Medicaid expansion issues to be considered

1. 1
Medicaid Expansion and Beyond:
House Bill 148
Issues to be considered1
The present Medicaid program now covers the most vulnerable
populations:
 The poor, elderly, blind, disabled, children, families with children
and pregnant women
 The federal government generally pays 50% match for these
individuals2
Medicaid expansion as discussed in the media:
 The addition of able-bodied individuals (ages 19-64) at or below
138% of the federal poverty level ($20,314 for single adults)
 Throughout the following years – the match for expansion is:
2016 2017 2018 2019 2020 After 2020
100% 95% 94% 93% 90% ?
 Throughout the above years, the State is still responsible for paying
generally 50% of the administrative expenses for administration of
Medicaid programs
HB 148 goes beyond Medicaid expansion
 House Bill 148 also:
o Expands and grows Denali KidCare
1 Prepared by the Office of Representative Liz Vazquez
2Pregnant women and children who have family incomes that are too high to qualify for Medicaid who
qualify instead for Denali KidCare are reimbursed at 65%.

2. 2
o Expands the existing Medicaid by adding 3 new programs (the
1915 (i) and the 1915 (k) options and the 1115 demonstration
waiver).
o Reduces audits on providers - reducing accountability
o Instructs the Department of Health & Social Services (DHSS) to
propose tax even if providers do NOT treat Medicaid patients,
this can be expected to increase costs and drive away providers
Medicaid budget
 Medicaid is the largest – and fastest growing – component of the state
operating budget
o It’s grown 250% -- from $200 million GF up to $700 million
general fund (GF) -- in just the past several years
o Alaska now spends $1.6 Billion each year on Medicaid
o FY14 Total Medicaid Recipients equal 165,7833 (22.5% of the
entire population of Alaska which totaled 736,732 for FY14)4
o By 2032 Medicaid without expansion is estimated to devour
the entire present budget and more, at over 6 billion dollars
Fiscal implications – enrollment is unknown
 Unknown enrollment numbers – from 26,5355 to 40,2846
o Enrollment projections vary widely: disparity of at least 52%
o Experience of other states: enrollment greatly exceeds forecasts
3 According to data presented during the House Health & Social Services Committee on March 19, 2015 -
Medicaid 101 – slide 13.
4 According to U.S. Census estimates of the entire population of Alaska.
5 Department of Health & Social Services (DHSS) during a presentation on March 5, 2015 before the
House HSS Committee.
6 Lewin Group Final Report titled “An Analysis of the Impact of Medicaid Expansion in Alaska”, updated
April 12, 2013.

3. 3
 Seventeen states that expanded Medicaid underestimated
enrollment an average of 91%7
o DHSS has a history of underestimating enrollment
 When selling Denali KidCare to the legislature, DHSS’
enrollment exceeded their projected maximum by 92%
(1999-2002)8
Fiscal implications – costs are unknown
 The spread between the various cumulative cost projections and
savings projections is nearly $417 million
Can Uncle Sam keep his promises?
 The federal debt is $18 trillion -- $56,378 per each man, woman, and
child living in USA
 Historically, once you expand Medicaid, costs go up
 Can the federal government always pay the new matching
reimbursement for the expansion at 90% or above?
 The federal government can reduce their match/reimbursement at
any time – and they have done so before
No promises were made after 2020
 Uncle Sam is silent about what the federal match will be after 2020
Squeezing out existing vulnerable populations
 With the federal government’s fiscal situation, decreased federal
funding is a real probability
o If that occurs, the state’s most effective cost-reduction strategy
will be to reduce services to the existing Medicaid beneficiaries
7 Arizona, Arkansas, California, Colorado, Connecticut, Illinois, Iowa, Kentucky, Maryland, Michigan,
Minnesota, Nevada, New Mexico, Ohio, Oregon, Washington, West Virginia (Arizona, Iowa and
Michigan expanded using 1115 demonstration waivers)
8 Using the only available information regarding enrollment of all children from Medicaid.gov

4. 4
first – impacting the most vulnerable (the elderly, disabled,
children and low-income families with children)
 Most Medicaid services are matched at 50%; the State
Children’s Health Insurance Program is matched at 65%
o Alaska offers the most generous Medicaid program in the
nation with 27 additional optional services provided to present
enrollees
o When cuts to services are needed, the 27 optional services
Alaska provides will likely be the first to be cut
 Providers will likely be penalized
o HB 148 calls for a proposal to tax up to all 19 provider types
that are allowed by federal law – regardless of whether the
provider accepts Medicaid
o Taxes will be passed on to consumers, resulting in higher
health care costs
Unintended consequences
 Squeezes out Medicare seniors
o Will make it even harder for Medicare seniors to find providers
o Higher Medicaid reimbursement rates will lead providers to
prefer Medicaid over Medicare patients - which will hurt
seniors
 Creates a serious equity issue
o Medicaid beneficiaries (including prisoners) will receive better
benefits than:
 Seniors on Medicare
 Veterans’ Administration beneficiaries
 Military

5. 5
 Most private insurance plans
 State Fiscal Crisis
o Existing Medicaid eligible groups (with lower federal match
50% to 65%) likely will suffer more cuts because of the higher
matching reimbursement for the new expansion group (at least
90% through 2020)
o New expansion group is reimbursed at least 90% through 2020
o The State is still responsible for 50% of administrative costs
 Once we expand, can we change our mind?
o DHSS is relying only on a letter9, not legal authority, not a
regulation or statute
o Binding law applies – Social Security Act, 42 U.S.C. Section
1396(c)
o The State Plan - is a legally binding agreement between the
state and federal government
o The courts will enforce legally binding laws and agreements
Studies of the University of Oregon’s expansion shows that Medicaid
expansion causes negative consequences
 Results in overuse/abuse of the ER
o Increased emergency room visits – by 41%
o Undermines a key justification for expansion
o A lack of enrolled providers will increase ER use
 Health outcomes mixed
o Medicaid expansion beneficiaries self-report better physical
and mental health
9 Letter dated March 6, 2015 addressed to Governor Walker from the United States DHHS Secretary
Burwell.

6. 6
 However, no significant effects on measured health
outcomes such as hypertension, high cholesterol levels
and glycated hemoglobin (blood sugar)
System is broken – why expand a broken system?
 Everyone admits the system is broken and needs reform
o Enterprise (formerly named MMIS) – payment system – had
numerous system defects affecting every area of operations
o Alaska has lost over 1,000 enrolled providers between 2010
and 2014
 Old adage: If it ain’t broke don’t fix it
 But if it is – fix it before you grow it and don’t throw more money at
it
Serious reforms NOT proposed
 HB 148 goes beyond Medicaid expansion – but it doesn’t fix what is
broken
o Proposes only generalities, not specifics
o No measured standards or goals
o No deadlines
DHSS has not done enough due diligence
 On the proposed 1115 demonstration waiver: DHSS personnel knew
of only one state trying expansion using a demonstration waiver –
Oregon
o Oregon however expanded its Medicaid program prior to the
Affordable Care Act – they were one of the first states to do so
o The following states implemented expansion through 1115
demonstration waivers/post the Affordable Care Act:
Arkansas, Indiana, Iowa, Michigan, New Hampshire, and
Pennsylvania

7. 7
o The following states have applied for demonstration waivers
but have had difficulties getting CMS approval: Arizona
California, Connecticut, Indiana, and Oklahoma
 Uncle Sam denied changes in:
 Arizona that sought cost-sharing increases
 California that sought to increase co-payments
 Connecticut that attempted to raise total asset tests
to limit eligibility
 Indiana that sought to implement requirements that
would promote personal responsibility for failing to
meet co-pay obligations
 Oklahoma because of enrollment caps
Possible alternatives to Medicaid expansion
 Federally Qualified Health Centers such as Anchorage Neighborhood
Health Center
o Roughly $14 million budget including a $3.4 million federal
grant
o Provides discounted care to low-income patients (90% of their
patients) via a sliding fee schedule
o Getting the job done with less $: providing health care for the
community, including low-income and uninsured patients
Look Before We Leap
 Imperative that we carefully weigh – and fully understand – both
fiscal and health care policy implications of both Medicaid
expansion and HB 148 – before we do it
o Arkansas stopped covering lifesaving drugs for Cystic Fibrosis
patients – forcing patients to sue
o Arizona hospitals see operating losses despite Medicaid
expansion

8. 8
o Massachusetts proposed to close a $1.8 billion state budget gap
by chopping benefits for the neediest and cutting rates of
reimbursements to providers
Printed May 20, 2015