NATIONAL HEALTH CARE REFORM MEDICAID EXPANSION

1. NATIONAL HEALTH CARE REFORMMEDICAID EXPANSION THE PACIFIC HEALTH POLICY GROUP AUGUST 2010

2. Affordable Care Act and MedicaidDiscussion Topics PHPG – Health Care Reform 2 Undertaking an incremental Medicaid expansion in advance of 2014 Affordable Care Act mandate Offering SoonerCare as an option through OSEEGIB to qualifying low income households

3. Affordable Care Act and Medicaid 1902(k)(2) Early Expansion Option • Act extends coverage to individuals not otherwise eligible for Medicaid, in households with incomes under 133 percent of FPL (primarily adults without dependent children; in Oklahoma, also non-pregnant parents above 37 percent of FPL) • Coverage must be provided beginning in 2014 • Coverage may be provided prior to 2014 (at standard FMAP), and can be limited to households below the 133 percent level • Option created in part for states with existing non-federally matched programs for uninsured adults • Connecticut is the first state to expand coverage, converting a state-funded program covering 45,000 adults PHPG – Health Care Reform

4. Affordable Care Act and Medicaid 1902(k)(2) Early Expansion Option *PHPG also met with representatives from the Oklahoma Department of Rehabilitation Services **County governments also contribute funding toward care provided in health department clinics PHPG – Health Care Reform 4 Oklahoma funds services for uninsured adults below 133 percent of FPL using state and local (county) dollars Multiple state agencies provide/fund services to the uninsured that would be reimbursable under Medicaid if the individuals were enrolled in SoonerCare

5. Affordable Care Act and Medicaid 1902(k)(2) Early Expansion Option PHPG – Health Care Reform 5 • PHPG is evaluating the potential impact of undertaking an incremental eligibility expansion prior to 2014 • Evaluation is being conducted in collaboration with affected state agencies (all data and conclusions are solely the responsibility of PHPG) • Any early expansion will involve a trade-off • Federal matching of current state-only expenditures, making available additional dollars for reinvestment into the health care system (and improving access to health care) versus • Newly-covered individuals not in the system today, whose service costs will result in new state expenditures (state matching dollars)

6. Affordable Care Act and Medicaid 1902(k)(2) Early Expansion Option - ODMHSAS 1 Source: DMHSAS (all contact sources) PHPG – Health Care Reform 6 ODMHSAS state-only expenditures for services that could be federally matched, ifthe individual was now eligible for Medicaid, totaled $45.9 million1 in SFY 2010, for adults below 133% of FPL Apportioning the unmatched dollars evenly by poverty percentage (conservative assumption) yields the following in potential federal dollars for reinvestment:

7. Affordable Care Act and Medicaid 1902(k)(2) Early Expansion Option - DOC PHPG – Health Care Reform 7 There were 254 inmate admissions to hospitals other than Lindsay Municipal Hospital in 2009, for a total cost to DOC of $2.8 million Any incremental FPL expansion would likely result in all of these stays being covered under Medicaid. Using the same payment rates, new federal dollars for reinvestment at SFY 2011 standard FMAP would total $1.8 million DOC payment rates are higher than Medicaid in some instances. Paying at Medicaid rates would also have a favorable financial impact There were an additional 696 admissions to Lindsay Municipal Hospital in 2009, some of which could have been made to another hospital, if the result would be coverage under Medicaid. (Any additional revenues would be partly offset by higher correctional officer costs)

8. Affordable Care Act and Medicaid SoonerCare and OSEEGIB PHPG – Health Care Reform 8 State employees and education workers are eligible for health insurance through OSEEGIB Employees and dependents are eligible for Medicaid today if they meet categorical requirements Children of employees have not been eligible for CHIP but will be under reform (subject to certain restrictions) Adults without categorical linkages will become eligible for Medicaid under reform if their family income is below 133 percent of FPL PHPG is evaluating the potential impact of offering SoonerCare (Medicaid) as a plan option to employees and spouses in households with incomes below 133 percent of FPL

9. Affordable Care Act and Medicaid SoonerCare and OSEEGIB PHPG – Health Care Reform 9 For qualifying employees, the OHCA could evaluate the cost-effectiveness of paying the employee premiums (as permitted under current law) If the private plan premium is not cost effective as compared to Medicaid, the employee would enroll into SoonerCare As an alternative, the federal matching dollars associated with the SoonerCare PMPM amount could be applied toward the employee’s premium, with OSEEGIB retaining responsibility for the state match + the remaining gap In either case, the federal matching dollars could be reinvested into the health care system to improve access to care

10. Affordable Care Act and Medicaid SoonerCare and OSEEGIB – Example • 1 2010 Health Choice employee High Option premium • OHCA Individual Plan average adult PMPM for July 2010 • Increases to 100% FMAP in 2014 PHPG – Health Care Reform 10

11. Affordable Care Act and Medicaid SoonerCare and OSEEGIB – Preliminary Numbers • 1 Does not include local educational workers (e.g., teachers and aides), some of whom also would qualify • Does not include income from other jobs (does include estimated spousal income) • Increases to 100% FMAP in 2014 PHPG – Health Care Reform 11

12. Affordable Care Act and Medicaid SoonerCare and OSEEGIB PHPG – Health Care Reform 12 The policy question for the state is whether/how to inform state employees about the Medicaid option, beyond traditional methods (e.g., including in list of plan offerings) Although there is no apparent prohibition on this step, CMS’ reaction is uncertain The reaction of other OSEEGIB plans (and some providers) may not be positive, although the introduction of more competition could have a positive effect on commercial plan rates