Legislature(2019 - 2020)ADAMS ROOM 519
02/18/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Long-term Forecast of Mesa: Medicaid Enrollment and Spending in Alaska | |
| Recessed to the Call of the Chair: the Meeting Reconvened on Wednesday, February 19, 2020 at 10:00 A.m. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 18, 2020
1:36 p.m.
1:36:10 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Adam Wool
MEMBERS ABSENT
Representative Cathy Tilton
ALSO PRESENT
Adam Crum, Commissioner, Department of Health and Social
Services; Ted Helvoight Ph.D., Vice President, Evergreen
Economics.
PRESENT VIA TELECONFERENCE
None
SUMMARY
PRESENTATION: LONG-TERM FORECAST OF MESA: MEDICAID
ENROLLMENT AND SPENDING IN ALASKA
Co-Chair Foster reviewed the meeting for the day.
^PRESENTATION: LONG-TERM FORECAST OF MESA: MEDICAID
ENROLLMENT AND SPENDING IN ALASKA
1:36:57 PM
ADAM CRUM, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, introduced Dr. Helvoight. He indicated the
importance of the subject of Medicaid. He thought the
presentation would be very informative. The commissioner
provided some background information on Dr. Helvoight.
Evergreen Economics had been under contract with the
Department of Health and Social Services (DHSS) since 2011
when Dr. Helvoight co-founded Evergreen Economics. Prior,
the department contracted for his services through
ECONorthwest. He was responsible for preparing the Medicaid
Enrollment and Spending in Alaska Report (MESA). The report
was a 20-year forecast updated annually and was developed
based on more than 20 years of enrollment and claim level
data from DHSS.
Dr. Helvoight was the lead author of the first long-term
Alaska Medicaid forecast conducted by the Lewin Group in
2005 and presented to the legislature in 2006. Since then,
the department had engaged him to conduct annual updates of
the long-term Medicaid forecast and to develop short-term
forecasts that assisted DHSS with fiscal year planning and
budgeting. He also provided training and support to the
Medicaid budget group. He conducted numerous other analyses
for the department including the cost of eight chronic
conditions to the Alaska Medicaid Program, the potential
savings to the program from diabetes self-management, the
forecast of enrollment and spending on Medicaid expansion,
the trends in Alaska's senior population, and the
enrollment in programs and spending on services for
Alaska's seniors. He suggested that in looking towards the
future at Alaska's long-term budget issues, the topic of
Medicaid would need to be addressed together. He thanked
the committee.
1:39:32 PM
TED HELVOIGHT PH.D., VICE PRESIDENT, EVERGREEN ECONOMICS,
introduced the PowerPoint Presentation: "Long-Term Forecast
of MESA: Medicaid Enrollment and Spending in Alaska." He
began with slide 2 containing an outline of what he would
be discussing in the meeting. He explained that his report
was an update of his original study produced in 2006. He
invited members to ask questions during the presentation.
Dr. Helvoight turned to slide 3 regarding the background of
MESA. The forecast assumed that Medicaid, as it was
presently, would exist into the future. In the early
forecast he had no idea there would be the Affordable Care
Act (ACA) Medicaid expansion. He did not predict
recessions, policy changes, or changes to Federal Medical
Assistance Percentages (FMAP) rates. It assumed the program
existed today. The forecast would help the legislature and
department leadership to understand what spending and
enrollment would look like 20 years from the present day
given the programs currently in place. He asserted things
would change that Alaska could not control such as actions
of the federal government and population changes. The
department could control certain other things such as
services offered and eligibility requirements. The forecast
provided a benchmark against the future. The idea was to
provide a picture of what Medicaid would look like in the
future. It would help the legislature and the department
make the changes necessary to ensure that the spending
projections did not come true in many cases.
Dr. Helvoight continued that the forecast focused on
population demographics and rates of enrollment for
different groups such as men, women, children, the elderly,
the working, and the different regions of the state.
Utilization and intensity of Medicaid services and the
increase in prices of medical services were also a focus.
Dr. Helvoight reviewed some key terms used in his forecast
on slide 4. The slide was strictly for reference. He might
come back to it later.
Dr. Helvoight turned to the Mesa Modeling Approach on
slide 5. He started with the state's population determined
by the Department of Labor and Workforce Development. He
used the information pertaining to the regions of focus and
the demographic subcomponents. He also considered
enrollment for all of the different groups in the Medicaid
Program. He then looked at the utilization of services. The
Medicaid Program offered several different services. Since
the original forecast to the present day, segmenting the
services into 20 different categories, he considered the
individual service categories and individual-touched
services which had changed over time. The earliest years of
data he had were from 1997. He reported that on average the
typical Medicaid enrollee utilized fewer than three (2.7)
of the available services. Currently the number of services
was about 3.5 to 3.6 services. Individuals were touching
more services presently. In addition, the intensity of
Medicaid use had grown over time. He spoke of the elephant
in the room, price inflation. Price inflation was added to
create a spending forecast.
1:44:36 PM
Dr. Helvoight moved to slides 6 and 7 to discuss recent
historical trends. He highlighted that from FY 12 through
FY 19 Medicaid enrollment had grown by 51 percent. The
percent change in the number of recipients had grown
slightly slower. The difference between the two was that a
recipient was a Medicaid enrollee that received services
and a Medicaid enrollee was anyone enrolled in Medicaid.
Federal spending grew very rapidly and had almost doubled
over the period at 93 percent while general fund (GF)
spending increased by less than 6 percent over the same
timeframe.
Representative Sullivan-Leonard asked if Dr. Helvoight had
the data to show why the enrollment had increased by 51
percent. She wondered if the recipients had options other
than Medicaid.
Dr. Helvoight responded that the Senate Finance Committee
had a similar question. More specifically, the question was
about how much of the increase resulted from expansion,
changes in the economy, and the effect of the Affordable
Care Act. He could determine who was on Medicaid through
expansion but could not establish the reason. However, he
could ascertain what a person's eligibility category was
when they applied such as being disabled, because of
expansion, or for other reasons. He could make some
estimations about how much of the increase was due to
expansion because some individuals were not eligible
beforehand. Other aspects of the ACA such as "No wrong
door" and insurance mandates might have influenced people
to enroll in Medicaid. He would not know why a person
enrolled in Medicaid but could determine their eligibility
category. He could also make some estimates based on
statistical analysis of the economic impacts of the
recession which influenced enrollment.
Representative Sullivan-Leonard thought she was hearing
that because of the failure of the ACA, recipients that
would normally pursue private health insurance were being
forced to enroll in Medicaid for their healthcare coverage.
Dr. Helvoight responded, "Not exactly." He assumed that in
many cases individuals did not have access to insurance
through a private marketplace. He indicated there were two
types of individuals that would have joined Medicaid when
it expanded: Previously uninsured individuals and
individuals that had private insurance who dropped it when
they became eligible through expansion. However, the
information was not captured in the enrollment data.
1:49:32 PM
Representative Knopp asked the speaker to go back to
Medicaid 101. He asked when Medicaid expansion was adopted
in Alaska. Dr. Helvoight confirmed that it was in 2016.
Representative Knopp asked what the expansion did. Dr.
Helvoight responded that Medicaid expansion went into
effect September 1, 2015 (FY 16) and expanded Medicaid
eligibility to adults who were not disabled and who did not
have dependents. The three criteria were important. Prior
to expansion a person would have been eligible as an adult
with dependent children or a working-age adult with a
disability. Expansion opened eligibility to adults without
dependents and working-age adults without a disability.
Expansion applied to adults from the ages of 19 to 64.
Representative Knopp commented that the number of people
that enrolled in Medicaid after expansion was significant.
He wondered about Medicaid eligibility criteria. Dr.
Helvoight responded that all factors were considered
including income levels. Medicaid was essentially
healthcare for the poor.
Representative Knopp asked if the eligibility requirements
changed with expansion. Dr. Helvoight responded that the
traditional eligibility requirements had not changed. The
change was the addition of one new eligibility group. He
remarked that, independent of the expansion portion of the
ACA, there was the "No wrong door" stipulation. He
explained that when a person came in for a service, even
unrelated to Medicaid, they would have a single application
process. If they were eligible for Medicaid, they could be
signed up. He referred to the insurance mandate resulting
from the ACA. A person might not be able to get private
insurance but could get Medicaid. He reported an increase
for children and other adults.
1:53:21 PM
Dr. Helvoight continued to slide 8: "Per-Enrollee/Recipient
Spending Is Flat." The chart showed three different
categories and spanned between 2010-2019. The green line
showed the Per-enrollee growth in spending on Medicaid. On
a per-enrollee basis spending had been very flat with
Medicaid growing less than 1 percent per year. He indicated
that for recipients (enrollees that were using services),
the spending per Medicaid recipient had increased by 1.5
percent per year. The blue line represented everyone in
Alaska. On a per-capita basis, healthcare expenditures had
increased 4.5 percent annually. He noted that people who
had insurance through their employer were familiar with
percentage jumps over the past 9 or 10 years. He summarized
that the Medicaid Program overall had done a good job of
controlling spending growth. Although the enrollment had
increased, the per-individual spending had not grown
substantially.
Dr. Helvoight moved to slide 9 highlighting that the
healthcare's share of economy has grown. He explained that
the bars represented gross domestic product (GDP) for
Alaska in nominal terms from 2010 to 2019. The blue line
represented healthcare expenditures as a portion of the GDP
the percentage of GDP made up by healthcare. The
recession in Alaska started late 2014 or early 2015. The
bar showed a steep decline in GDP for a couple of years.
The healthcare portion had increased from 15 percent before
2015 to nearly 20 percent presently. He concluded that the
economy got smaller but healthcare did not. In addition,
Medicaid expansion had driven up demand for healthcare
services. Currently, the healthcare percentage of the
economy in Alaska was nearly 20 percent which was about the
same as the United States overall.
Dr. Helvoight emphasized that healthcare costs had risen
quickly as denoted on slide 10. He indicated the red line
represented medical price inflation for the Anchorage area.
The orange dashed line represented medical price inflation
for the U.S. overall. He went back to 1984 to show that the
red and orange dashed lines were on the same projection
until late 2009 when they started to diverge substantially.
It meant that medical prices in Alaska were growing much
faster than the U.S overall.
Dr. Helvoight continued to explained the chart. He pointed
to the dark blue line and the dashed light blue line. The
dark blue line represented Alaska's consumer price index
(CPI), while the dashed light blue line showed the entire
U.S. During the same period of time. The growth in prices
for all products and services consumed by Alaskans had
grown slightly slower than the U.S. overall. He included
the blue lines to show that the steep increase in medical
prices in Alaska relative to the U.S. overall was not
explained by a higher growth rate in the CPI. Instead,
there were other factors at work driving up prices that
were already higher than anywhere else in the U.S. The
chart showed that the rate of change in healthcare prices
was growing faster.
1:58:57 PM
Representative Sullivan-Leonard asked about healthcare
price inflation. She mentioned in previous committee work
there had been constructive conversations with different
hospital providers and physicians about how to lower costs
in the healthcare industry in Alaska. She noted that part
of the reason for the high costs had to do with competition
among providers and healthcare facilities. She provided a
hypothetical scenario. She thought providers were setting
rates as they pleased. In such circumstances she wondered
how to bring costs down.
Dr. Helvoight agreed with Representative Sullivan-Leonard
that providers had significant market power in Alaska. He
looked at the U.S. and Alaska price inflation periodically.
He admitted it had been a few years since he had reviewed
it because they typically tracked the same. He had not
expected to see such a deviation. Initially, he thought it
was a small data series. However, it was not the case, as
it was too consistent of a series divergence. As an
economist he quickly assumed that it was an instance in
which there was a small market, spatially isolated, and a
market place that had consolidated significantly over the
previous decade. He mentioned talking to an economist at
Oregon Health and Sciences University. They agreed that
doctors in Alaska were price-setting. He also mentioned
that the lower 48 had a much better insurance market
because of there being more providers. At a high level, it
appeared price-setting was occurring. He suggested that
other states had similar problems. Publishing prices might
help open up scrutiny. He noted that managed care was not
permitted in Alaska and was uncertain it would work in the
state. He indicated he was not looking at a Medicaid issue,
rather, it was an Alaska healthcare issue. He clarified
that the chart showed private healthcare spending rather
than Medicaid. He asserted that Medicaid prices, although
they would be lower, tracked along with private healthcare
prices.
2:04:19 PM
Dr. Helvoight moved to the topic of the FY 20 - FY 24
projection on slide 11. He directed attention to the chart
on slide 12 which showed population for the past, present,
and future. He reported that population had increased very
rapidly years ago. However, it had slowed down becoming
negative. He predicted it would slowly increase again at
about .5 percent per year through the following 20 years.
Dr. Helvoight reviewed the fact that Alaska's population
was aging on slide 13. He indicated the population had
changed and was growing older. He reported the growth rate
for people 65 and older would grow more than 1.5 percent
per year. The traditional working age adult population was
growing much slower, and the child population was growing
at an even slower rate. He thought the growth of the aging
population in Alaska was higher than in the rest of the
U.S.
Dr. Helvoight moved to slide 14 to highlight that the ACA
was no longer impacting enrollment growth. He pointed to
the age cohort between FY 15 through FY 20 (the fiscal year
before Medicaid expansion to the current year). There was
an overall growth rate in enrollment of 9 percent per year.
Going forward the rate would be much slower slightly more
than 1 percent per year. He noted that currently Medicaid
covered many more adults than it did children. It was not
the case when he started in his position 15 years prior. He
reported that in FY 00 the median age of enrollees was 14.
In other words, half of Medicaid enrollees were 14 years
old and younger and half were over 14. Presently, the
median age was 23. He thought the median age would creep up
to 25 by FY 40.
Dr. Helvoight turned to slide 15 showing the long view of
Medicaid enrollment. The slide reflected from FY 97 through
FY 40. The black line represented FY 19. Enrollment had
been increasing through the period. He highlighted the
rapid growth of the working adult population over the
previous 5 years largely due to Medicaid expansion. He
surmised that growth would slow but would continue over the
following 20 years.
Dr. Helvoight moved to slide 16 and reported that spending
was expected to slow but would keep growing. He pointed out
that everything to the right of the black line got larger
which reflected the power of compounding interest and
growth rates. In 2000, the Medicaid Program was well below
$1 billion. Currently, the program was at $2 billion. The
program would push above $5.5 billion in 20 years. His
analysis was based on population, demographics, potential
enrollment, and medical price inflation.
2:08:51 PM
Representative Sullivan-Leonard asked if the aging
population numbers were affected by Medicare dollars or
whether he was only highlighting Medicaid. Dr, Helvoight
responded, "Yes."
Representative Sullivan-Leonard asked about those
recipients on Medicare, ages 65 and older, and why they
were also on Medicaid. Dr. Helvoight responded that many
individuals, ages 65 and older, were dual eligible for
Medicaid and Medicare. Often, individuals enrolled in
Medicare had their premiums paid for by the Medicaid
Program. Medicare would then be the first payer on
services. The slide only showed Medicaid dollars.
Representative Wool asked about the graph on slide 16 that
increased to $5 billion in 20 years. He wondered how much
of the increase had to do with price increases versus
population growth. Dr. Helvoight would address the
representative's question in 3 slides.
Representative Wool brought up the median age rising since
Medicaid expansion. He wondered if Dr. Helvoight took into
account those individuals eligible at age 21 who might not
need Medicaid in their thirties. Dr. Helvoight thought
Representative Wool brought up an important point. He was
not assuming enrollment was simply cumulative. The
enrollment portion of the forecast was based on a set of
statistical models examining 240 subgroups. The subgroups
were based on 12 age cohorts, gender, Alaska Native Status,
and 5 regions. The models considered the probability that
an individual would enroll in Medicaid based on historical
data and trends.
Representative Merrick asked about younger people and the
Denali Kid Care Program. She asked if it was a part of the
Medicaid Program. Dr. Helvoight confirmed that the Denali
Kid Care Program was a part of the Medicaid Program. He
reported that Medicaid was very complicated. He indicated
that all kids on Medicaid or in the Children's Health
Insurance Program (CHIP) were included. They would be
enrolled through different eligibility categories.
2:13:28 PM
Dr. Helvoight discussed the notion that healthcare spending
increased with age on slide 17. The slide showed the
average Medicaid spending per enrollee. He suggested that
it was no surprise more money was spent on seniors than
working age adults and children. The trend would continue
into the future.
Dr. Helvoight reviewed slide 18 having to do with federal
spending versus GF spending. He reported that the forecast
for FY 20 estimated just under $670 million in GF spending
versus almost $1.6 billion in federal spending. Both types
of spending would grow at the rate through FY 40. He
mentioned that the long-term forecast was based on claims
from the date of service rather than the date of payment.
Typically for budgeting purposes the date of payment was
more important. However, over the long-term, they would be
the same. He added that he assumed there would be no
changes in federal medical assistance percentages (FMAPS).
Co-Chair Johnston asked that with Medicaid Expansion there
was a step-down of the federal reimbursement. However, the
growth in federal spending was close to the growth in state
spending. She asked if she was accurate. Dr. Helvoight
answered affirmatively. He explained that the first half
was with the FMAP for the expansion population of 93
percent. The second half was at 90 percent. Even with the
step-down of expansion the state ended up at about the same
growth rate.
Representative Merrick asked how the FMAP was calculated
and how Alaska compared to other states. Dr. Helvoight
responded that there were several calculations involved. He
argued that the FMAP was very slow. He reported Alaska was
at the lowest FMAP, 50 percent. Representative Merrick was
interested in seeing the comparison of other states.
2:18:40 PM
Dr. Helvoight turned to slide 19 to answer Co-Chair
Johnston's question about items contributing to growth
rates. He pointed to the blue horizontal band at the bottom
representing present day spending. It assumed the Medicaid
population would stay the same without enrollees aging for
the following 20 years an unrealistic scenario. The very
light sand colored band showed population growth. There
would be slow population growth which would lead to more
enrollment in Medicaid. Next, he pointed to the green band
which showed enrollment growth above population growth. He
expected that the proportion of the population enrolled
would increase slightly over time.
Dr. Helvoight continued to the utilization of Medicaid
services represented in dark brown. He reemphasized that
all the services offered through Medicaid were aggregated
into 20 different service categories. Over time individuals
enrolled in Medicaid were using more of the different
services. He provided an example. The utilization of
Medicaid services had grown historically and would continue
to grow. The light blue band represented the intensity of
services. In the past, individuals with knee pain would get
an x-ray, in following years they would get an MRI instead.
Intensity of services could be due to technology or changes
in the care provided which occurred over time. The change
was not significant. He pointed to the mauve band showing
healthcare price inflation which would drive cost up in the
future. Medical price inflation was high everywhere in the
U.S. and particularly high in Alaska. Prices paid to
providers were contracted. However, the providers wanted to
contract for higher prices all of the time. They wanted the
increases to be comparable to what they were receiving in
the private marketplace. Although he did not think the
prices could get much higher in Alaska, medical price
inflation would remain the largest cost driver in the
future.
2:22:48 PM
Representative Carpenter thought there was an economy of
scale problem. He suggested that there were not enough
patients for the number of doctors in Alaska to continue
increasing doctors and healthcare facilities adding to the
state's bottom line.
Dr. Helvoight did not agree. He argued that Alaska had
always had a small population. Other states had small
populations without having the increases in healthcare
prices as great as those seen in Alaska. Additionally,
there was a small population purchasing energy, food, and
other goods and services, yet the overall CPI was growing
slightly slower in Alaska than the rest of the U.S. He
observed one sector of the economy, the healthcare sector,
that had a significant amount of power because people could
not shop around. At best it was an opaque market. Prices
were not posted in the emergency room and a patient would
not know whether an anesthesiologist was in network, for
example. He asserted that scale issues were not driving
growth in prices. Rather, they were impacting what a
patient was paying relative to the rest of the U.S. but
were not driving prices up faster. He indicated something
else was going on. He assumed the market power of providers
was the source of impact.
2:25:24 PM
Representative Carpenter asked if Dr. Helvoight had broken
down price inflation to show how competition in the
lower 48 between states or metropolitan areas impacted
prices compared to Alaska. He reiterated the severe
increase in healthcare price inflation in Alaska and the
lack of competition. He asked how Dr. Helvoight would
delineate how much of the price inflation was due to
Alaska's remoteness and lack of provider competition. He
suggested that because of Alaska's small population there
would never be sufficient competition to drive prices down.
Additional people would not fly to Alaska for healthcare.
The opposite occurred where Alaskans flew out of state for
medical care. Alaska's competition existed outside the
state but was a small number. If the number was larger, the
competition would be greater.
Dr. Helvoight replied that instead of using a projection of
medical price inflation for Alaska, it would be better to
take a medical price inflation forecast for the U.S overall
and compare it to Alaska. The difference would equate to an
Alaska premium. He spoke to the notion of Alaskans flying
out of state for medical care. He thought it was a reaction
to the price setting behavior of providers in the state. He
noted price inflation had not always been a factor.
Previously, medical price inflation in the U.S. had been
similar to Alaska. The delineation occurred in 2009 or 2010
and had continued to grow. He suggested looking service-by-
service comparing several other places around the state. He
acknowledged that, because it was Alaska, there could be
reasons why care would be more expensive. He argued that
even if costs were 10 times higher in Alaska than Seattle
or San Francisco, Alaska was a less expensive place to
live. He was aware of limits to the expectation for an
Alaska premium.
Representative Carpenter agreed that there were other
places that were more expensive. However, those other
places had larger populations. He argued that the economy
of scale problem was that healthcare was more expensive,
but there were more people needing healthcare.
Dr. Helvoight countered that it would impact the current
cost. However, he did not think it would influence the
change in cost over time. He indicated that it should not
drive costs to grow faster. It might result in costs being
higher, but the change over time should not be different.
The difference in CPI was not that costs were higher in
Alaska than the lower 48. It showed that the growth in
costs was higher in Alaska than the lower 48. He
reemphasized that the overall CPI costs had grown slower in
Alaska with a smaller population. He suggested that in
other sectors of the economy they were servicing the
smaller population without experiencing the same rate in
price growth.
Representative Carpenter asked if Dr. Helvoight had a graph
showing when the increase in federal dollars was funneled
into the healthcare industry and any related trends. He
mentioned services growing. Dr. Helvoight replied that
services growing also occurred in the rest of the U.S. He
noted that federal dollars flowed into healthcare in every
state. Every state had a Medicaid Program and individual
Medicare. He continued that expansion occurred in certain
states well before it did in Alaska. Montana expanded about
the same time as Alaska. He noted that the federal dollars
were not included in the CPI (private dollars only). The
increase in provider rates would be increased by medical
price inflation.
2:31:44 PM
Representative Carpenter asked if Dr. Helvoight was
suggesting that Alaska had a higher percentage of greedy
people some sort of healthcare greed in the state. In
other words, providers jacked up their prices because they
could. Dr. Helvoight, as an economist, saw market power. He
did not look at the difference in prices, rather, he looked
at the change in prices. In a place like Anchorage, a
relatively small spatially isolated metro area compared to
many other places throughout the U.S., he saw what looked
like providers setting prices. He continued that Alaska
might not have a strong insurance network to push back
against them. He concluded that the healthcare price
inflation was driving a large portion of costs in Alaska.
He thought it was an issue beyond Medicaid; it was a
statewide issue. He indicated that 10 years prior
healthcare was 14 percent of Alaska's economy. Presently,
it was 20 percent. Part of the reason for the percentage
increase was that other parts of Alaska's economy had
shrank including oil. There were other issues as well.
2:35:55 PM
Co-Chair Johnston recommended looking at reports from the
Institute of Social and Economic Research (ISER) regarding
out-of-network costs in Alaska. She realized the chart
reflected a point in time. She mentioned the state's
medical costs and retirement costs for its employees having
dropped. She asked if Dr. Helvoight had built the
information into the model. Dr. Helvoight responded, "I
have not." He clarified that she was asking about state
employees.
Co-Chair Johnston responded that she was talking about
state employees and the state's retirement community. She
noted the unfunded liability of state pension funds which
was very large because of medical costs. However, medical
costs had dropped significantly. She remarked there were a
couple of other public insurance programs in which medical
costs had also dropped.
Representative Wool asked if Dr. Helvoight had evaluated
the eightieth percentile rule in Alaska. He encouraged him
to explain it. Dr. Helvoight responded that it was not
included in the forecast.
Representative Wool noted Dr. Helvoight had talked about
Alaska prices, market power, and the reimbursement rate
which did not apply to Medicaid directly as it did to
private insurers. Dr. Helvoight had inferred a parallel. He
wondered if he had analyzed the information. Co-Chair
Johnston referred Representative Wool to the ISER study.
Representative Josephson thought there would be a
connection if the private sector healthcare provider had
exorbitant rate. The legislature might feel compelled to
offer rate adjustments and inflation adjustments because of
a concern of diminishing the interest in the Medicaid
provision. He thought there was some connection.
Dr. Helvoight responded, "Absolutely." He elaborated that
while Medicaid rates were negotiated and sometimes went
down, most of the time they went up. The rate of increase
was tied to medical price inflation which was why it was an
integral part of the forecast. If medical price inflation
was significantly low, Medicaid prices would not increase
rapidly. His assumption was that Medicaid pricing would
roughly parallel with increases of all healthcare prices.
2:39:01 PM
Representative LeBon referred to the chart and asked if the
relationship between state-paid Medicaid and federally-paid
Medicaid assumed no change over time. In a growth scenario,
he wondered if the state portion and the federal portion
would remain the same. He asked if the relationship was
neutral.
Dr. Helvoight responded that the only change would be with
respect to the individuals being enrolled in Medicaid. He
reported that the 65 and over population in Medicaid was
growing faster than the working population. Therefore,
people who were 65 and older would have an FMAP of 50
percent. No one 65 and older would be part of the Medicaid
expansion population. The state would receive a 50 percent
FMAP for them rather than a 90 percent FMAP. The forecast
accounted for the adjustments in rates associated with an
individual's age and the likelihood of their eligibility
category.
Representative LeBon asked if he could expect the state's
share to grow with the aging population. Dr. Helvoight
replied, "Yes, for sure, all else being equal. Yes." He
expounded that at the same time there had been rebasing. A
few years prior, many Alaska Native beneficiaries of
Medicaid received a 100 match from the federal government
for 65 percent of the services they received. Currently,
the percentage of services receiving a 100 percent match
was 10 to 14 percent higher. The state was still
benefiting. The forecast acknowledged the benefit of the
shift in federal spending.
Representative LeBon recalled the debate in 2015 to take on
the expansion. He had heard that the federal government
would pick up the majority of expanded costs for a benefit.
He asked if the state could expect the relationship with
the federal government to remain consistent. Dr. Helvoight
responded that the question was beyond his pay grade. The
forecast assumed no change in the structure.
2:42:36 PM
Representative Josephson mentioned that at the time of
deliberations, Becky Hultberg of the Alaska State Hospital
and Nursing Home Association gave a presentation making a
strong case that the state would come out ahead. He
wondered if Dr. Helvoight had seen the numbers.
Dr. Helvoight imagined that Ms. Hultberg's point was that
the state was getting people covered, and the federal
government was paying $.90 on $1.00. It meant many hundreds
of thousands of dollars would be coming into the economy
every year. He concurred with the economic view that there
were certainly benefits to Alaska. He was agnostic about
expansion but thought there was a logical argument for it.
Dr. Helvoight moved to slide 20: "Bending the Cost Curve."
He explained that for each slide, the red represented
actual spending. The blue dots showed what was predicted in
the 2006 forecast, and the green dots represented the
current forecast. In the 2006 forecast presented to the
legislature he predicted that there would be extremely
rapid growth in Medicaid spending over the following 20
years given the construct of the program at the time and
how spending was moving. He reported that the red showed
what happened since 2006. The legislature and the
department made some immediate changes in personal care
attendant services and other parts of the Medicaid Program
and flattened spending growth for a few years. In 2015 and
2016 the Affordable Care Act and Medicaid expansion came
into play. He pointed to the red line which indicated
bending the cost curve from where the expectation of the
prices would go. The green line showed what actually
happened. He was looking at total spending.
2:46:31 PM
Dr. Helvoight spoke of many more Alaskans receiving
Medicaid services on slide 21. The number of people
receiving services through Medicaid was much greater
presently than he predicted in 2005 because of the ACA. He
highlighted that the actual number of recipients tracked
very closely with the forecast until Medicaid expansion, at
which time it grew substantially. Currently, there were
many more people receiving Medicaid services than he
predicted due to expansion.
Dr. Helvoight turned to the last graph on slide 22 which
showed spending was much lower than expected. Although many
more people were receiving services than anticipated,
spending per recipient was much lower than he originally
forecasted. The red line showed what actually happened.
Immediately following the first forecast spending per
recipient decreased for a couple of years and had been
relatively flat until 2020. He expected it to increase over
time. He observed that the legislature and the department
had accomplished slowing the growth of the Medicaid Program
even while the program had grown substantially.
Representative Wool noted Dr. Helvoight had predicted fewer
people covered at a much higher cost, yet the opposite
occurred. More people were being served at a lower cost. He
wondered why Dr. Helvoight's predictions were off.
Dr. Helvoight responded that the forecast of the number of
people covered did not anticipate any expansion in the
future. The forecast was in line with what actually
occurred until expansion. Regarding spending, the impact
was a result of a combination of the population projection
at the time and a greater growth in the elderly population.
The aging population had grown but not at the rate that was
expected. Additionally, he thought the seniors that would
be staying in the state or coming into the state would be
similar to seniors in the past. However, seniors of the
current day were wealthier making them less eligible for
Medicaid. He argued that while seniors contributed to the
growing number of people enrolled in the program, their
rate of growth in Medicaid was slower than their population
growth. The spending growth had been impacted because not
as many seniors received expensive services like he had
anticipated.
Dr. Helvoight continued that the largest factor in his
predictions being off had to do with deeper oversight of
such services as providing personal care attendants, a
service growing at a rate of 15 percent to 25 percent per
year. Currently, services were only growing at a rate of 2
percent to 3 percent per year similar to other parts of
the Medicaid Program. There were several changes that
occurred with the department.
2:51:01 PM
Representative Merrick asked if Medicaid recipients paid a
copay or deductible. Dr. Helvoight replied, "My
understanding is, not in Alaska."
2:51:34 PM
Dr. Helvoight moved to the topic of chronic conditions and
Medicaid on slide 23. He reported that the overall
structure of the long-term forecast had been consistent
each year with a few changes that made it better. The one
thing he added in the current year and would continue to
include in the future was to look at the issue of chronic
conditions. The department considered cost drivers in
Medicaid more frequently.
Dr. Helvoight reviewed the bar chart on slide 24 that
showed the FY 18 chronic conditions and age of recipients.
He indicated there was much more in the report about
chronic conditions including all of the chronic conditions
he looked at within the Medicaid population. He found that
most people on Medicaid did not have diagnosed chronic
conditions. He noted the different age groupings included
on the chart. The blue portion of the bar reflected
recipients without a diagnosed chronic condition. The
orange bar showed recipients with chronic conditions. He
reminded members that the chart only reflected recipients
(people who received Medicaid services in 2018) rather than
enrollees. He reported there were approximately 40,000
other individuals enrolled in Medicaid who received no
services in the same period.
Dr. Helvoight turned to slide 25 to discuss the impact of
age on chronic conditions. Over time with age, the
proportion of individuals on Medicaid with diagnosed
chronic conditions increased and was greater than those
without chronic conditions. He concluded that chronic
conditions were closely related to age. The graph showed,
by age, the prevalence of diagnosed chronic conditions in
the Medicaid population increasing over time.
Dr. Helvoight turned to slide 26: "Chronic Conditions Drive
Spending, FY2008." He explained the columns on the slide.
Column A reflected the twelve different age groups he
focused on in doing the long-term forecast. Column B showed
the average spending in FY 18 for recipients of the
corresponding age group. He highlighted that spending per
recipient increased with age. Column C showed the average
spending per recipient for recipients with a chronic
condition. Aside from the youngest and the oldest age
groups there was not a notable difference in spending based
on age.
Dr. Helvoight shifted attention to Column D which
represented the average spending per recipient for
individuals with a chronic condition. Again, there was not
much of a difference in spending except for the 85 years or
older, even though Column B showed that as individuals aged
spending per recipient increased substantially. He
concluded that the prevalence of chronic conditions
increased with age which explained why age had an effect on
spending. Column E showed the incremental costs of chronic
conditions which was calculated by taking the average
spending for a person with a chronic condition minus the
average spending for a recipient without a chronic
condition. The question came down to how much a Medicaid
recipient with a chronic condition cost. On average it was
about $21,000 more per year in FY 18 for those with a
chronic condition.
2:56:27 PM
Representative Carpenter asked if there was a
stratification in costs based on age. He provided an
example. Dr. Helvoight did not believe so but could not
answer definitively.
Dr. Helvoight advanced to the chart on slide 27 which
displayed the incremental cost of chronic conditions in
FY 18. He reported that Column A was the same as Column A
in the previous table. Column B was the same as Column E in
the previous table. The age categories and the incremental
costs for recipients with a chronic condition were the
same. Column F represented the number of recipients
diagnosed with a chronic condition in FY 18 with one or
more diagnosed chronic conditions. Column G equaled the
total incremental cost to the Medicaid Program associated
with chronic conditions. The total spending in FY 18 based
on the date of service was about $2.2 billion, of which
$1.3 billion had to do with the additional costs paid to
treat recipients with chronic conditions. The amount was
well over the total spending of $2.2 billion. The cost of
chronic conditions was a large issue in healthcare in the
U.S. and the Medicaid Program in Alaska. He also thought it
was a growing issue with Alaska's aging population.
Dr. Helvoight continued to his final slide, slide 28: "Cost
Impact of Chronic Conditions Will Grow." He reported that
presently about 73 percent of Medicaid spending was on
beneficiaries diagnosed with one or more chronic
conditions. He noted that providers were supposed to report
a diagnosis code for the Medicaid Management Information
System (MMIS) to use for payment. It was also used to
determine whether a condition was chronic. Some claims were
not required to have diagnostic codes such as pharmacy
claims. Some other claims simply did not have a code. Based
on the Medicaid population over the following 20 years, the
amount of Medicaid spending on beneficiaries with chronic
conditions would rise to about 78 percent by FY 40. The
information was based on what he saw in the database. About
$4 of every $5 would be spent on individuals with chronic
conditions. It would be a very large and increasing problem
in the Medicaid Program.
3:00:29 PM
Co-Chair Johnston asked Dr. Helvoight to define "chronic
condition." Dr. Helvoight replied that a chronic condition
was a medical condition that lasted 3 or more months.
Another definition was a medical condition that lasted a
long time. There was another definition of a medical
condition that lasted a year or more. There was ambiguity
in the definition. He relayed that for the purpose of the
forecast there was a list of diagnostic codes used in the
MMIS to identify a chronic condition.
Co-Chair Johnston asked whether, in looking at any
population, a cost driver of 6 percent to 7 percent
attributed to chronic conditions. Dr. Helvoight responded
in the affirmative. However, he noted that a chronic
condition could exist from birth. It could also be related
to age, strokes, falls, and heart disease. There were also
chronic conditions including drug addiction, smoking, and
alcohol abuse. There were several chronic conditions
related to choices. The chronic conditions sometimes
compounded such as obesity and diabetes. He added that the
longer a person lived, the more likely they would
experience a chronic condition.
Co-Chair Johnston thought the story could change through
some access to managed care. She suggested that having a
wellness coordinator or living a healthy lifestyle could
have a significant impact on costs related to chronic
conditions. Dr. Helvoight commented that although he had
not studied the issue, it seemed like a logical conclusion.
He was not sure how practical it would be for the Medicaid
Program to implement such a thing.
3:04:37 PM
Co-Chair Johnston also noted the importance of a person
being diagnosed early with time to provide early
intervention. Dr. Helvoight responded that he had looked at
prevention as it related to diabetes. Data suggested that
there could be savings to the program associated with
diabetes self-management. However, the ease of
implementation was unknown.
Representative Carpenter asked for the resource for chronic
conditions. Dr. Helvoight responded that it was a report
done for the Division of Public Health and it was posted to
the department's website in December 2018. He offered to
send it to him. Representative Carpenter thought it would
be interesting to be familiar with the chronic conditions.
He suspected if people made different lifestyle choices the
problems would not exist. Dr. Helvoight concurred.
Representative Merrick asked if Medicaid recipients
received dental, vision and prescription coverage. Dr.
Helvoight was aware of pharmaceutical services, vision care
for children, dental care within healthcare services, and
the adult dental program (a preventative program).
3:07:30 PM
Representative Wool asked if cancer was considered a
chronic illness. Dr. Helvoight responded affirmatively. He
suggested there should be further subcategories of chronic
conditions. Many of the conditions were not preventable.
Representative Josephson asked if one of the drivers of
care for the elderly and the Medicaid Program was that it
covered long-term disability. If someone had the wisdom in
their thirties or forties to purchase it, it was incredibly
expensive. Therefore, they typically punted, relying on
Medicaid. He asked if he was accurate. Dr. Helvoight agreed
that long-term care was expensive, and rates could climb.
He personally had not paid for long-term disability because
of not knowing what he was really investing in.
3:10:41 PM
Representative Wool returned to the discussion of chronic
care and the costs increasing because of the population
aging. He had mentioned cancer because some things were
unavoidable. He mentioned lifestyle choices influencing
health such as smoking, and drinking. He did not believe
the trend was that people were getting healthier. On the
contrary, people were getting less healthy. He wondered if
the issue was factored into the forecast. He thought people
had become more sedentary over time and were increasing
their chronic conditions regardless of age. He inquired
about Dr. Helvoight's opinion.
Dr. Helvoight responded that the forecast accounted for
growth in the rate of enrollment in the Medicaid Program
which would be driven by a number of factors. Some of the
factors included issues of chronic conditions leading to a
person becoming disabled. He responded to Representative
Wool's question about people not getting healthier. He had
read several articles that concurred that obesity rates had
steadily climbed.
Representative Carpenter asked if there was a component of
Medicaid that encouraged personal responsibility. He was
speaking to behaviors that contributed to developing
chronic conditions which could otherwise be avoided with
making different choices. He wondered if a mechanism
existed. Dr. Helvoight did not know.
Co-Chair Johnston indicated she would be recessing the
meeting until Wednesday at 10:00 A.M. at which time the
committee would close out the budget for the University of
Alaska.
^RECESSED TO THE CALL OF THE CHAIR: THE MEETING RECONVENED
ON WEDNESDAY, FEBRUARY 19, 2020 AT 10:00 A.M.
3:14:19 PM
ADJOURNMENT
3:14:19 PM
The meeting was adjourned at 3:14 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Ted Helvoigt MESA FY2020-40 02-18-20.pdf |
HFIN 2/18/2020 1:30:00 PM |
HFIN presentation |