Warm Southern Breeze

"… there is no such thing as nothing."

UPDATED: If #ALpolitics Would #ExpandMedicaidNow, They Could CUT Medicaid Co$t$ More Than 50%

Posted by Warm Southern Breeze on Thursday, August 6, 2015

UPDATE: Tuesday, 11 August 2015
CORRECTION ADDENDUM

In my first & earlier calculations, I inadvertently overlooked multiplying the Annual Medicaid Spending in Alabama figure (which is a TOTAL of $5,241,269,869) by 70%, which would represent the portion paid for by the Federal government. Alabama’s 30% share of that figure (the share paid for by the state) would be $1,572,380,960.70. It would also be reasonable to expect that Expanding Medicaid in Alabama to 138% of the Federal Poverty Level would increase total economic activity (through Medicaid spending) in the state at least 38%. So to Expand Medicaid, the baseline figure for TOTAL Medicaid spending (combined Federal and State funds) would approximate $7,232,952,419. According to the provisions of the law, Alabama’s sharing portion (if Governor Bentley chose to Expand Medicaid) would still be 2016-100%; 2017-5%; 2018-6%; 2019-7%; 2020 and beyond-10%. The corrections to the figures herein are dollar amounts only (based on the $7,232,952,419 total expanded figure), not the %ages. Data & figures are now also shown in table format.

Folks, it may (or may not) surprise you to know a sampling of the collective thoughts of our wrong-wing friends, and relatives on matters political in Alabama, especially as they pertain to Medicaid.

Here’s a verbatim excerpted sampling of what I came across today.

• No one want increased entitlements. Too much waste and abuse. get a job folks. no to medicaid
• Medicaid is a lifestyle
• scare tactic. nursing homes overcharge. working people of Alabama are tired of taking care of lazy people
• ask any hospital administrator or physician in private practice. Medicaid devalues services. Reject medicaid

I dare say, MOST are clueless about the genuinely tangible economic and public health benefits Medicaid provides to this state, and the revenue and jobs it creates. All they hear are the wails and moans of representatives and/or senators – mostly of whom, if not exclusively, are Republican.

Where does Alabama's Medicaid money come from? Where does it go?

Where does Alabama’s Medicaid money come from?
Where does it go?
Source: Alabama Medicaid Agency Annual Report – FY 2012

Medicaid is a Federal/State matching/sharing program which provides (pays for) healthcare services for the impoverished wherein states pay a minority matching portion, while the Federal Government through CMS (Centers for Medicare and Medicaid Services) pays the majority portion. Within reasonable guidelines, the states have broad discretion and liberty to operate Medicaid according to the way they see fit, and the needs of the residents they serve. There are, however, certain minimums standards to which every state must adhere.

Under the provisions of the OLD law, the states that do NOT Expand Medicaid pay a higher %age rate for their services than they would if they were to Expand Medicaid to provide services to those whom are at 138% of the Federal Poverty guidelines – which is what the PPACA provides. The PPACA is the Patient Protection and Affordable Care Act- though it’s more often called the ACA “Affordable Care Act,” and colloquially referred to as “ObamaCare.”

Under the provisions of the PPACA, states that choose to Expand Medicaid will have 100% of those costs paid-for by the CMS beginning 2014, until 2016. The incentive for expansion is based upon an increased matching %age rate paid for by CMS, beginning with 100%, then being gradually reduced to 90% over a period of years.

95% – 2017
94% – 2018
93% – 2019
90 % – 2020 & beyond

Alabama is presently operating Medicaid under the provisions of the OLD law, in which its matching %age portion (the %age it pays) approximates 30%.
http://kff.org/medicaid/state-indicator/federalstate-share-of-spending/

FYI, “The Federal Medical Assistance Percentages (FMAPs) are used in determining the amount of Federal matching funds for State expenditures for assistance payments for certain social services, and State medical and medical insurance expenditures. The Social Security Act requires the Secretary of Health and Human Services to calculate and publish the FMAPs each year.”

The 2015 FMAP rates may be found in the Federal Register here:
http://aspe.hhs.gov/health/reports/2015/FMAP2016/fmap16.pdf

According to a report issued by the AL Medicaid Agency, as of the date of publication, there were 1,049,711 Medicaid eligible individuals in Alabama December 2014.
http://medicaid.alabama.gov/documents/2.0_Newsroom/2.6_Statistics/2.6_Eligibility_Stats/2.6_Eligibles_Demographics_by_MEG_12-2014.pdf

Now, let’s run some numbers.

According to the US Census Bureau, Alabama’s poverty rate is 18.6%.
http://quickfacts.census.gov/qfd/states/01000.html
They also estimate 4,849,377 people resided in AL in 2014.
That translates into at least 901,984 people living at, or below the FPL (Federal Poverty Level), in AL.

We must include children, which would account for the discrepancy between the two figures – the one by Alabama Medicaid Agency & the rough calculation.

The CMS states that in May 2015, there were 853,432 Total Medicaid & CHIP (Children’s Health Insurance Program) recipient/enrollees in Alabama.
http://www.medicaid.gov/medicaid-chip-program-information/by-state/alabama.html

Using AMA’s larger figure of 1,049,711 Medicaid-eligible individuals as of December 2014, to increase that 38% would add 398,890 people to the Medicaid roll, for a Grand Total of 1,448,600.

Medicaid spending in Alabama – the Grand Total of Federal and State money – is presently $5,241,269,869/year.
http://kff.org/medicaid/state-indicator/total-medicaid-spending/

If Alabama were to Expand Medicaid, that would – in effect – be at least a $1,572,380,960.7 revenue GAIN to the General Fund Budget for 2016, because CMS would pay 100% of ALL costs to Expand Medicaid.

Expansion to 138% of FPL would  approximate $7,232,952,419/yr to be SPENT IN ALABAMA.

Thereafter (from 2017), again, if Alabama were to Expand Medicaid, as a %age share, Alabama would pay 5% of the expansion costs which would approximate $361,647,620.95. (Much less than it’s now paying, which is $1,572,380,960.7.)

For 2018, 94% would be paid by CMS, and AL’s share would be 6%, using same/static figures, that would be $433,977,145.14.

For 2019, 93% would be paid by CMS, and AL’s share would be 7%, using same/static figures, that would be $506,306,669.33.

For 2020, 90% would be paid by CMS, and AL’s share would be 10%, using same/static figures, that would be $723,295,241.9.

I welcome everyone’s criticism of my work – please, do double check to see if I missed, overlooked, or miscalculated anything.

In my estimation, it’s quite plain to see that Expanding Medicaid in Alabama is not merely a cost-saving measure from a fiscal perspective, it’s also beneficial for entrepreneurship, jobs, and tax revenues of numerous variety and types associated with the same.

To summarize:

Under the provisions of the OLD law which Governor Bentley has chosen to follow, Alabama’s %age sharing portion of Medicaid costs is 30%, and the state presently spends approximately $1,572,380,960.7/year on Medicaid.

Expansion to 138% of FPL would approximate at least TOTAL Federal & State $7,232,952,419/yr.

2016 CMS pays 100% – at LEAST $7,232,952,419/yr.
AL saves at least $1,572,380,960.7 (based upon current expenditures) in 2016.

2017 CMS pays 95% of Expanded cost (approximately $7,232,952,419) = $6,871,304,798.05.
AL pays 5% of Expanded cost (approximately $7,232,952,419) = $361,647,620.95.

2018 CMS pays 94% of Expanded cost (using static figure $7,232,952,419) = $6,798,975,273.86.
AL pays 6% of Expanded cost (static figure $7,232,952,419) = $433,977,145.14.

2019 CMS pays 93% of Expanded cost (static figure $7,232,952,419) = $6,726,645,749.67.
AL pays 7% of Expanded cost (static figure $7,232,952,419) = $506,306,669.33.

2020 CMS pays 90% of Expanded cost (static figure $7,232,952,419) = $6,509,657,177.1.
AL pays 10% of Expanded cost (static figure $7,232,952,419) = $723,295,241.9

TOTAL AL would pay 2017-2020 (based upon static expansion figure) $2,025,226,677.32.

AL NOW PAYS $1,572,380,960.7/year on Medicaid.

A net increase of $452,845,716.62 over a 4-year period; or, $113,211,429.155/year for 4 years.

The TOTAL INCREASE in Economic Medical Spending is 38% over current levels. The TOTAL Economic Benefit to the state would be significantly more because of increased hiring, increased entrepreneurial activity, increased hospital & physician payments, decreased charity write-off costs, and much more.

In closing, this may be of some interest to note also, that States’ spending for healthcare varies widely.
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet.html

http://knowledgecenter.csg.org/kc/content/medicaid-spending

Spread Sheet of Current & Prospective Medicaid Costs in Alabama using TWO scenarios:1.) Current system in which the state pays a 30% sharing, and;2.) Prospective system in which Medicaid is EXPANDED.

Spread Sheet of Current & Prospective Medicaid Costs in Alabama using TWO scenarios:
1.) Current system in which the state pays a 30% sharing, and;
2.) Prospective system in which Medicaid is EXPANDED.
NOTE: This graphic contains the same information as the table below.

Alabama Medicaid Scenarios – Current & Prospective

Year

Current Cost
paid by AL

Current %
paid by AL

Prospective Cost
if
Medicaid Expanded

Prospective %
if
Medicaid Expanded

2015

$1,572,380,960.70

30

$0.00

0

2016

$1,572,380,960.70

30

$0.00

0

2017

$1,572,380,960.70

30

$361,647,620.95

5

2018

$1,572,380,960.70

30

$433,977,145.14

6

2019

$1,572,380,960.70

30

$506,306,669.33

7

2020

$1,572,380,960.70

30

$723,295,241.90

10

AVERAGE %age
per year

$9,434,285,764.20

30

$2,025,226,677.32

4.66666666666667

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2 Responses to “UPDATED: If #ALpolitics Would #ExpandMedicaidNow, They Could CUT Medicaid Co$t$ More Than 50%”

  1. Jo Ann Cummings said

    I’m a navigator and I wanted to be sure you understand the rules.

    Medicaid Expansion DOES NOT cover those people that the state is ALREADY covering. They will CONTINUE to have a cost of 30% (or whatever it is)

    Medicaid Expansion is ONLY for that portion of the population wedged between what AL already covers and those making up to 133% of poverty level. Estimates are that this about 190,000-250,000 NEW PATIENTS (slightly less than previously estimated) added to the existing rolls of over ONE Million Alabamians on Medicaid.

    This report by UAB on the Economic Benefits of Medicaid Expansion estimates that the added cost per patient (the 100% amount) is about $6000 each, so multiply that (on low side) by 200,000 patients (for simple math) and you get about $1.2Billion per year at 100% (2014-2016), and $1.14 Billion in Fed Funds (@95%) for 2017, and at least $1.08B (@90%) in 2020 and beyond. These are FED dollars we are ALREADY PAYING that we are NOT getting, but OTHER states are.

    There is an estimated 2.5% per year “management cost” to administer the program so it is NOT scot-free, even at 100% funding. That amount is $30M per year, and it is part of the reason legislators are BALKING at it. The Koch-Brother sponsored report from Troy University claims a MUCH HIGHER admin cost, and ignores ALL added GDP growth benefits.

    Here are the ACTUAL costs to the state, including that admin expense (assuming ALL of the patients enroll first year – which is impractical), based on an ave cost of $6000/patient, 200,000 total new patients:

    ……………………..Feds ………….AL
    2014, 15………$ 1200 M …..$30M (admin cost only) MISSED OPPORTUNITY
    2016 …………..$ 1200 M …..$30M (admin cost only)
    2017…………….. 1140 M …….90M (5%+admin)
    2018………………1128 M …..102M (6% + admin)
    2019………………1116 M …..114M (7% +admin)
    2020 & beyond 1080 M …..150M (10% +admin)

    When the $1.2 BILLION of funds comes into the state, it is going to go to hospitals, and pharmacies, doctors and laboratories, receptionists and medical supply agencies… All of the elements of the health care industry. More demand means MORE JOBS, which means MORE state TAXABLE INCOME, and more SALES TAXES generate when that money is spent. With 8-10,000 new jobs possible in the medical field alone, there are an additional 10-15,000 more INDIRECT jobs that also may be created as all that new Fed money is circulated, boosting the Alabama economy.

    Considering HOW MUCH MONEY the state GIVES AWAY in business incentives each year for a few hundred or maybe a thousand jobs, even if these ARE the costs we must pay, we are certainly GAINING enough jobs to be WORTH IT. Plus you are SAVING LIVES, improving the quality of life for MANY OTHERS, relieving mental and financial stress for low income families AND improving the productivity of these workers.

    Don’t forget that in the first years that this is implemented, the SICKEST, most EXPENSIVE patients (with untreated chronic conditions) are going to come in first, but with the Feds picking up the tab for care, that won’t matter. BUT, since Alabama has ALREADY missed the first two years of Medicaid Expansion, we will STILL see some of the most expensive cases whenever we start having to pay a share of the tab.

    HERE is the UAB Report on the Economics of Medicaid Expansion. EVEN IF they over-estimate the benefits a little, it is STILL going to provide healthcare for 200,000 more people.
    http://www.soph.uab.edu/files/faculty/mmorrisey/Becker-Morrisey%20Study%20of%20Alabama%20Medicaid%20Expansion%202012.pdf

    AND… if you want to have FEWER people NEED these services, then let’s bring in some REAL jobs, and raise the minimum wage to a LIVING WAGE (which would make folks eligible for the ACA Marketplace insurance program)

    http://blog.al.com/spotnews/2012/12/uab_study_alabama_would_benefi.html

    Like

    • Warm Southern Breeze said

      Thanks so much Jo Ann! These figures are SIGNIFICANT, and I appreciate your sharing them. One thing being completely overlooked is the unspoken “bet against Alabama” that the economy will not improve, that the state’s Gross Domestic Product will not increase, and that stagnation (deterioration) is inevitable. Being an optimist (though by no means the “rose colored glasses” type), I will ALWAYS bet on people to:
      1.) Do the right thing, and;
      2.) Exceed expectations.
      Of course, that doesn’t always occur, although it’s a far better unspoken proposition to expect the best from people, than it is to resign oneself and organization to failure.
      Thanks again!

      Like

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