Charles Gaba pointed out an interesting article on Pennsylvania’s conversion of the Healthy PA Medicaid expansion –that could not be called a Medicaid expansion — to a straight up Medicaid expansion. The state projects that embracing Medicaid expansion will save the state a massive amount of money to cover the same population.
According to Sec. Dallas, 440,000 Pennsylvanians are enrolled in Medicaid expansion insurance plans with the last group of enrollees coming out of Healthy PA’s primary coverage options into Medicaid expansion.
“With that last group of folks moving over, the Medicaid expansion is now complete,” Sec. Dallas told reporters.
He added with the full transition now complete, Pennsylvania is eligible for more federal funding and will realize a savings of $626 million from people moving off of state-funded care to fully federally funded Medicaid expansion.
How does that happen?
There are two major mechanisms at play. Legacy Medicaid had bare bone coverage requirements. Legacy Medicaid required coverage for very poor children, the disabled, expectant mothers and a few other very small populations. States had the option to expand eligibility using state funds for working adults and other non-required populations. Pennsylvania, like other Northeastern states, tends to have a better safety net than the bare bones required by the Federal government. It had expanded Medicaid to some working adult populations before PPACA was ever a glimmer in a wonk’s eye.
Legacy Medicaid has a fairly complicated pay split. The Federal government usually pays between 50% and 74% of the Legacy Medicaid costs. States pick up the rest. The federal contribution is based on relative income of the various states. Poorer states get a larger Federal Medicaid match rate. Medicaid expansion currently is 100% picked up by the Feds, and in the out years 90% of the cost will be picked up by the Feds.
State funded Medicaid programs that are not part of the bare bones requirements are an area of savings if those people can be administratively transferred to Medicaid Expansion payment buckets. From a patient point of view, nothing changes besides perhaps a new ID card. From the back end point of view, the state goes from paying 40% or 50% of the cost of care to 0% of the care in year 1 to 10% of the cost of care in Year 3. This is a massive state budget savings. It is a savings that is far more likely to occur in Northeastern and Blue states than it is to happen in states of the former Confederacy as there are far fewer Medicaid receiving adults in the South who are eligible for this type of switch.
If Healthy PA continued instead of being scrapped and replaced by Traditional Expansion, most of those savings would have been realized. It is not a net new source of savings for the state of Pennsylvania, just a re-allocation of where the savings are coming from.
The second source of significant savings is Pennsylvania specific. From my understanding of the Healthy PA system, the state had established a parrallel regulatory universe for Healthy PA. I spoke with a former co-worker who moved to Pennsylvania and works at an insurer there, and she said the Healthy PA system was a mirror of traditional Medicaid reporting with a new header attached to all documentation. The state had to hire several hundred new employees to manage the Healthy PA back-end. Rolling Healthy PA’s regulatory back-end into pre-exisiting Medicaid system will significantly reduce administrative complexity and costs.
This leads to a third, and Pennsylvania specific point of savings in the out years. Healthy PA had higher capitation rates than Medicaid expansion as providers were expected to be paid more by the insurance companies. Medicaid Expansion pays a lower rate to insurers and providers. In 2015/2016, that is meaningless from a state perspective as the Feds are paying for everything. In 2019, it matters as the state will pay 10% on a lower base amount.
Most states won’t see these last two sets of savings as most states that choose to expand Medicaid won’t re-invent the wheel like Pennsyvlania did.But these savings should be real and significant.
Marmot
Whoa. What?
rikyrah
it’s nice that you bring forth logical points like this. But, without a Democratic Governor, they wouldn’t care about the financial savings. they don’t care about the expansion of Medicaid as a moral thing- helping those in need. they don’t care about the financial benefit either.
they are just evil.
Randy P
@rikyrah: We got a Democratic governor this year, Tom Wolf.
benw
Just expand Medicare already, you stupid states!
Randy P
@Randy P: Just checked the governor’s website. Mr. Wolf is listing the Medicaid expansion as one of the key accomplishments of his first days in office.
MomSense
@benw:
It really is stupid not to expand Medicaid. It’s also cruel which is what our stupid governors like.
Jado
“…most states that choose to expand Medicaid won’t re-invent the wheel like Pennsyvlania did…”
MOST states won’t turn themselves into pretzels trying to get the monetary savings while not crediting the Democratically-implemented ACA. They are not capable of separating politics from ANYTHING
There are completely gone, transformed into the keymaster/gatekeeper dog-beasts
There is no Dana, only ZUUL.
Redshift
@MomSense: Or in the case of Virginia, our stupid state legislature.
Benw
@MomSense: and the Roberts court enabled them, because States Rights (TM) means being allowed to let people suffer, or something.
Richard Mayhew
@Marmot:
Pennsylvania’s former Republican governor wanted to expand Medicaid. However he did not want to call it a Medicaid expansion. He got a waiver from CMS for expanded eligibility up to 138% FPL where the new money went to “Private Care Organizations” (PCO) that received a capitated/risk adjusted payment from the state to provide health care for people who were now eligible for expanded Medicaid eligibitly through the ACA. The PCOs were overwhelmingly the same entities that also provide Medicaid Managed Care through Medicaid Care Organizations (MCOs) but they had to submit new contracts, new bids, and new networks (all 99% similar to their exisiting Medicaid networks). This was Healthy PA for relatively healthy people. Sick people who had previously earned too much to qualify for Medicaid but made under 138% FPL were shunted to traditional Medicaid (managed care).
When Wolfe won, he scrapped Healthy PA and its associated waiver and made it a straight up Medicaid expansion.
Richard Mayhew
@benw: States have the option to expand Medicaid.
Medicare expansion is a federal decision and that ain’t going to happen any time soon.
MomSense
@Redshift: @Benw:
No shortage of stupid and/or cruel Republicans.
benw
@Richard Mayhew: You are correct. I meant Medicaid and typed Medicare. Read what I mean, not what I write!
cosima
What are the implications of the recent ruling re: the ACA funds approved by President Obama, rather than Congress (if I read the one article correctly)?
Marmot
@Richard Mayhew: Oh, I see. This part:
That part is parenthetical. Sure, I’m pedantic. Granted. But if you set that part off with dashes and use “which” in place of “that,” it’s a little clearer. More so if you specify who won’t call it an expansion.
Thanks for the interesting post, though. The crrrrrazy idea that Medicaid expansion is evil — it’s crazy.
EDIT: Removed a comma to hide the fact that I’m not perfect either.
Richard Mayhew
@Marmot: fixed —- and what would Balloon Juice be without pedants — a far less interesting place
Richard Mayhew
@cosima: Who knows, as it is highly likely that the DC Court of Appeals slaps the district court down as the standing doctrine strongly suggests that the House as a body does not have standing nor do the courts want to intervent in a political food fight. The House has plenty of tools to exert its will (up to and including impeachment, but more prosaically, the power to write an explicit law to define what they believe current law says).
rikyrah
@Randy P:
I know you got a Dem Governor, which is the only reason Medicaid got expanded.
jayjaybear
Healthy PA was a Hail Mary pass on Corbett’s part, because his numbers were tanking about a year before the election and he wanted to find SOMETHING to bring them up without actually going all “socialist”. The public-private handoff was crap (speaking as someone who works with the PA welfare structure).
Thoughtful Today
[sigh]
Real health care savings would be eliminating the for-profit insurance system we have that still fails to provide health care for everyone and replace it with a Single Payer system.
We also need to be more tightly regulating “non profits”, if you’ve paid attention to the “non profit” scandal at Goodwill Inc., when someone tries using “non profit” status to shield themselves from criticism, assume they’re selling you something at a premium.