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today’s talk § § § § Background Politics of expansion Impact on People Impact on Government Impact on Business Impact on the Economy What you can do Final Thoughts
patient protection & affordable care act On March, 23, 2010, the Patient Protection and Affordable Care Act (ACA) was signed into law
expanding coverage under aca § Medicaid Expansion: § Will cover 250, 000 uninsured in SC § By 2014 states can extend Medicaid eligibility to all legal residents up to 138% of poverty and under 65 years old § 138% FPL is about $16, 000 for individual and $32, 500 for family of 4 § From 2014 -2016 the federal government will cover 100% of state costs § Health Insurance Exchange § Subsidies for legal residents 100% to 400% FPL § 100% FPL is $11, 450 for individual; $23, 550 for family of 4 § 400% FPL is $45, 960 for individual; $94, 200 for family of 4
supreme court § Ruled 5 -4 on June 28, 2012 to uphold law § Individual mandate, exchanges, insurance rules and other programs still stand § Medicaid expansion is now optional for each state
the political question: what will states do?
some background § § § January 1966 --only six states originally participated when the program launched: Hawaii, Illinois, Minnesota, North Dakota, Oklahoma, Pennsylvania 20 states signed on later that year 11 states joined in 1967 13 more states (southern) joined in 1968 -1972 Arizona last to join in 1982 Eventually all states participated in basic program and SCHIP (enacted in 1997)
who will benefit?
why are states reluctant? § Oppose Obama…… Oppose Obama. Care § States Rights § Administrative burden § 10 percent is still a big commitment § Fear the federal government will not keep its financial commitment § The “welcome mat” effect
who’s participating? • 26 states and DC participating • 14 states officially not participating • Primarily southern states including South Carolina • All but two also not participating in a state-run insurance exchange
changing their tune § Florida Gov. Rick Scott dropped his staunch opposition § "While the federal government is committed to paying 100 percent of the cost of new people in Medicaid, I cannot, in good conscience, deny the uninsured access to care. ” § Arizona Gov. Jan Brewer plans to push for expansion § “Weigh the evidence and do the math. With the realities facing us, taking advantage of this federal assistance is the strategic way to reduce Medicaid pressure on the State budget. We can prevent health care expenses from eroding core services such as education and public safety, and improve Arizona’s ability to compete in the years ahead. ”
governor kasich: reclaim our dollars § Video: § http: //youtu. be/i. Jgj. BIQ JFW 0
haley vowed not to expand medicaid
governor haley’s explanation Governor Haley believes this (ACA) expansion “will ultimately hurt the poor, hurt South Carolina, and hurt the country by doubling down on a system that already delivers some of the lowest value in the world. ” Haley argues there is already sufficient money in the system to support excellent health care for South Carolinians, but the process of delivering that care is wasteful.
how much will the medicaid expansion cost sc? Year State Administrative Cost Federal 2014 0 $19 m $706 m 2015 0 $19 m $1. 7 b 2016 0 $18 m $1. 8 b 2017 $46 m $18 m $1. 8 b 2018 $107 m $19 m $1. 8 b 2019 $132 m $19 m $1. 9 b 2020 $180 m $20 m $1. 9 b Totals $465 m $132 m $11. 7 b
health insurance matters
health insurance matters § State Medicaid expansions to low-income adults are associated with significant reductions in death and improvements in access, particularly in poor, rural areas. Mortality and Access to Care among Adults after State Medicaid Expansions, Harvard School of Public Health, NEJM, July 2012
the new coverage gap § Families of four making as much as $94, 000 a year will receive subsidies to help buy health insurance § Many poor, uninsured South Carolinians would receive no coverage assistance through ACA if SC opts out of the Medicaid expansion § Parents in low income families of four making between $11, 800 and $23, 500 a year § Childless adults making under $11, 000 a year § 13, 000 veterans and their spouses § 65, 000 uninsured citizens age 50 -64
the new coverage gap
the business of hospitals § Among largest employers in the state § Two of the top five employers in SC are hospitals § § Nearly 86, 500 employees $3. 8 billion in wages and salaries $1. 5 billion in total capital expenditures SC ranked by the federal government as one of the top five states making the most improvements in the quality and safety of health care.
the business of (your) hospital § § § (Among) largest employers in county # of employees $_____ in wages and salaries $_____ in total capital expenditures SC ranked by the federal government as one of the top five states making the most improvements in the quality and safety of health care.
statewide impact $2, 601, 505, 270 $11, 706, 700, 000 TOTAL CUTS WITH OR WITHOUT MEDICAID EXPANSION FROM 2014 -2020. The total amount our state would receive in federal funding from 2014 to 2020 if South Carolina decides to expand Medicaid.
hospital impact $ TOTAL CUTS WITH OR WITHOUT MEDICAID EXPANSION FROM 2014 -2020. $ The total amount (Your Hospital) would receive in federal funding from 2014 to 2020 if South Carolina decides to expand Medicaid.
impact on state and local government “We estimate that 3. 6 million fewer people would be insured, federal transfer payments to those states could fall by $8. 4 billion, and state spending on uncompensated care could increase by $1 billion in 2016… In terms of coverage, cost, and federal payments, states would do best to expand Medicaid. ” RAND Corporation, “For States That Opt Out Of Medicaid Expansion: 3. 6 Million Fewer Insured And $8. 4 Billion Less In Federal Payments, ” June 2013
impact on business “Pressures will be greatest in states that opt out of Medicaid expansion, but have a relatively high proportion of uninsured residents” Moody's, "Reduction of Medicaid & Medicare Disproportionate Share Hospital Payments a Looming Challenge for States and Hospitals. ” March 14, 2013
impact on business “Premium increases would be even higher among those states that do not expand Medicaid. Premium increases would be borne by nonsubsidized purchasers and by the federal government… Exchange premiums also may increase…” American Academy of Actuaries, “Implications of Medicaid Expansion Decisions on Private Coverage” September 2012
impact on business The average individual market and exchange premium will be $120 higher annually if SC does not expand Medicaid. The Society of Actuaries, “Exposure Draft: Cost of the Future Newly Insured under the Affordable Care Act” December 2012
impact on business Not expanding Medicaid could expose SC employers to $30 to $46 million in annual ACA shared responsibility payments. Jackson Hewitt, “The Supreme Court’s ACA Decision and Its Hidden Surprise for Employers: Without Medicaid Expansion, Employers Face Higher Tax Penalties Under ACA” March 2013
economic impact in sc
other economic impact studies “Medicaid expansion saves state $372 million. ” “Could save hundreds of millions over a decade. ” “The smart decision for Maryland. ” Arkansas Michigan Maryland “Rejection leaves people uninsured. ” “Generate at least $700 million in new economic activity every year in Nebraska, which could finance over 10, 000 jobs each year through 2020. ” “Generated total business spending of almost $11. 2 billion throughout the state of Oklahoma. ” Mississippi Nebraska Oklahoma “State costs of implementing “Only one rational choice. ” Texas “Uncompensated care would be reduced by over 22 percent. ” Tennessee ACA's Medicaid expansion would be modest compared to increases in federal funds; some states would see net savings” Kaiser Foundation
usc economic impact report § SCDHHS estimates $11. 2 billion in new federal funding will be generated between 2014 and 2020 due to newly eligible enrollees. § By 2020, the annual economic impact will total $3. 3 billion in annual economic output, nearly 44, 000 jobs, and approximately $1. 5 billion in labor income. § This will translate into additional spending, leading to increases in SC general funds totaling $105. 6 million by 2020.
usc economic impact report § This increased tax revenue will completely offset the required state costs over the first seven years and generate a $9 million net surplus. § From 2020 forward after the federal match rate caps at $9 federal to every $1 state, new tax dollars will generate enough to cover 53% of the state required Medicaid match.
local economic impact Jobs County: Total: Income Taxes Generated
annual fiscal impact Year Required State Match State Administrative Costs State Tax Revenue Generated Net Cost to South Carolina 2014 $0 $27. 6 m $45. 6 m -$18. 0 m 2015 $0 $28. 2 m $94 m -$65. 8 m 2016 $0 $25. 5 m $96. 8 m -$71. 3 m 2017 $44. 1 m $26. 4 m $98. 7 m -$28. 2 m 2018 $101. 5 m $27. 3 m $99. 9 m $28. 8 m 2019 $125. 3 m $28. 3 m $103. 3 m $50. 2 m 2020 $171. 3 m $29. 3 m $105. 7 m $94. 9 m Totals $442. 2 m $192. 6 m $644. 1 m -$9. 3 m
medicaid expansion: a good roi § SC has invested millions to attract BMW and Boeing. § SC has invested countless state dollars to draw down federal highway funds and funds to deepen the Port of Charleston. § Why is it any different for healthcare? § An investment in Medicaid will: § improve access to health care for low-income workers § make businesses more competitive § and generate a 9 -1 match over the long haul
what you can do? § Communicate with legislators § Engage local chambers of commerce, businesses and civic organizations § Write letters to editor § Join the South Carolina Hospital Association’s Grassroots Program: www. schalead. org § Sign Petition: www. remedysc. com
legislative effort for expansion § Ultimate decision will be made through the legislative budgetary process § Every legislator is important § 2/3 to override a veto
key messages on medicaid expansion § If we don’t act now and expand Medicaid, South Carolinians’ dollars will be sent to other states that are expanding Medicaid. This plan keeps your dollars at home in South Carolina. § An additional 250, 000 uninsured South Carolinians will gain insurance coverage under this expansion, easing the burden on rural hospitals. § Refusing Medicaid expansion means that South Carolina businesses and insured accept a higher burden of cost for caring for the uninsured. § Medicaid expansion will help pay for itself.
despite concerns, these facts remain: § SC hospitals will continue to care for uninsured patients; federal law requires them to do so. § The cost of that care must be paid by someone, and there are two options: § We can let the other states help pay 90% of it (they are offering to do so through Medicaid), or § We can absorb 100% of the costs within our borders. Which strategy will make SC more competitive?