medicaid expansion in sc
today’s talk






Background
Politics of expansion
Impact on People
Impact on Business
Impact on the Economy
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
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?
who will benefit?
who’s participating?
• 25 states and DC
moving toward
Expansion
• 4 considering
• 21 states not
expanding
• Many southern
states including
South Carolina
• Most also not
participating in a
state-run
insurance
marketplace
how much will the medicaid expansion cost sc?
Year
State
State
Administrative
Cost
Federal
2014
0
$19m
$706m
2015
0
$19m
$1.7b
2016
0
$18m
$1.8b
2017
$46m
$18m
$1.8b
2018
$107m
$19m
$1.8b
2019
$132m
$19m
$1.9b
2020
$180m
$20m
$1.9b
Totals
$465m
$132m
$11.7b
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
 51,500 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.
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.
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
“Hospitals and healthcare systems
operating in states that do not expand
Medicaid coverage under the ACA will face
greater financial challenges and rating
pressure compared to hospitals and health
systems in states that expand Medicaid
coverage”
Fitch Ratings “Adverse Expansion:
Hospitals, States, and Medicaid”
October 28, 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
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.
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
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.
 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?