Medicaid Spending Trends A 50 State Study Kavita

Medicaid Spending Trends: A 50 -State Study Kavita Choudhry, MPP Governmental Research Association Annual Policy Conference August 5, 2014 www. pewtrusts. org/healthcarespending 0

Project Overview • Medicaid & CHIP State retiree health benefits State employee health benefits Mental health State Health Care Spending Substance abuse Prison health care 1 Objectives: – Cohesive picture of state health care spending – Help policymakers gain a better understanding of cost drivers in specific health care areas – Highlight practices that may contain costs while maintaining or improving health outcomes

Companion Report: Tracking Key Health Indicators Demographics & Uninsured • Uninsured rates • Poverty rate • % of residents over 65 Health Status • Overall health status • Rate of serious mental illness • Rate of substance abuse Vital Statistics • Life expectancy • Infant mortality • Low birth-weight babies Prevalence Prevention & Treatment 2 • Asthma • Smoking • Childhood immunizations • Hemoglobin A 1 c • Nursing home pressure sores Diabetes Obesity rates Mammography Appropriate surgical care

About Medicaid • Our country’s largest health insurance program • 66 million low-income Americans covered in 2010 • Total program cost (2012): $429 billion • Provides health insurance coverage for low income individuals • Children and parents • Elderly and individuals with disabilities • Jointly funded but state-run: • Federal dollars cover between 50% and 74% of expenditures 3

Annual Medicaid Spending Growth, 2000 to 2012 • Nationally, Medicaid spending grew 63% from 2000 to 2012—a compound annual growth rate of 4. 1%. 8. 6% 4 • This growth is on par with US overall health care spending which rose by 58%.

Percent of Residents Enrolled, 2010 • 21% of Americans had Medicaid coverage for at least a portion of 2010. • Medicaid enrollment is a key determinant of program spending. • Factors such as poverty rates, state decisions to expand eligibility, and the reach of private insurance coverage drive differences in Medicaid enrollment. 5

Trends in Health Insurance Coverage, 2000 to 2012 • Medicaid enrollment grew 50%, from 44 million to 66 million over the last decade Employersponsored • Uninsured grew 23%, from 36 million to 50 million over the same period Medicaid Medicare Uninsured Direct Purchase 6

Spending Person: Medicaid vs US overall health care, 2000 to 2010 Overall health care Medicaid • Spending per enrollee for Medicaid remained relatively stable, rising only 5% from 2000 to 2010. • Overall health care spending person grew 39% over the same period. 7

Not all Medicaid Enrollees Cost the Same, 2010 • Elderly and disabled individuals make up 24% of Medicaid enrollment and accrue 64% of Medicaid payments for services. 24% 64% 8

Elderly or Disabled Enrollees as a Percent of Medicaid Enrollment, 2010 38% • The composition of Medicaid enrollees varies dramatically by state and impacts per enrollee spending. 16% 9 • In 9 states, at least 30% of Medicaid enrollees are elderly or disabled.

State-funded Medicaid Spending as a Percent of Own Source Revenue, 2012 5% 26% 5% 10 • The states’ share of Medicaid expenditures was $181 billion in 2012, or 16% of states’ own-source revenues. • Variation across states is driven by factors affecting both Medicaid spending and own-source revenues.

The Share of State-Generated Revenues Spent on Medicaid Increased • State spending on Medicaid increased from 12 percent of states’ own-source revenues to 16 percent between 2000 and 2012. 11

Kavita Choudhry kchoudhry@pewtrusts. org 202 -540 -6521 www. pewtrusts. org/healthcarespending

Prison Health Care Spending State Employee Health Plan Spending Maria Schiff August 5, 2014 mschiff@pewtrusts. org 202 -540 -6822 www. pewtrusts. org/healthcarespending

Prison Health Care Spending Medicaid & CHIP State retiree health benefits State employee health benefits Mental health State Health Care Spending Substance abuse Prison health care

A legal standard for care

Topline Findings States’ correctional health care spending nationwide totaled $7. 7 billion in 2011, down from a peak of $8. 2 billion in fiscal 2009. * Spending increased in majority of states from fiscal 2007 to 2011. However, spending also peaked in most states prior to 2011. A similar trend occurred on a per-inmate basis. The share of prisoners 55 and older rose in all but two (HI & MS) of 42 states. *spending reported in 2011 dollars.

Total Prison Health Care Spending Grew 13% from 2007 to 2011 Spending peaked in a majority of states before 2011.

Per inmate spending on prison health care grew 10% over the last 5 years • From 2007 -2011 per-inmate health care spending rose in 39 states • Average per-inmate spending was $6, 047 in 2011. • For comparison, Medicaid national average was $6, 254 in 2010.

Key Cost Drivers Size of prison population Health status of inmates Age of inmates

Prison Populations Skyrocketed 677 Percent from 1971 to 2011 Notes: Annual figures prior to 1977 reflect the total number of sentenced prisoners in custody. Beginning in 1977, all figures reflect the jurisdictional population as reported in the Bureau of Justice Statistics’ “Prisoners” series. Sources: Sourcebook of Criminal Justice Statistics, University at Albany; US Department of Justice, Bureau of Justice Statistics

Recent downturn in prison population Primary driver in spending downturn Pew survey showed: Average daily prison population peaked in 2009 and then began to fall National downturn in prison population heavily influenced by California’s large downturn

Health status of inmates Higher incidence of chronic and infectious diseases, such as AIDS and hepatitis C, and mental illness. In 2010, roughly 65 percent had an alcohol or drug use disorder Seven times more likely than individuals in the community to have such a condition. 1/3 suffered from mental illness 1/4 had a co-occurring mental illness and substance use disorder National rate of hepatitis C among inmates was 17. 4 % in 2006. Rate in general population is 1%.

Older inmates More susceptible to chronic medical and mental conditions Dementia, impaired mobility, and loss of hearing and vision Experience the effects of age sooner Substance use disorder, inadequate preventive and primary care prior to incarceration, and stress Cost at least 2 -3 times as much as younger to treat inmates Necessitate increased staffing levels, more officer training, and special housing

The Number of Prisoners Age 55+ Increased by 204%, 1999 -2012

The Share of Older Inmates in State Prison Populations Hawaii and Mississippi did not experience increase in older prisoners during study period

States with older inmates tended to have higher per-inmate spending

Promising cost containment strategies Strategic use of telehealth. Effective management of outsourcing agreements. Enrolling eligible prisoners in Medicaid. Using medical or geriatric parole policies.

Enrolling eligible prisoners in Medicaid Qualifying services limited to inpatient care delivered outside of prison. Medicaid does not cover health care delivered inside prisons. States can obtain federal Medicaid reimbursement for inpatient health care provided outside of prison. States expanding Medicaid eligibility under the ACA likely to benefit most.

State Employee Health Plan Spending Medicaid & CHIP State retiree health benefits State employee health benefits Mental health State Health Care Spending Substance abuse Prison health care

State Employee Health Plan Spending • Report to be released Tuesday, August 12 th • Second largest state health care spending after state contribution to Medicaid • 100% financed by state dollars • Spending is determined by (among other things): – Plan design – Take up rate – Provider price and practice patterns – Composition of state workforce

State Health Care Spending Project State and Local Enrollees Private Sector Enrollees 57% female 51% female 25% age 55 -64 17% age 55 -64 Diabetes: 65. 9 patients per 1, 000 members Diabetes: 44. 4 patients per 1, 000 members Hypertension: 144. 3 patients per 1, 000 members Hypertension: 90. 5 patients per 1, 000 members Overweight: 10. 2 patients per 1, 000 members Overweight: 7. 9 patients per 1, 000 members Source: Truven Health Analytics

State Health Care Spending Project Advantages: – States have a preponderance of employees in one city and are often that city’s (and the state’s) largest employer. Can set performance standards, exert influence to reform care delivery and payment methodology – Possibility for locally based initiatives such as reference pricing, on site primary care clinics, etc. – Longer employee tenure (and state responsibility for retirement health care) means investing in health improvement, disease management, smoking cessation may bring more of a return than in private sector

Topline Findings • States spent $31 billion to insure 2. 7 million employees in 49 states in 2013. • Average PEPM (2013): $963 State: 84% Employee: 16% + $70 per month in cost-sharing • Most popular plan PEPM average (2013): $971 Source: Milliman Atlas of Public Employer Health Plans

Average Premiums PEPM by State - Range: $461 - $1, 465 Darker shades of green represent states with higher average premiums PEPM.

Continued • • Average actuarial value (2013): 92% (platinum level) 19 states offered at least one plan with a deductible of at least $1, 500 in 2013. – Only 4 percent of employees nationwide are enrolled in one • Adjusting plans for richness narrows the PEPM range, but much variation remains. • Other factors: provider prices and practice patterns, service utilization, age and health status, and breadth of network

Average Actuarial Value by State – Range: 83% - 98% Darker shades of green represent states with higher average actuarial values.

Average % of Premiums Paid by Employee – Single Coverage Range: 0% - 42% Darker shades of green represent states with higher average PEPMs.

Check Out Our Reports www. pewtrusts. org/healthcarespending Spending Reports & Data Visualizations • State Spending on Medicaid • Prison Health Care Spending • State Employee Health Plan Spending (August 12 th) • Tracking Key Health Indicators Related Issue Briefs • Combating Medicaid Fraud and Abuse • Managing Prison Health Care Spending • The Cadillac Tax (Late August) 38

Maria Schiff mschiff@pewtrusts. org 202 -540 -6822 www. pewtrusts. org/healthcarespending