Mission:
Joy Smolnisky, Director
605-367-9667
To promote responsible and
equitable fiscal policies
through research and
education
808 N. West Ave., Sioux Falls, SD
joys@sdbudgetandpolicyproject.org
The Affordable Care Act
(ACA) in South Dakota
•
•
•
•
•
Concepts
Coverage
Costs
Choices
Consequences
How will ACA affect South Dakotans’
access to and cost of health insurance?
Federal law includes:
Medicaid
Expansion
1. Coverage guarantees
2. Insurance exchanges
3. Federal tax credits to pay
for insurance
4. Individual mandate
5. Funding provisions
regardless of
state decision
to expand
Medicaid
Coverage Guarantees
• Young adults can stay on parents plan
until age 26 (2010)
• Eliminates life-time limits on coverage
(2010)
• Guaranteed availability of insurance
• Minimum medical loss ratio for insurers
state-based American health
benefits exchange
1. “essential health benefits” packages
2. Four categories of plans
3. Limited annual cost-sharing
How will affect South Dakotans’ access
to and cost of health insurance?
Federal law includes:
1. Coverage guarantees
2. Insurance exchanges
3. Federal tax credits
to pay for insurance
regardless of
state decision
to expand
Medicaid
FEDERAL TAX CREDITS
92,800 South Dakotans* will be eligible for
Premium Subsidies
*Data Source: Research using Lewin Group economic models:
http://www.familiesusa.org/assets/pdfs/health-reform/premium-taxcredits/South-Dakota.pdf
FEDERAL TAX CREDITS – Cost Sharing
1/3 of out-of-pocket cap
1/2 of out-of-pocket cap
2/3 of out-of-pocket cap
Small Business Tax Credits
2010 to 2013:
35% credit / 25% NFP
2014 and after
50% credit / 35% NFP
http://www.irs.gov/uac/Small-Business-HealthCare-Tax-Credit-for-Small-Employers
Dollars (in millions) available to help
South Dakotans pay
health insurance premiums
in 2014
Federal Spending on Exchange Subsidies in SD,
2014-2019
Million $ in
South
Dakota
Premium
Subsidies
Cost
Sharing
Subsidies
Total
876
$ 876
$ 106
$ 983
Source: Urban Institute
Funding mechanisms
2010
• Penalty tax on hospitals without financial
assistance policies
• 10% tax on indoor tanning services
2011
• Changes to tax free savings accounts
2012
• New annual fees on drug manufacturing sector
2013
• New limits on itemized medical deductions &
flexible spending accounts ($2,500/yr)
• Medicare Tax increase (individual incomes over
$200,000/families over $250,000)
• Tax on Medical Devices (2.3%)
• Eliminates tax-deduction for employers
receiving Medicaid retiree drug subsidy
2014 Employer requirements
2018 Excise tax on “cadillac” employer provided
health plans
How will ACA affect South Dakotans’
access to and cost of health insurance?
Federal law includes:
Medicaid
Expansion
1. Coverage guarantees
2. Insurance exchanges
3. Federal tax credits to pay
for insurance
4. Individual mandate
5. Funding provisions
regardless of
state decision
to expand
Medicaid
How does this decision affect
healthcare in South Dakota?
Current Medicaid eligibility in SD
as % of the FPL (federal poverty
level)
200%
138% FPL
133%
100% FPL
52%
0%
Children
Pregnant Women
Parents
Childless Adults
Medicaid Expansion Bridges the Gap
30,000
uninsured
South
Dakotans
49,000 uninsured South Dakotans
below 138% federal poverty level
9,000
Current eligibles less
than 138% FPL
18%
30,000 new eligibles
less than 100% FPL
61%
21%
10,000 new eligibles
100% to 138% FPL
Medicaid
Expansion
FMAP
(federal share)
for newly
eligible
parents and
childless
adults
Another concern….
1. Will Federal Government continue
commitment to 90% FMAP rate after
2020 for Medicaid Expansion?
How much will Medicaid
Expansion cost South Dakota?
Cost projections are
based on assumptions
•
•
•
•
•
Projected eligibles
Participation rates
Crowd-out rate
woodwork effect
Per enrollee cost
How much will Medicaid
Expansion cost South Dakota the first 6 years?
Governor – $99.7 million
• 5.5% increase in state Medicaid costs 2014-19
• 48,564 new eligibles from expansion & 5,982
existing eligibles
Urban Institute - $112 million
Kaiser: 1.1% increased state spending
Uncompensated care savings estimate change
cost to a range of: $15 million total expense to
$82 million in state government savings
after 2019 - ballpark calculation:
10
%
X
X
48,564
newly
eligible
$4,264
per
person
State cost for care:
48,564 x $4,264 x 10% =
90
%
State
share of
cost
$20.7 million
Adding administrative costs:
State cost for care*:
48,564 x $4,264 x 10% =
$20.7 million
State cost for administration:
48,564 x 2.5% =
$ 5.2 million
Annual SD cost* estimate
after 2019 =
$25.9 million
*based on FY11 cost per eligible - calculations by SD B&PP
HOW MUCH IS $26 million*?
• 8.6% of FY12 state spending on Medicaid
to increase coverage by 42%
• $533 per year per person newly enrolled
• $31.41 per year per SD resident in new
state spending
*based on FY11 cost per eligible - calculations by SD B&PP
Medicaid expansion would cover
additional low-income non-elderly
South Dakotans
200%
138% FPL
133%
100% FPL
52%
0%
Children
Pregnant Women
Parents
Childless Adults
200%
without Medicaid expansion lowincome non-elderly South
Dakotans are left out of health
care reform
138% FPL
133%
100% FPL
52%
0%
Children
Pregnant Women
Parents
Childless Adults
Medicaid Expansion Bridges the Gap
92,800
30,000
uninsured
South
Dakotans