Kathy H. Kliebert

Secretary

Louisiana and the Affordable Care Act

October 8, 2013

Today’s Discussion

• Louisiana’s Perspective on the ACA’s Impact to• Medicaid Expansion• Health Insurance

Marketplace• ACA Implementation• Redefining the Safety Net

System• DHH Business Plan

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ACA’s Impact on Louisiana: (Medicaid Expansion)

Expansion – Risky Business• As of Louisiana’s most recent analysis, 10-year impact

figures range from $490 million in savings to $1.64 billion in new state costs.

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37 states would have Medicaid populations (as a percentage of

state residents) at or below where Louisiana is today (29%), according

to Kaiser figures.

According to Kaiser projections, La. would have the second highest percentage of its population on Medicaid if all states expanded – 39%.

Expansions Not Created Equal

New M

exico

Califo

rnia

*

Miss

issip

pi

Distric

t of C

olum

bia*

New Y

ork*

Tenn

esse

e

Georg

ia*

Delaw

are

Kent

ucky

Oklah

oma*

Ohio

Indi

ana

Texa

s

Flor

ida*

Rhode

Isla

nd*

Alask

a

Mon

tana

Penn

sylvan

ia*

Idah

o*

Nebra

ska

Wyo

min

g*

Min

neso

ta*

Color

ado*

New Je

rsey

Virgin

ia*

New H

amps

hire

*0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Medicaid Population Today Medicaid Population in 2022 - Expanded

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Expansion: Not all Uninsured

Year 1:

467K new enrollees

= 10,000 people

Almost 260,000 would have been newly eligible individuals that were previously uninsuredMore than 20,000 would have been individuals currently eligible but not enrolledNearly 187,000 would have come from private insurance rolls

Louisiana Medicaid under ACA

ACA’s Impact on Louisiana: (Health Insurance Marketplace)

Consumer Impact• Biggest impact from increased costs as employers pass along premium

increases linked to new insurance rules like:

• Premiums can only vary by family size, geography, tobacco use, and age

• Age variance limited by new rules – largest impact to young healthy people

• Kids can remain on parents policies until age 26

• No denials for pre-existing conditions, and

• A transitional risk adjustment fee that will cost $63 per plan participant in the first year.

• If an individual is not covered by “minimum essential” health care coverage, they face an individual mandate tax.

• AHIP/LAHP study estimates that ACA premium tax alone will force policyholders in La. to pay over $2,000 more for single coverage and over $4,500 more for family coverage over the next ten years.

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The Employer Mandate• Treasury announced one-year delay – signaling major concerns

with fall-out.• Now, beginning in 2015, large employers (50+ FTEs) will be

mandated to offer affordable coverage to full-time employees or face significant monetary penalties.

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Pushing the “train wreck” further down the tracks?

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Source: New York Times Economix

The current “50 Employee” Cliff

– will be exacerbated by

provisions of ACA

• The cost to go from the 49th to 50th FTE is $40,000 for business that do not offer “affordable” coverage.

• This is a significant disincentive for small businesses to grow beyond this threshold.

Steepening the “50 Cliff”

Trickle Down to State Budgets?• Employer mandate will have largest impact to

employers with predominantly low-wage jobs, forcing them to pass costs on to customers.

• Major implication for state budgets: home and community-based service providers in Medicaid.• Low-wage direct-care jobs that often do not provide health

insurance today.

• Unlike other businesses, costs cannot be easily passed on to consumers, who in this case are often state Medicaid programs.

• Already increasing rate pressure for states to pay more.

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Provider Perspective• ACA will cause immediate changes and shifts in long-term market forces –

with implications for state budgets. • In the short run: • Revenue will shift from uncompensated care to insurance for some

individuals.• Health systems may not be better off in Expansion states as

individuals shift from private coverage to Medicaid – in Louisiana there are nearly 250,000 individuals who would either fall off private coverage or lose access to subsidized coverage on the exchange should Louisiana expand Medicaid.

• Pent up demand may overwhelm the system’s capacity to treat and serve.

• Over time:• Market forces will encourage consolidation and integration (e.g., ACO’s,

bundled payments) - Insurers and state policy makers will have to watch carefully as this activity may place upward pressure on rates.

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ACA Implementation

No Expansion + No Exchange ≠ No Work

• Even given a decision to not expand Medicaid or established a state-based Exchange, states still face significant requirements and mandates related to ACA. For example, Louisiana (and other states):

• Must convert current income standards to the new MAGI standard for determining Medicaid eligibility.

• This will require extensive staff training and modifications to the Eligibility system and external interfaces.

• Created new interface to communicate with the Federally Facilitated Exchange to share applicant account data for October 1, 2013.

• DHH is had to retrofit existing systems and created new functionality to ensure real-time eligibility decisions.

• Developed a new “intuitive” single streamlined online application as defined by CMS for October 1, 2013.

• New online application must provide for real time eligibility decisions by January 1, 2014.

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• Enrollment on the Marketplace has begun• Louisiana will have a federally facilitated marketplace,

but still many unknowns• Continual delays of key provisions challenge

implementation• Uncertainties regarding outreach efforts, information

and confusion will have impacts on all of us• Despite the uncertainties, DHH has been able to make

the necessary changes to Medicaid for the October 1st deadline and will continue to make these changes for the January 1st deadline.

ACA Implementation

Redefining the Safety Net System

• Reduction in FMAP funding posed a challenge.• Opportunity for reform.• Key strategies:• Local community partnerships.• New models of delivery.• Focus on strengthening graduate medical education.

Redefining the LSU Health System

• Baton Rouge • Earl K. Long Medical Center with Our Lady of the Lake Medical Center and Woman’s Hospital

• Bogalusa• Bogalusa Medical Center with St. Elizabeth (Our Lady of the Angels) FMOL

• New Orleans• Interim LSU Hospital and University Medical Center with Louisiana Children’s Medical Center

• Houma• Leonard J. Chabert Hospital with Ochsner Health System and Terrebonne General Medical Center

• Lake Charles• Walter O. Moss Medical Center with Lake Charles Memorial Hospital and West Calcasieu Cameron

Hospital• Lafayette

• University Medical Center (University Health Center) with Lafayette General• Shreveport/Monroe

• LSU Shreveport and EA Conway with the Biomedical Research Foundation• Alexandria

• Huey P. Long with Rapides Medical Center and CHRISTUS St. Francis Cabrini Hospital

Establishing Partnerships

DHH Business Plan

Highlights transformational priorities in three main themes:• Building Foundational Change for Better

Health Outcomes• Promoting Independence through Community

Based Care• Managing Smarter for Better Performance

DHH’s Big Bets and Business Plan

Questions?

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