Lessons from Medicaid Expansion in Arizona & Maine

Lessons from Medicaid Expansion in Arizona & Maine Tarren Bragdon, CEO Foundation for Government Accountability Naples, Florida www.floridafga.org tbragdon@floridafga.org or 239.244.8808

Initial Projections: Reduce uninsured Reduce charity care Save general fund money Have low, predictable enrollment & costs ARIZONA Actual Outcomes: High costs Huge enrollment spikes Massive new GF costs to state Program capped and patients thrown off No reduction in charity care & hidden tax scheme

Arizona Proposition 204 in 2000 Use Free Tobacco Settlement $ for Medicaid Expansion Prop 204 expanded Medicaid for parents to 100% FPL (from 36%) and started covering childless adults up to 100% FPL, beginning July 2001. [Childless Adults]

Arizona s Prop 204 Promises Save General Fund about $30 million a year Reduce the number of uninsured Reduce charity care Reduce hidden tax on private insurance from uninsured and uncompensated care

160,000 140,000 Arizona Prop 204 Parents Expansion 149,797 139,140 120,000 100,000 80,000 77,595 86,607 89,987 60,000 40,000 20,000-38,658 50,381 41,350 17,329 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Parent - Projected Enrollment Parents - Projected Eligible Parents - Actual Enrollment Source: Arizona Legislature's Joint Legislative Budget Committee (2001 actual and 2001-2013 projected) & Arizona Health Care Cost Containment System (2001-2013 actual, based on January enrollment).

Arizona Prop 204 Childless Adult Expansion 250,000 226,773 202,599 200,000 162,227 179,068 150,000 100,000 96,420 118,148 134,368 86,719 50,000 53,869 66,513 81,040-28,984 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Childless Adults - Projected Enrollment Childless Adults - Projected Eligible Childless Adults - Actual Enrollment Source: Arizona Legislature's Joint Legislative Budget Committee (2001 actual and 2001-2013 projected) & Arizona Health Care Cost Containment System (2001-2013 actual, based on January enrollment).

Arizona s Cost Increases from Medicaid Expansion 2001-2010 Per Member True Cost in 2010: Childless Adults 2.5x projection 2001 Actual/Projected 2010 Projected $7,361 2010 Actual $2,878 $2,800 $2,878 $1,903 $1,903 Parents - PMPY Childless Adults - PMPY Source: Arizona Legislature's Joint Legislative Budget Committee (2001 actual, 2009 projected) & Arizona Health Care Cost Containment System (2009 actual). Childless adults not covered in 2000.

Millions $1,800 $1,600 $1,400 $1,200 Arizona s Medicaid Expansion Spending (in millions) Projected vs. Actual $1,623 Projected Spending $1,416 $1,403 Actual Spending $1,326 $1,108 $1,000 $863 $800 $655 $600 $400 $200 $135 $216 $279 $315 $338 $363 $389 $- 2002 2003 2004 2005 2006 2007 2008 Source: Arizona Legislature's Joint Legislative Budget Committee (2002-2008 projected) & Arizona Health Care Cost Containment System (2002-2008 actual).

Parents Unemployment Rate The Woodwork Effect Parents Already Eligible 2001-2003 260,000 250,229 8% 240,000 7% 220,000 210,193 5.9% 6.1% 5.9% 5.9% 5.3% 6% 200,000 180,000 4.0% 4.6% 170,782 Dec 2012 343,910 Non-Expansion Parents 5% 4% 160,000 157,582 3% 140,000 120,000 127,097 137,733 129,443 130,380 2% 1% 100,000 0% Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Non-Expansion Parents - Total Projected Eligible Non-Expansion Parent Enrollment Projected Woodwork from Parents Unemployment Rate Source: Arizona Legislature's Joint Legislative Budget Committee (2002-2004 projected) & Arizona Health Care Cost Containment System (2002-2004 actual). Bureau of Labor Statistics (unemployment rate in AZ).

Total Annual Spending Millions What s Driving the High Costs? $1,600 $1,400 2009 Actual Spending (in millions) $1,407 $1,200 $1,000 $800 $659 $600 $400 $200 $0 $147 $103 $300 $151 $40 $11 $67 $48 $230 $349 Hospital Practitioner Pharmacy Transportation Other Total Prop 204 - Parents (105k) Prop 204 - Childless Adults (130k) Source: Arizona Health Care Cost Containment System (2009 actual).

Impact on Arizona s Hospital Charity Care/Uncompensated Care Projection: Prop 204 would dramatically reduce charity care Actual Outcome: The Arizona Hospital and Healthcare Association reports that hospital uncompensated care has increased an average of about 9 percent per year since 2000 reaching $364 million in 2007. The Lewin Group, March 6, 2009 The Medicaid Expansion went into effect July 2001.

Hidden Tax to Private Insurance In 2007 Arizona Hospitals had Medicaid cost shift of $407 M Uncompensated care cost shift of $390 M Worsened

Effect of Prop 204 on Arizona s Uninsured Rate Arizona Health Coverage - 1999-2011 - Non-Elderly 100% 22 18 19 19 19 19 22 23 20 21 21 21 19 Uninsured 9 7 10 7 11 8 13 8 14 9 16 10 17 6 17 5 17 6 19 7 22 10 20 7 19 6 80% 60% Medicaid 40% Other Public - Medicare/Military 61 64 63 59 58 58 57 56 58 54 52 52 56 20% Private - Individual 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0% Private - Employer Source: U.S. Census Bureau

Why is Arizona Expanding Medicaid? No Real Choice. Recent federal guidance provides that expansion states like Arizona that already provide Medicaid coverage for Childless Adults up to 100% FPL, are not eligible for enhanced federal funding unless the State expands Medicaid to cover individuals up to 133% FPL Arizona s two options: 1. Do nothing, hope the feds extend the waiver, run the risk the feds don t extend the waiver letting it expire on January 1, 2014, leaving 86,000 Arizonans uninsured 2. Restore coverage of Childless Adults up to 100% FPL, open enrollment, and expand Medicaid to cover all adults from 100% to 133% FPL to secure enhanced federal matching funds

Initial Projections: Reduce uninsured Reduce charity care Have low, predictable enrollment & costs MAINE Actual Outcomes: High costs Huge enrollment spikes Program capped and patients thrown off No reduction in charity care & hidden tax scheme

2002 Childless Adult Expansion Covered childless adults up to 100% of FPL Used 1115 Wavier and federal DSH funds with annual expenditure cap (state & federal) Same promises as Arizona: lower charity care, fewer uninsured, less hidden tax on private insurance, and low enrollment and per person costs

Chartity Care Millions People Maine s Childless Adult Expansion and the Impact on Charity Care (in millions) $250 20,901 20,852 16,629 25,000 $200 $150 14,800 15,007 20,000 15,000 $100 11,000 10,000 $50 5,000 $- $41 $61 $67 $61 $62 $75 $100 $111 $122 $152 $186 $196 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 Charity Care Total Projected Uninsured (<100% FPL) Projected Childless Adult Enrollment (<100% FPL) Childless Adult Medicaid Enrollment (June) Source: Maine Legislature s Fiscal Office (projections, enrollment), Maine Hospital Association (charity care)

Effect of Medicaid Expansion in Maine on Uninsured Rate Maine Health Coverage - 1999-2011 - Non-Elderly 10 10 8 12 11 6 12 14 6 12 16 8 11 19 8 11 21 6 11 20 7 10 19 7 10 20 7 12 20 6 12 24 5 11 23 7 12 23 6 100% 80% 60% Uninsured Medicaid 71 69 70 66 65 65 63 65 65 62 60 62 61 40% Other Public - Medicare/Military 20% Private - Individual 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0% Private - Employer Source: U.S. Census Bureau

LESSONS FOR OHIO Projections are historically way off Expect costs to dramatically increase Too often patients thrown off Medicaid within a few years

Ohio Medicaid Expansion Uncertainty Projected 2022 Costs No cost growth No population growth 5% annual cost growth 70% participation 80% participation 90% participation 70% participation 80% participation 90% participation 1.0 cost multiplier $1,936 $2,213 $2,490 $3,004 $3,433 $3,862 1.5 cost multiplier $2,905 $3,320 $3,735 $4,506 $5,150 $5,794 2.0 cost multiplier $3,873 $4,426 $4,979 $6,008 $6,866 $7,725 2.5 cost multiplier $4,841 $5,533 $6,224 $7,510 $8,583 $9,656 0.5% annual population growth No cost growth 5% annual cost growth 70% participation 80% participation 90% participation 70% participation 80% participation 90% participation 1.0 cost multiplier $2,025 $2,315 $2,604 $3,142 $3,591 $4,040 1.5 cost multiplier $3,038 $3,472 $3,906 $4,713 $5,386 $6,060 2.0 cost multiplier $4,051 $4,629 $5,208 $6,284 $7,182 $8,079 2.5 cost multiplier $5,063 $5,787 $6,510 $7,855 $8,977 $10,099 1% annual population growth No cost growth 5% annual cost growth 70% participation 80% participation 90% participation 70% participation 80% participation 90% participation 1.0 cost multiplier $2,118 $2,420 $2,723 $3,285 $3,755 $4,224 1.5 cost multiplier $3,177 $3,631 $4,084 $4,928 $5,632 $6,336 2.0 cost multiplier $4,236 $4,841 $5,446 $6,571 $7,510 $8,448 2.5 cost multiplier $5,295 $6,051 $6,807 $8,214 $9,387 $10,561 Projections based on actual FY13 PMPM, adjusted by gender/age to reflect uninsured new eligibles age/gender distribution as baseline (1.0 cost multiplier). The demographics taken from Urban Institute report on uninsured new eligibles, assumes no woodwork or crowdout (switching from private insurance). Also shown is 5% annual PMPM cost increases.

Ohio Health Coverage Over Time Ohio Health Coverage - 1999-2011 - Non-Elderly 11 11 11 12 12 12 13 11 13 13 16 15 16 10 9 10 10 11 13 13 15 13 14 15 16 5 6 6 18 6 6 6 6 6 7 7 8 6 5 100% 80% 60% Uninsured Medicaid 76 76 74 75 73 72 70 69 68 68 63 63 61 40% Other Public - Medicare/Military 20% Private - Individual 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0% Private - Employer Source: U.S. Census Bureau

Childless Adults Cost Much More $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $5,072 $7,361 $6,394 $6,523 Kaiser: $6,058 cost per newly eligible in 2016, increasing 5%/year $5,383 CMS/Mathematica 2011 study found that childless adults were: Older and included more men More likely to become Medicaid eligible due to disability Cost approximately 60 percent higher than expenditures for adults with dependent children $- Maine - 2012 Actual Arizona - 2010 Actual New York - 2008 Actual Florida - 2014 Projection Ohio - 2014 Projection Source: Who Will Enroll in Medicaid in 2014? Lessons From Section 1115 Medicaid Waivers May 2011 Per Member Per Year Childless Adults Parents

Projected vs. Actual Take-Up Rates Vary Dramatically Childless Adults - Expansion Maine 74% projected v. 169% actual (within 3 years) Arizona 40% projected v. 111% actual (within 3 years) Ohio 26% projected among uninsured in 2014, 19% overall. (Ohio Department of Job and Family Services) Parents - Expansion Arizona 50% projected v. 71% actual (within 3 years) and 117% actual (within 10 years) Ohio 33% projected among uninsured in 2014, 22% overall. (Ohio Department of Job and Family Services) Parents Woodwork for Currently Eligible Arizona 10% projected v. 135% actual (immediately) and 393% actual (within 2.5 years) Ohio 32% projected among uninsured in 2014, 23% overall. (Ohio Department of Job and Family Services) Massachusetts (only state with employer/individual mandate) 96% actual (Kaiser Family Foundation)

Projected v. Actual Key Lessons from Arizona & Maine Cost of childless adults dramatically underprojected Enrollment rates dramatically under-projected Many more people enroll, often more than entire projected uninsured population Costs and enrollments skyrocket Charity care continues to grow Uninsured rate virtually unchanged

Urban Institute Study August 2012 Uninsured newly eligible with OH Medicaid Expansion 578,000 90% - Childless Adults (518,000) 10% - Parents (60,000) Uninsured currently eligible but not enrolled in OH (potential woodwork) 127,000

Urban/Kaiser Study - Ohio No ACA ACA no Expansion ACA and Expansion 2013-2022 Medicaid Spending - Total $256 B $263 B $321 B State share (current law) $90 B $93 B $97 B 2013-2022 New Spending Total $7.3 B $64.6 B State share (current law) $2.6 B $6.6 B 2013-2022 Medicaid Spending to Hospitals Reduction in Uncompensated Care 2013-2022 (state savings) $57.4 B $80.6 B -$0.9 B 2022 Medicaid Enrollment 1,908,000 +196,000 +879,000 Reduction in Uninsured 33% 61%

Urban/Kaiser Study - Ohio Portion of those with employer insurance that drop for Medicaid Portion of those with individual insurance that drop for Medicaid Portion of uninsured that enroll in Medicaid No ACA ACA no Expansion 4% 11% 69% 85% 40% 74% Take-up rate 23% 61% ACA and Expansion