Dec 18, 2016

Allison Neswood previously served as CCLP's Deputy Director of Strategic Priorities. She is an expert in public health insurance plans (Medicaid and CHP+), Aid to the Needy Disabled, immigrant access to services and health equity.

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Proposed changes to Medicaid would hurt Coloradans

by | Dec 18, 2016

Incoming White House and congressional leaders are reportedly planning to make deep cuts in federal funding for the Medicaid program which provides health care coverage for individuals and families with limited resources.

The first round of cuts would likely involve the repeal of federal funding for the Affordable Care Act’s (ACA) Medicaid expansion, which expanded Medicaid to cover low-income adults. The second round will likely limit the federal funding that supports traditional Medicaid – the portion of the Medicaid program that has served low-income children and people with disabilities since 1965.

Congressional leaders aim to have an ACA-repeal bill ready for the new President to sign immediately after he is inaugurated in January. Proposals to cut traditional Medicaid are expected to follow in the subsequent months. Those proposals, which include converting the federal Medicaid funding structure into a block grant or per capita cap, are expected to move quickly. That means it’s important for constituents to make their concerns known to their representatives right away. (Read the last paragraph of this posting to learn how to make your voice is heard by elected officials).

Background on Medicaid funding
Medicaid is a public health coverage program that is jointly funded by the states and the federal government. Medicaid spending is determined based on a fixed percentage of the overall costs of providing care to the eligible population. In Colorado, federal funding covers about half of the costs of providing care.

For the Medicaid-expansion population, federal funding covers 100 percent of the coverage costs until 2017. That federal share is set to decline by 5 percent by 2018 and by another 5 percent by 2020. However, the federal government will continue to cover 90 percent of the cost of the expansion after 2020.

Proposals to cut Medicaid
As mentioned earlier, the first congressional proposal would eliminate federal support for the Medicaid expansion under the ACA. In Colorado, the Medicaid expansion has provided coverage to more than 350,000 Coloradans. These are people who would not be able to afford health insurance in the private market. This coverage supports the health and financial security of workers and the stability of hospitals across the state. In addition, the expansion brought nearly $1.6 billion in federal funding into the state in its first two years. In economic terms, a Colorado Futures Center report found that the “Medicaid expansion … is already having and will continue to have a significant positive impact on the state’s economy” and has buoyed the state economy by expanding state GDP, growing employment and increasing annual household earnings.

The proposals to cut federal spending for traditional Medicaid are a bit more complex. Such proposals would end the flexible federal funding structure that allows federal Medicaid spending to respond to the changing costs of providing care — whether due to population growth, increases in health costs or emergencies or disasters. That structure would be replaced with a rigid block grant formula that would set base-year funding at current levels and grow funding annually based on the Consumer Price Index (or CPI). Meanwhile, the so-called “alternative” to block grants, the per capita cap proposals, would limit the amount of spending on each individual enrollee regardless of health status and allow the cap to grow based on CPI. Neither proposal takes into account that the rate of medical inflation is higher than what the CPI reflects. Both are equally bad in terms of undercutting the ability of the Medicaid program to provide health care to the population in need.

Block granting Medicaid will result in cuts because the formulas don’t reflect population growth. The proposal also ignores the increasing cost of providing medical care and doesn’t allow the federal Medicaid budget to expand when downturns in the economy or natural disasters create a surge in the number of people who are eligible for the program.

Per capita caps will allow federal funding to adjust with changes in the size of the eligible population. However, these caps will still result in significant cuts because they do not take into account the increasing costs of medical care or individual needs for services.

The 2016 block grant proposal from Rep. Tom Price, president-elect Trump’s nominee for Health and Human Services Secretary, would reduce the federal contribution to Medicaid by $1.5 trillion over ten years and shift that cost to the states or to low-income people. That is a $1.5 trillion cut for a program that already spends 18 percent less per Medicaid enrollee than is spent per enrollee in the private market, when you consider people with similar health status.

It’s not about flexibility
Block granting is not about flexibility. The Medicaid statute already has waiver provisions that give states a large amount of flexibility to innovate — provisions many states, including Colorado, have used.

More accurately, block granting is about reducing the federal contribution to Medicaid and shifting that financial responsibility to the states and/or to low-income people. Block grants — especially when coupled with the repeal of Medicaid expansion funding — will create enormous funding gaps that will put states in the position of substantially cutting benefits or substantially increasing state spending to maintain services.

In Colorado, block granting traditional Medicaid is expected to result in a significant reduction in federal Medicaid funding over 10 years. Medicaid provides prenatal care so that Colorado children are born healthy and ensures that people with disabilities and low-income seniors can access long-term care services. Over the past year, the Medicaid expansion provided care to more than 12,400 people with cancer, 30,200 people with diabetes and 103,000 people with mental health treatment needs. Cutting funding to the program affects our state, our rural communities, our hospitals, and our insurance rates as hospitals shift uncompensated care to the insured.

As I mentioned, the federal Medicaid laws allow states significant flexibility to constrain growth and design a program that suits the needs of their population. Colorado has taken advantage of that flexibility to serve more Coloradans and to spur health care innovation and improve the value of care. There is still work to do, but our current approach seeks to optimize savings by reducing actual health care costs rather than by reducing services or cutting eligibility.

Block grant proposals will put states in the uncomfortable position of either raising more money to fill in huge reductions in federal funding, or forcing them to make choices about reducing access to care. From a policy perspective, forcing states into this position lets the federal government off the hook under the guise of newfound “flexibility.”

Since we in Colorado already have that flexibility, let’s not be fooled by the terms of the proposed bargain from Congressional leaders and the White House. In short, it’s a terrible deal that would have long-term consequences for the health of too many people.

If you are concerned about how these proposed changes to Medicaid and the ACA would hurt Coloradans, please make sure your voice is heard by Gov. John Hickenlooper and Colorado’s Congressional delegation. Read this “call to action” for more details.

By Allison Neswood

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HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.