthierky/Documents/medicaid/Kentucky_Medicaid_Expansion_One-Year_Study_FINAL.pdf.

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  2. Urban Institute estimates based on data from CMS (Form 64) (as of 9/16/13).

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  3. The 90 percent FMAP for initial eligibility-related IT investments was initially set to expire at the end of 2015, but in October 2014, CMS announced plans to extend the higher federal match permanently.

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  4. In addition to the areas of savings within Medicaid budgets mentioned in this section, states were asked about savings-related declines in applications for disability-based cash assistance and well as savings from health care services provided to adults with disabilities under 138 percent FPL during the months while they are waiting for their disability determinations. No states in this study tracked such savings.

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  5. Washington State also noted savings from the transition of adults who were previously eligible for their presumptive SSI category. This is an optional Medicaid eligibility category that provides Medicaid coverage while adults await a disability determination for SSI coverage. It is unclear how many states offer Medicaid coverage for such individuals, although once a disability determination is obtained that qualifies an applicant for Medicaid, all states are legally required to retroactively pay all Medicaid-covered claims that were incurred up to 90 days before the date of application. While expenses for those who qualified under this pre-ACA eligibility pathway in Washington state were not reimbursed at the 100 percent federal match rate, the state did receive a higher matching rate for these individuals (equivalent to the early adopter matching rates.)  As a general matter, CMS has ruled that, in a state that implements the Medicaid expansion, adults who qualify based on income generate federal matching rates at the level paid for newly eligible adults for claims incurred until the point of disability determination, after which normal FMAP applies. CMS. “Medicaid Program; Increased Federal Medical Assistance Percentage Changes Under the Affordable Care Act of 2010,” Federal Register, April 2, 2013, Vol. 78, No. 63, 19918-19947.

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  6. Additionally, the report commissioned by the Commonwealth of Kentucky reported savings from beneficiaries qualifying for the newly eligible group instead of the Kentucky Temporary Assistance Program (K-TAP)and for a program referred to in that state as “nursing facility,” which provided coverage to disabled adults in select circumstances. Report on Medicaid Expansion in 2014. (Deloitte commissioned by the Commonwealth of Kentucky, February 2015.) http://governor.ky.gov/healthierky/Documents/medicaid/Kentucky_Medicaid_Expansion_One-Year_Study_FINAL.pdf.

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  7. In addition to the areas of savings outside of Medicaid budgets listed in the text, states were asked about savings from reduced health insurance costs for public employees and retirees. While no state included in this study tracked such savings, some state-level projections estimated that, along with other employers, states would see premium increases decline slightly when reductions in hospital uncompensated care, caused by lower levels of uninsurance resulting from Medicaid expansion, reduce hospital cost-shifting to private insurers. The Oregon Health Authority, Estimated Financial Effects of Expanding Oregon’s Medicaid Program Under the Affordable Care Act (2014–2020), February 2013, http://www.manatt.com/uploadedFiles/Content/5_Insights/White_Papers/OR_EffectofACAMedicaidExpansion_Feb2013_Final.pdf.

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  8. State Mental Health Legislation 2014 - Trends, Themes & E­ffective Practices. National Alliance on Mental Illness, December 2014. http://www.nami.org/Template.cfm?Section=Policy_Reports&Template=/ContentManagement/ContentDisplay.cfm&ContentID=172851

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  9. Additionally, officials in Connecticut believed that the majority of the chronically mentally ill were picked up under the state’s early expansion in April 2010, which included adults with income up to 56% FPL; the increase to 138% FPL in January 2014 therefore did not have a dramatic impact.

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  10. Report on Medicaid Expansion in 2014. (Deloitte commissioned by the Commonwealth of Kentucky, February 2015.) http://governor.ky.gov/healthierky/Documents/medicaid/Kentucky_Medicaid_Expansion_One-Year_Study_FINAL.pdf.

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  11. Vernon Smith, et al. Medicaid in an Era of Health & Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015. (Kaiser Family Foundation, October 2014.) http://kff.org/medicaid/report/medicaid-in-an-era-of-health-delivery-system-reform-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2014-and-2015/.

    Kentucky elected to expand access to these substance use services to all of their Medicaid population, not just the newly eligible. The study commissioned by the Commonwealth of Kentucky noted that there would be increased general fund requirements for providing these additional substance abuse benefits to those previously eligible as well as those already enrolled in Medicaid.

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  12. Federal Medicaid law (Subparagraph (A) in the matter after section 1905(a)(29) of the Social Security Act) prohibits the payment of federal Medicaid matching funds for the cost of any services provided to an “inmate of a public institution,” except when the individual is a “patient in a medical institution.” This policy applies to both adults in jails or prisons as well as to youths involuntarily detained in a state or local juvenile facility. This policy does not prohibit individuals from being enrolled in Medicaid while incarcerated; however, even if they are enrolled, Medicaid will not cover the cost of their care, except for care received as an inpatient in a hospital or other medical institution. Because individuals may remain enrolled, states can suspend, rather than terminate, Medicaid coverage for inmates to accommodate the inmate exclusion. However, suspension and termination policies vary across states.

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  13. Managing Prison Health Care Spending, (Washington DC: Pew Charitable Trusts and John D. and Catherine T. MacArthur Foundation, October 2013), http://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2014/PCTCorrectionsHealthcareBrief050814pdf.pdf .

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  14. Managing Prison Health Care Spending, (Washington DC: Pew Charitable Trusts and John D. and Catherine T. MacArthur Foundation, October 2013), http://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2014/PCTCorrectionsHealthcareBrief050814pdf.pdf .

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  15. Some state officials also noted that tracking state savings in this area can require costly reprogramming of Medicaid eligibility systems.

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  16. Report on Medicaid Expansion in 2014. (Deloitte commissioned by the Commonwealth of Kentucky, February 2015.) http://governor.ky.gov/healthierky/Documents/medicaid/Kentucky_Medicaid_Expansion_One-Year_Study_FINAL.pdf.

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  17. Teresa A. Coughlin, John Holahan, Kyle Caswell, and Megan McGrath. Uncompensated Care for the Uninsured in 2013: A Detailed Examination. (Washington, DC: Urban Institute, May 2014.) http://kff.org/uninsured/report/uncompensated-care-for-the-uninsured-in-2013-a-detailed-examination/.

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  18. Report on Medicaid Expansion in 2014. (Deloitte commissioned by the Commonwealth of Kentucky, February 2015.) http://governor.ky.gov/healthierky/Documents/medicaid/Kentucky_Medicaid_Expansion_One-Year_Study_FINAL.pdf.

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  19. Ibid.

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  20. Ibid.

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  21. Council of Economic Advisers. Missed Opportunities: The Consequences of State Decisions Not to Expand Medicaid. July 2014, http://www.whitehouse.gov/sites/default/files/docs/missed_opportunities_medicaid.pdf.

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  22. Report on Medicaid Expansion in 2014. (Deloitte commissioned by the Commonwealth of Kentucky, February 2015.) http://governor.ky.gov/healthierky/Documents/medicaid/Kentucky_Medicaid_Expansion_One-Year_Study_FINAL.pdf.

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  23. The calculations are those of the authors based on (1) savings figures provided by state officials as (2) compared to state general fund spending across all budget categories for SFY 2013 as reported by the National Association of State Budget Officers in its State Expenditure Report: Examining Fiscal 2012-2014.

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  24. Report on Medicaid Expansion in 2014. (Deloitte commissioned by the Commonwealth of Kentucky, February 2015.) http://governor.ky.gov/healthierky/Documents/medicaid/Kentucky_Medicaid_Expansion_One-Year_Study_FINAL.pdf.

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Appendix A: Coverage Initiatives prior to the ACA
  1. Martha Heberlein, Tricia Brooks, Joan Alker, Samantha Artiga and Jessica Stephens. Getting into Gear for 2014: Findings from a 50-State Survey of Eligibility, Enrollment, Renewal, and Cost-Sharing Policies in Medicaid and CHIP, 2012-2013. (Kaiser Commission on Medicaid and the Uninsured, January 2013.) http://kff.org/medicaid/report/getting-into-gear-for-2014-findings-from-a-50-state-survey-of-eligibility-enrollment-renewal-and-cost-sharing-policies-in-medicaid-and-chip-2012-2013/.

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  2. Connecticut’s SAGA program included both cash and medical assistance; the cash assistance component remains.

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  3. After projecting a $300 million surplus for FY 2015 twice, the state’s Comptroller projected a $31 million deficit due in part to a shortfall in the Medicaid program resulting from federal reimbursement issues and hospital settlement payments that were above projections. http://www.osc.ct.gov/public/news/releases/20150102.html. The state has been working with CMS to finalize the methodology for obtaining the enhanced match.

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Appendix B: Optional Medicaid Eligibility Pathways
  1. New Mexico had originally reported plans to eliminate its family planning program, but did not ultimately do so. Virginia also reduced eligibility for this group to 100 percent FPL in 2014 but plans to restore coverage to 200 percent FPL in 2015. Vern Smith, Kathleen Gifford, Eileen Ellis, Robin Rudowitz and Laura Snyder. Medicaid in an Era of Health and Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015. (Washington, DC: Kaiser Commission on Medicaid and the Uninsured,) October 2014. http://kff.org/medicaid/report/medicaid-in-an-era-of-health-delivery-system-reform-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2014-and-2015/.

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  2. Vern Smith, Kathleen Gifford, Eileen Ellis, Robin Rudowitz and Laura Snyder. Medicaid in an Era of Health and Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015. (Washington, DC: Kaiser Commission on Medicaid and the Uninsured,) October 2014. http://kff.org/medicaid/report/medicaid-in-an-era-of-health-delivery-system-reform-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2014-and-2015/.

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  3. Ibid.

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