March21,2017
RepealBillThreatensTexasMedicaid
ByAnneDunkelberg,[email protected]
RepealBillThreatensTexasMedicaid
NOTE:AnUPDATEonthelatestchangestotheHouseRepealbill(asof3/21/2017)isprovidedattheENDofthis
brief.Thechangesoverallmakethebillworseforconsumers,andtheMedicaidchangesareparticularlybad.
Thenon-partisanCongressionalBudgetOfficehasreleaseditsdetailed“score”fortheU.S.HouseRepublican
proposaltorepealtheACAandradicallyreducefederalsupporttostatesforMedicaid(therepealbill),and
estimatesthatifpassed,thenumberofU.S.uninsuredwillimmediatelyjumpupby14millionin2018,growing
to24moreuninsuredin2026thanwouldhavebeencoveredundertheAffordableCareAct.Ofthe26million,
about14millionfewerwillbecoveredbyMedicaidthanundertheACA.
TheHouseRepublicans’repealbillcutsfederalMedicaidfundstostatesby$880billionoverthedecade,
accountingformorethanhalfofthebill’s“savings”(mostoftheremainderresultsfromcuttingtheACA’shealth
insurancetaxcreditsubsidies).
Expertestimatesofstate-by-stateimpactwillbecomeavailableinthenearfuture.Whilewewaitforthat
helpfulinformation,thisbriefreviewskeycutsandchangestoMedicaidproposedintheAHCAbillitself,adding
aTexasperspectivewherepossible.
7020EasyWindDrive,Suite200•Austin,TX•T512.320.0222•F512.320.0227•CPPP.org
•
PlannedParenthoodOne-YearFreeze-Out:Foroneyearfrompassageofthebill,PlannedParenthoodcould
nolongerprovideservices(likebirthcontrol,well-womancheck-ups,cancerandSTDscreening)inMedicaid.
TheHouserepealbillwouldalsocutoffPlannedParenthoodfundingfromCHIP,theMaternalandChild
Healthblockgrant(TitleV),andtheSocialServicesblockgrant(TitleXX).Forthatyear,CBOestimatesdirect
paymentstoPlannedParenthooddropby$178million,partiallyoffsetby$21millionincreasedMedicaid
spendingforadditionalbirths.
•
Medicaidexpansionroll-backbeginsin31expansionstates.Thebillwouldphaseoutthroughattritionthe
highfederalmatchrateforthenewly-coveredadults.AnyadultcoveredundertheACAMedicaidexpansion
asof12/31/2019,whohasagapincoverageofmorethanonemonthafter1/1/2020,willdropbackdown
tothetraditionalMedicaidmatchrate(e.g.,56%forTexasin2017)fromthemuchhigher90%ratethat
wouldhavebeenineffectundertheACA.
•
Requiresthe31Medicaidexpansionstatestore-determineeligibilityforMedicaideverysixmonths.The
ACAcurrentlyprohibitsstatesfromrequiringrenewalmoreoftenthanonceayear.
ByrequiringrenewaltwiceayearstartingOctober2017,thebillwouldspeeduptheratewithwhich
Medicaidexpansionadultswillexperiencegapsincoverageofmorethanonemonth,whichbeginning
January2020willcausethefederalfundingmatchrateforthatindividualtodropfrom90%tothestate’s
regularmatchrate(e.g.,56%inTexas2017).Stateswouldgeta26-monthwindowwithenhancedfederal
support(5percentagepoints)forthesystemchangesrequired.
Goingfrom12to6monthscanbeasurprisinglypowerfultoolfordrivingdownenrollment.WhentheTexas
legislaturecutCHIPeligibilityfrom12to6monthsin2003,CHIPenrollmentdroppedby40%,with200,000
fewerchildrencoveredafter18months.CBOestimatesthatfewerthan5percentofMedicaidexpansion
enrolleeswouldqualifyforthehigherfederalmatchingratebytheendof2024.
•
•
States(likeTexas)amongthe19non-expansionstatescouldstillexpandcoverageforadultsin2017-2019,
and:
o
Wouldbesubjecttothesamephase-outoftheenhancedfederalmatchforenrolleeswhosignup
before2020;
o
Newenrollees1/1/2020andlaterwouldbematchedonlyatthetraditionalMedicaidmatchrate;
and
o
Underthecomplexnewper-capitacapformula,theaveragecostsofnewly-eligibleadultswouldbe
assumedtobethesameasfortheadultscoveredinthestatein2016(inTexas,thatgroupincludes
asmallnumberofverypoorparents,pregnantwomen,andyoungadultswhophasedoutofthe
fostercaresystem.)
o
UnlessTexastakesactiontocreatecoveragefortheworkingpoorby2019,therepealbillwould
leaveuswithnowaytocoverpoorandnear-pooradults.Medicaidcouldnotbeexpandedin2020
orlater,andlargecutinsubsidiesformarket-basedcoveragewouldmakeitimpossibleforlowincomefamiliesandworkerstopurchasecoverage.Evenatthelowermatchrate,Medicaid
expansionstateswouldhaveatremendousfiscaladvantage.
EndsHospital-basedPresumptiveEligibility,establishedundertheACA,whichallowedhospitalstobepaid
forcareprovidedtopatientswhiletheirapplicationwasstillinprocess.TexasMedicaidofficialsimposed
suchstrictlimitsonthisoptionthatitwasusedverylittle.
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•
CancelstheACA’sscheduledDisproportionateCareHospital(DSH)paymentreductionsfornon-expansion
states.ACA’sscheduledcutstoMedicaidpaymentstohospitalsservingaDisproportionateShareof
Medicaidanduninsuredpatientshadnotbegun.Alongwiththemuch-largerTexasMedicaid1115waiver,
DSHhelpsmakeupforinadequateMedicaidhospitalpaymentrates,usingalmost100%localtaxpayer
matchingfundsratherthanstate-budgetdollars.TheHouserepealbillwouldcancelthecutforthestates
withoutMedicaidexpansion;anystatethatexpandsbetweennowand2020wouldbecomesubjecttothe
cutsagain.
•
Dropsthe“floor”forcoveringchildreninMedicaidto100%FPLfrom133%undertheACA.Statesthat
wantedtoshrinkMedicaidcoverageforchildrencoulddothat.
•
EndsthehigherfederalmatchrateforPersonalAttendantServicesundertheACA’sCommunityFirst
Choiceoption.Texashasenjoyeda6-percentagepointincreaseinfederalmatchingfundsfortheseservices
providedbothinSTAR+Plusandthroughwaivers.HHSCreportssavingsof$35millionin2016fromthe
enhancedfederalmatchrateforCommunityFirstChoice.
•
Endsretroactiveeligibility(sometimescalled“threemonthsprior”)fornewMedicaidenrollees.Under
thislong-standingMedicaidpolicy(i.e.,decadesbeforetheACA),anewMedicaidenrolleewhohadunpaid
medicalbillscouldhavethosecoveredforuptothreemonthspriortothedateonwhichher/hisapplication
wasfiled.ThisisenormouslybeneficialnotonlytoMedicaidrecipientswhowouldotherwiseowelarge
debtstohospitalsandotherhealthcareproviders,butalsotothecareprovidersthemselves.TheHouse
repealbillwouldlimitcoveragetocaredeliveredinthemonthinwhichtheapplicationwasfiled. Retroactive
coveragealsoprovidesalevelofprotectionforbothMedicaidbeneficiariesandcare providerswhenstate
Medicaideligibilitysystemsareunderfunded,createonerousredtapebarriers,or failoutright.Evenwhen
astatefallsweeksormonthsbehindinprocessingapplicationsandrenewals, patients’billsareeventually
paid.TexasMedicaid’seligibilitysystemisperformingwelltoday,butithas experiencedallofthe
aforementionedproblemsinthelast25years.
•
Ends“ReasonableOpportunity”periodforMedicaidapplicantstoestablishU.S.citizenshiporeligible
immigrationstatus.Statesarecurrentlyrequiredtoprovideapplicantswithtimetoprovidedocumentation
ofcitizenshiporimmigrationstatus,beginningMedicaidbenefitsbasedontheirself-attestationduringthat
period.TheHouserepealbillwouldprohibitMedicaidcoveragefromstartinguntilproofhasbeenprovided.
(Exceptionsareprovidedforapplicantswhosestatushasalreadybeenestablishedinanotherfederal
programincludingSSI,SSDI,federallyfundedadoptionassistanceorfostercare,andmostU.S.newborns.)
•
LowersthecaponthevalueofhomeequitythatcanbeexcludedwhencalculatingeligibilityforMedicaid
longtermservicesandsupports,whetherincommunityoranursingfacility.TheHouserepealbillwould
startthispolicysixmonthsafterthebillbecamelaw.
•
“SafetyNetFundforNon-ExpansionStates”wouldnetTexasfarlessfederalsupportthanMedicaid
Expansion;andisalsotoosmalltoallowforcorrectionofcurrentlyinadequateproviderrates.Therepeal
billwouldestablishafundthatwoulddistributeattotalof$2billioneachyear,dividedacrossallthenonexpansionstates(currentlynumbering19).Incontrast,projectionsofnetfederalfunding(i.e.,netgainafter
anystatematchingfundsaresubtracted)forTexasunderMedicaidexpansionhaverangedfrom$6to$10
billionayear.iTheproposedfundclearlywouldnotoffsetthefederalMedicaidexpansionfundingTexashas
leftonthetable.
Thebillstatesthatthissmallfundcanbeusedtoadjustpaymentratesforsafetynetproviders(notto exceed
actualcosts).Asexplainedfurtherbelow,theformulafortherepealbill’sproposedreductionin
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federalMedicaidsupporttostateswouldlockinpercapitacostsofTexasMedicaidbeneficiariesbasedon
2016spending.TexasMedicaidproviderratesfor2016includedanumberofproblematicfeatures,like
therapyratecutsforhigh-needschildren;inadequatewagesforpersonalattendantswhocareforour
seniorsanddisabledpersons;andphysicianandotherprofessionalfeesthathavenothadregularupdates
since1993.Theybecomeevenmoreproblematicwhenfrozenintoazero-sumformulathatpresumesthe
2016fundinglevelwasadequate.
TexasMedicaidpayshospitals,physiciansandprofessionalsover$14billionayearindirectfees;thescope
ofadjustmentsneededinourstatecouldnotbesupportedbythismodestfund.
AddingtotheDisparities:TexasisaNon-ExpansionState
14
Examplesoffederalfundsfornewadultgroupin2016
Washington:
$2.8B
Washington
NorthDakota:
$251M
Montana
Oregon
Idaho
California:
$20.8B
Arkansas:
$1.4B
NorthDakota
Michigan:
$3.3B
Vermont
Minnesota
SouthDakota
Nebraska
Utah
Colorado
California
Michigan
NewMexico:
$1.4B
Arizona
Pennsylvania
Iowa
Iowa
Oklahoma
Missouri
Arkansas
Indiana
Ohio
West
Virgini
a
Kentucky
NorthCarolina
Tennessee
Illinois
Kansas
New
York
Wisconsin
Wyoming
Nevada
Ohio:
$3.4B
SouthCarolina
NewMexico
Texas
Alaska
Hawaii
Maine
Connecticut:
$1.2B
NewHampshire
Massachusetts
RhodeIsland
Connecticut
NewJersey
Delaware
Washington,DC
Maryland
Virginia
Kentucky:
$3.0B
ExpandedMedicaid(31+DC)
NotExpandedMedicaid(19)
Georgia
Alabama
Louisiana
Mississippi
$72.6Billion
InTotal Federal
ExpansionFundingtoStates
in2016
Note:Federalfundingdoesnotreflectenhanced fundingprovidedbytheACAtostatesthatexpanded beforetheACA("earlyexpansion states").
Totalfederalfundingforallexpansion adultenrollees(notjustthosethatarenewlyeligible)fromJanuary2014- June2015was$78.8billion.
Sources:ManattanalysisbasedonDecember2016CMS-64expendituredata.Dataavailableonlineat:https://www.medicaid.gov/medicaid/financing-and-reimbursement/state-expenditurereporting/expenditure-reports/index.html; CurrentStatusofStateMedicaidExpansionDecisions,KaiserFamilyFoundation,July2016.Availableat:http://kff.org/health-reform/slide/current-status-ofthe-medicaid-expansion-decision/
PerCapitaAllotmentRestructuringofMedicaid:Locksin2016TexasMedicaidpoliciesandspending;makes
futureimprovementsdifficult;leavesstateexposedtocostsabovenewcap.
ManycritiquesoftheriskstostatesinacceptingcappedfederalMedicaidfundinghavenotedthesehigh-level
problemsforstates,butawalkthroughtheproposedformulaforfundinghelpsexplainthespecificreasonsthat
thecappingwillbeproblematicforTexas,aswellasareasinwhichthefiledRepealbillisunclearorambiguous.
•
UseofthepercapitaformulaforfederalshareofMedicaidfundingwouldlaunchin2020.
•
Theformulawouldcalculateanaverage,per-enrolleecostin2016TexasMedicaidforeachoffourgroups:
(1) children;(2)elderly;(3)disabled(includeschildreneligibleonbasisofdisability);(4)non-expansion
adults(pregnantwomen,smallnumberofparentsinTexas,formerfostercareyouth).IfTexaschoosesto
createcoverageforadultsupto133%undertheMedicaidexpansionoptionin2018or2019,afifthgroup
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couldbecreated,andlacking2016experiencedatawouldbeassumedtohavethesameper-capitaaverage
costasgroup(4)non-expansionadults.
•
Alistofcertain2016stateMedicaidspendingtypesisNOTincludedinthecalculationsofpercapitacost
bygroup:
o
Vaccinesforchildren;
o
Children’sHealthInsuranceProgramenrollees(CHIP);
o
Medicaidforbreastandcervicalcancertreatment;
o
Medicarecost-sharingenrollees(MedicaidpaysMedicareout-of-pocketcoststovaryingdegrees
basedonverylowincomes);
o
IndianHealthServices;
o
MedicaidFamilyPlanningwaivers;
o
EmergencyMedicaidservicestolawfullypresentandundocumentedimmigrants;
o
DisproportionateShareHospital(DSH)reimbursements;
o
Medicaidadministrationcosts.(Thefiledbilldoesnotlistadministrativespendingasexempt,but
thecommittee’sofficialsummarydoes.Clarificationisexpected.In2016,Texasreceivedabout$1
billioninfederalMedicaidadministrationfunding.
(TheseexcludedMedicaidcostsareNOTbeingeliminatedfromfederalsupport;theyappeartocontinue
withoutbeingsubjecttoacap.)
•
Thebigambiguity:treatmentofMedicaid1115supplementalpaymentsforUncompensatedCareand
DeliverySystemReformIncentivePayments(UCandDSRIP).Anumberofnationalexpertshavedescribed
asambiguousthelanguageabouthowsupplementalpaymentslikeTexas’Medicaid1115Transformation
waiverwillbetreatedinthisformula.In2016,Texas’federalfundingfromthewaivertopped$3.5billion
(andleveragedanother$2.7billioninlocaltaxrevenues).TheRepealbilllanguagerelatedto“non-DSH
supplementalpayments”including1115waiverDSRIPandUCpoolsincludescontradictorystatements which
appearatonepointtoexcludethatspendingfromtheformulaforthespendingbase,andinanother place
todefinetermsfortheirinclusioninthe2019fundingbase.
ExpertsindicatethattheproblemisunderdiscussioninCongress,andmaybecorrectedsoonintheprocess.
TheidealoutcomeforTexasonthisspecificpoint(ifthebillwerepassedintolaw)isofcoursetoensurethat
thefundscontinuetobeavailable,astheyaccountforsuchalargeshareoftotalTexasMedicaidhospital
reimbursement.IfnopartofthewaiverfundscouldeverbebuiltintotheMedicaidprogram,e.g.,via
increasinghospitalratestoMedicarelevels,orbybuildingsuccessfulDSRIPpoliciesintoMedicaidbenefits
anddeliverymodels,Texaswouldbelockedintoawkwardpoliciesandfundingthatwereneverintendedto
bepermanent.
•
2016costsforeachgroupwouldbetotaled,andthendividedbythenumberoffull-yearequivalent
enrolleesinthatspecificgroupinTexasin2016.
•
Eachgroup’s2016per-capitacostwouldbetrendedforwardto2019usingthemedicalcomponentofthe
ConsumerPriceIndex(M-CPI).AstheKaiserFamilyFoundation’sanalysisoftheCBOscorenotes,Medicaid
per-enrolleegrowthconstrainedtoCPI-M(3.7%overthe2017-2026period)wouldbelowerthantheU.S.
averageannualrateof4.4percentprojectedundercurrentlaw.
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•
AnaggregatetotalTexastargetMedicaidexpenditurewouldbecalculatedforyear2020,usingthe2019
per-enrolleeaveragecostforeachgroup,inflatedbyM-CPIplus1percentagepoint(thisistheonlyyearfor
whichtheadditionalpercentagepointisaddedtoM-CPI).Those2020amountswillbemultipliedbythe
actual2020enrollmentineachofthefour(orfive)groupstoarriveatTexas’2020TargetMedicaid
expenditure.
•
IfTexas’2020spendingonenrollees(excludingtheabove-listedcategories)exceededthattargetamount,
federalMedicaidallocationstoTexasin2021wouldbereducedtorecouptheoverage.
TopConcernsforTexasMedicaidunderPerCapitaCap/Allotment
CPPPhasreviewedthesubstantiallistofriskandissuesforTexasifMedicaidisconvertedfromthecurrent
federalpartnershiptoaper-capitacaponfederalmatchingfunds(seepp.7-8).Torecapthetopconcerns:
(1) IfTexasmakeserrorsinpredictingMedicaidspendinginanupcomingyearandourfederalfundsare
inadequate,ourLegislature’shistoryindicatestheywillcutbenefits,payment,orenrollmentinresponse,
topayforthefederalrecoupmentoffunds.
(2) RigiduseofaretrospectivebaseyearwilllockTexasandotherstatesintopermanentinadequateprovider
networks.
(3) Ifthemake-upofenrolleesinoneofthefour(orfive)enrollmentgroupschangesovertimetohavemore
intensiveneeds—e.g.,amongeldersorTexanswithdisabilities—wewillbeunabletomeettheirneeds,
anditwilltakeanactofCongresstocorrecttheproblem.
(4) Limitsto2016benefitsalsomakeourMedicaidfundingallocationtoolowtoallowustoadoptbest
treatmentpracticesandstandardsofcarewithoutfirstcuttingelsewhere.
•
CappingspendingforbroadcategoriesofMedicaidenrolleesbasedon2016spendinglocksTexasintoa
longlistofLegislativepolicychoicesthatweremadewhentherewasnothreatwhatsoeverthatthey
wouldbemadepermanent.
•
ManyTexasMedicaidprovidersarepaidratesthathavegonewithoutregularinflationupdatesfor
decades,andasaresultsomearepaidwellbelowtheircosts.Unfortunately,thetopexamplesare
medicalandmentalhealthprofessionals,andpersonalattendantswhocareforourseniorsanddisabled
persons.Accesstotheseprovidersiscriticaltoprovidingthemostbasichealthcarethatcanprevent
hospitalizations,incarcerations,disability,anddevelopmentaldelays.
Incontrast,systemshaveevolvedthatallowotherplayersinTexasMedicaidtogainlargeprofits;for
example,TexasMedicaidManagedCareplansnetlargeprofitsafterpayingTexas“experiencerebates.”
Thisdidnotresultfromathoughtfulplanningordeliberatechoices,buttherepealbillformulawould
neverthelesscreateasituationinwhichwecanonlycorrectinadequateratesforoneprovidertypeby
cuttingratesforanotherprovider(orcuttingbenefitsforenrollees).
•
Lockingin2016spendingalsolocksininadequatehealthbenefits.Forexample,2016spending“bakes
in”thewidely-criticized2015cutstopediatrictherapyratesthathavecausedmultipleEarlyChildhood
Interventionproviderstoshuttheirdoors.Otherexamples:2016TexasMedicaidspendingwillnot
reflectcostsoflife-savingHepatitisCcuremedication;dentalcareforadultsinTexasMedicaid
(especiallyshort-sightedforpregnantwomen);orthecurrentU.S.standardoftreatmentformany
childrenontheautismspectrum.
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Update:Manager’sAmendmentaddedMondaynight(3/20/2017)byUSHouse
CommitteesonEnergy&CommerceandWays&Means
Thechangesreportedaremostlynegativeforconsumers.
https://rules.house.gov/sites/republicans.rules.house.gov/files/115/PDF/115-AHCA-SxS-MNGRPolicy.pdf
Themajorchangestothebillare:
•
StatescouldaddworkrequirementstoMedicaid.AmendmenttoSocialSecurityActwouldgiveStates
theoptiontoaddaworkrequirementinMedicaidfor“nondisabled,nonelderly,non-pregnantadults”
asaconditionofreceivingcoverageunderMedicaid.BasedonH.R.1381byGriffith,usesTANF
“countableactivities”andexemptionsincurrentlaw.Statescouldbeginusingthisnewoptionon
October1,2017.Stateswouldgeta5%administrativeFMAPbumpiftheyimplementawork
requirement.
•
StatesthatpursuenewMedicaidexpansionwillnotgetenhancedmatchatall.(Originalbilltreatedall
statesthesameregardlessofwhentheyexpanded.)
•
StateoptiontotaketheirMedicaidfundingasalump-sumblockgrantratherthanaper-capitacapped
allocation.ProvidesspecificsoftheBlockGrantstructure,tobeoutlinedinaseparateblogpost.
•
NewYorkCountySpendingExcluded.WouldexcludefromthePerCapitaCapformulaMedicaid
spendingbyNewYorkcountygovernmentsotherthanNewYorkCity.Writteninawaythatappearsto
NOTaffectTexasMedicaidcountygovernmentcontributions—thoughquestionsaboutTexas1115
waiverdescribedabovearestillunanswered.)
•
IncreasesMedicaidPerCapitaCapinflationfactorfortheelderlyanddisabled:Increasestheannual
inflationfactorfortheelderlyanddisabledfromCPI-UMedicaltoCPI-UMedical+1.
Non-Medicaidprovisions:
•
AchangeinthetaxdeductibilityofmedicalexpensesthattheSenatecouldharnesstoboosttaxcredits
forolderAmericans,tothetuneofanestimated$85billion.Thischangestillleavesthebill’snetcutto
ACAtaxcreditvalueat34%(downfrom44%infirstdraft)anddoesnotaddressthelackofgeographic
orincomeadjustmentsatall.
•
•
MovestherepealofObamacare’staxincreasesbyoneyear(earlier).
Restrictsrollingunusedtaxcreditmoneyintohealthsavingsaccounts(apparentlytoeaseconcernsof
anti-abortiongroups)
ToquoteVox’sEzraKlein:“Noneoftheseprovisionsmeaningfullychangetheunderlyinglegislation,noranyof
itsflaws.ThesearemostlytweaksmeanttowinoverhardcoreconservativesandCongressmembersfromNew
York.”
Formoreinformationortorequestaninterview,[email protected].
AboutCPPP
TheCenterforPublicPolicyPrioritiesisanindependentpublicpolicyorganizationthatusesresearch,analysisandadvocacy
topromotesolutionsthatenableTexansofallbackgroundstoreachtheirfullpotential.LearnmoreatCPPP.org.
7
Twitter:@CPPP_TX
Facebook:Facebook.com/bettertexas
i
http://www.urban.org/sites/default/files/publication/49881/2009209-Medicaid-Expansion-Health-Coverage-andSpending.pdf;http://tools.forabettertexas.org/healthwealth/images/Statewide_Coverage_Gap.pdfand
http://tools.forabettertexas.org/healthwealth/data_source.php
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