Medicaid Expansion in Mississippi Facts Sheet

A potential windfall of $1.573 billion per year for each of the next six years
In 2010 Congress enacted the Affordable Care Act. One part of this legislation mandated that all States expand their Medicaid to all persons whose incomes are under 138% of the federal poverty level, which is less than $15,415 per year for a single person and less than $31,809 for a family of four. In June 2012, the U.S. Supreme Court held that Medicaid Expansion could not be a mandate, making Medicaid Expansion optional for States. This Fact Sheet explains why Medicaid Expansion will be a major source of new federal funds and a significant driver of Mississippis economy. That is why it is vitally in Mississippis economic interest to opt to provide for Medicaid Expansion. Medicaid Expansion represents new federal dollars available to Mississippi. These otherwise unavailable federal dollars will create jobs, provide new state tax revenue and stimulate the state economy. Hospitals, nursing homes, medical supply firms, healthcare providers, and physicians will directly benefit. Medicaid Expansion funds will create a major ripple effect throughout Mississippis economy, spurring job creation and benefitting both the public and private sectors. 1. In Mississippi, there are about 293,000 people whose incomes are under 138% of the federal poverty level but who are not currently eligible for Medicaid for other reasons.1 These people will be Medicaid eligible after Mississippis Medicaid Expansion. 2. The Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicaid, has reminded States that while States have flexibility to start or stop the expansion, the applicable federal match rates [for the Medicaid Expansion] are tied by law [Congress] to specific calendar years; States will receive: 100 percent [federal financial assistance] in 2014, 2015 and 2016; 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent by 2020, remaining at that level thereafter.2 3. This means the federal government will pay for all the Medicaid costs for the 293,000 people under 138% of the federal poverty level in Mississippi between 2014 and 2016 -- the entire 100% of their Medicaid. Yes, it will be an enormous influx of federal funds with no Mississippi match. Between 2017 through 2019, the federal reimbursement will decrease a little, but never fall below 90 percent. 4. Contrast these federal reimbursements for Medicaid Expansion with what the federal government presently matches Mississippi for the 515,800 people who already receive Medicaid.3 The present federal reimbursement rate is only 74.2% and the Mississippi pays remaining 25.8,4 as compared to the 90 100% federal reimbursement rate for Medicaid Expansion! 5. What if Congress in a few years changes its mind or changes these percentages? Is Mississippi stuck with the expansion? CMS was asked if a State accepts the [federal] expansion [funds], can a state later drop out of the expansion program? CMS responded Yes. A State may choose whether and when to expand [coverage], and if a state covers the expansion group, it may decide later to drop the coverage.5 6. Is it administratively difficult or time-consuming for a State to enter the Medicaid Expansion program? As with other parts of a Medicaid State plan, its easy for States to sign up. A State need onl y notify CMS that it has amended its Medicaid State Plan to include persons whose incomes are under 138% of the federal poverty
1 2

http://www.urban.org/UploadedPDF/412607-Opting-Out-of-the-Medicaid-Expansion-Under-the-ACA.pdf http://cciio.cms.gov/resources/files/exchanges-faqs-12-10-2012.pdf at 11. 3 http:// www.statehealthfacts.org /profile.jsp 4 http://aspe.hhs.gov/health/fmap12.shtml 5 http://cciio.cms.gov/resources/files/exchanges-faqs-12-10-2012.pdf at 11.

level. This is a very simple process which can be done on-line or by letter. Similarly, if a state later chooses to discontinue coverage , it would submit another state plan amendment to CMS notifying CMS it no longer will cover the group under 138% of the federal poverty level.6 7. Lets take a six year view for Mississippi. From 2014 through 2019, the federal dollars for the Medicaid Expansion will come to about $9.865 billion. 7 Those federal dollars will cost Mississippi $429 million over the six years as a match. 8. Thats a 23 to 1 federal to state match! Is there any business in Mississippi which would not put up one dollar to receive 23 dollars? Its hard to imagine a business that would refuse such a rate of return, especially if the business could always drop out of the Medicaid Expansion without any penalty or loss. 9. It has been estimated that this $1.573 billion in new federal funds between 2014 and 2019 will only increase by 4.8% what Mississippi would have spent if it had not participated in this Medicaid Expansion. 8 Why would Mississippi NOT expand? 10. Over the next six years that is a net gain of $9.436 billion dollars. An average federal gain of $1.573 billion per year for Mississippi.9 If you are interested in economic development and can kick in $1.573 billion per year into the State for anything, whether highway construction, foster care and adoption assistance, or Medicaid, that $1.573 billion is going to help the State. 11. If Mississippi does not enroll the 293,000 low-income people in Medicaid Expansion, the State will actually lose federal reimbursements it had previously received. When the Affordable Care Act was passed, Congress assumed every State would expand coverage to families whose incomes are less than 138% of the federal poverty level. Congress also reduced special hospital payments that had been providing a disproportionate share of reimbursements for hospital services to the lowest income residents. Congress significantly reduced these special reimbursements because it assumed that the hospitals would be reimbursed under the regular Medicaid for serving the Medicaid Expansion population. 12. Therefore, if Mississippi does not agree to Medicaid Expansion, the State and hospitals will lose about $154 million in federal reimbursements per year10 without receiving in its place the stream of reimbursements that Medicaid Expansion would have provided! That means jobs, as well as health care services. Over the same six years, this loss of special hospital payments will amount to about $925 million. Any way one cuts it, this loss is far more than what Mississippi would spend if it agreed to the Medicaid Expansion. 13. It makes simple business sense to accept the $9.865 billion in Medicaid Expansion, because Mississippi and its hospitals will lose $925 million over the six years regardless. Why not come up with $429 million in state funds spread over 6 years to finance Medicaid Expansion which will then ensure and provide for the tremendous financial benefits to the hospitals? 14. One could also look at potential increases in revenue for the health care industry. For example, if Mississippi participates in the Medicaid Expansion, this will generate about $592,548,550 per year in new hospital revenues.11 That means new jobs at all economic levels. 15. Besides hospitals, other health-related industries will similarly benefit, including pharmaceutical, home health, therapy providers and others because there will be 293,000 new Medicaid recipients to use their services.
6 7

Id. http://www.kff.org/healthreform/upload/medicaid-coverage-and-spending-in-health-reform-national-and-state-by-state-results-for-adults-at-or-below-133-fpl.pdf Table 1 at 10. 8 Id. 9 This was computed by subtracting the six year State match of $429 million from the federal match of $9.865 billion and then dividing by six. 10 This represents the total Medicaid Inpatient Hospital Disproportionate Share Hospital (DSH) payments in 2010 multiplied by the federal match in # 4 above. 11 This amount is derived by computing Mississippis average current Medicaid recipients Medicaid hospital costs and multiplying that by the number of people who will be enrolled in Mississippis Medicaid Expansion.

Medicaid Expansion is Good Medicine and a win-win for Mississippi. Medicaid Expansion in Mississippi will increases both health care access and the amount of federal funds put into Mississippis economy.

Just Advocacy of Mississippi

www.justadvocacy.org

Mary Troupe, Director Phone: 601.941.9388 Fax: 601.939.7553 mary@justadvocacy.org