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  • Joshua Brooker, REBC, ABHP, ESP, ASFC

Letter to Senator Martin: Reducing Medicaid Spending



On December 22nd, 2021 Senator Scott Martin and Sen. David G. Argall published a memo about Promoting Work and Community Engagement for those receiving medical assistance. In a continual effort to advocate for our clients, and consumers at large below is our comment letter to this memo:


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"First, Senator Martin, I want to say I appreciate the hard work you have provided to your constituents over your tenure. As someone who both lives and works in your district, your work is much appreciated.


This message is in regard to Memo: Promoting Work and Community Engagement Among Medical Assistance Beneficiaries


OUR AUTHORITY

As the Legislative Chair for the Central Penn AHU Chapter, a member of the PENNIE Policy and Legal Workgroup, and a member of the CMS/CCIIO Agent/Broker workgroup I'm intimately familiar with the Medicaid, Medicare, Pennie, and small business segments.


COMMENTS

Within your memo, you referenced: 1. Pennsylvania ranks 4th in the nation for Medicaid spending and an increase in the future projected spending within that cohort. 2. You referenced a $28 billion annual spend 3 years ago. 3. You referenced a $2 billion increase confirming exponential growth.


1. We agree that spending can be reduced. We don't disagree in the principle of a work requirement. Below I will outline a case that may cause some additional consideration on how the spirit of your law would be applied.


2. Obviously this is an anchor point prior to the pandemic. How much of the $28 billion is purely from PA and how much is subsidized from federal and local funding into the system? According to the DHS Executive budget, in the 2020-2021 budget federal funds specifically earmarked to Medical Assistance and CHIP(Page 6-7 of the executive budget at https://www.dhs.pa.gov/docs/Publications/Pages/Budget-Information.aspx) looks to be approximately $24.5 Billion


CALCULATION


Grants and Subsidies

Medical Assistance - Capitation $14,523,295,000

Medical Assistance - Fee-For-Service $2,357,307,000

Medical Assistance - MAWD $110,234,000

Medical Assistance - Physician Practice Plans $12,311,000

Medical Assistance - Critical Access Hospitals $21,428,000

Medical Assistance - Obstetric and Neonatal Services $11,167,000

Medical Assistance - Trauma Centers $10,747,000

Medical Assistance - Academic Medical Centers $30,576,000

Medical Assistance - Transportation $85,514,000

CHIP $416,075,000

Medical Assistance - Long-Term Living $175,899,000

Medical Assistance - Community Health Choices $6,693,503,000

Total: 24,448,056,000


3. I wouldn't agree that a $2 billion increase is indicative of exponential growth. With the pandemic and the covid waiver with Medicaid, currently, 1/4 of Pennsylvanians are either in a Medicaid and/or CHIP Program. https://www.dhs.pa.gov/about/Pages/Data-Dashboards.aspx. Our current conversation with CMS is that as that waiver comes to a close DHS will start eligibility reconsideration as soon as April (after the emergency/waiver ends potentially on January 16th). This is projected at the national level to cause a loss in Medicaid eligibility by 10 million Americans. Additionally,


PA SYSTEMS OVERVIEW - Medicaid as Reactive, Helps Small Business

Medicaid is designed to be a bridge that is reactively available when a hardship is realized. It should not be a long-term solution to healthcare. Within the Pandemic many of our self-employed clients that saw an aggressive decrease in cash flows wound up showing Losses on their cash flow statements and were a prime example of when Medicaid was able to step in and help these individuals conserve cash flows while they needed to run lean and continue to pay payroll.


PA SYSTEMS OVERVIEW - Medicaid overspend, No Resources out

Per DHS, here: https://www.dhs.pa.gov/Services/Assistance/Pages/MA-General-Eligibility.aspx, Medicaid does not use resources as a qualifier if you are enrolling in Medicaid based upon income only. This includes applications rerouted from Pennie or people that are living off of post-tax savings accounts.


RESOURCE COST EXAMPLE

A 58-year-old couple was referred to us by their financial advisor. On paper, they have $1.4 Million in assets. Of which, $400k was tied to a savings account nest egg they accumulated over their working years. Since they were under 59 1/2 they were advised to live off of their savings account since they decided to retire early. The problem was that individual health insurance through Medicaid AND Pennie is income-based. Technically, living off of savings account results in a household income of near-zero (interest on the savings account was negligible).


Originally, they did not want to take Medicaid because of a moral objection to the system. But, Pennie would not give them an affordable plan at full cost. Between their deductible within their plan being $8,000 per person ($16,000 total) and their monthly premium being $2,000 per month ($24,000) they were losing $40,000 of their nest egg each year because they weren't eligible for tax credits through Pennie and weren't disqualified for Medicaid. Ultimately, we had to assist them with Medicaid because on their current path they would have exhausted a total of $280,000 up to age 65 if they stayed with major medical.


When they moved to Medicaid this adds cost to the Medicaid system both in subsidizing the premium AND cost when the plan is used.


Had there been a provision in the law that disqualifies an individual for Medicaid based upon excess assets (specifically non-qualified assets) then consumers would be routed back to Pennie at an affordable amount. For the consumer above, if this qualifier was in the code, then Pennie would push them to Medicaid due to $0 income, Medicaid would decline their application based upon resources and push them back to Pennie. Pennie would then deem them eligible for Tax Credits and they would be enrolled in a plan with more manageable Premiums of $500(better than $2,000 per month) and manageable deductibles ($500-$3,500 compared to $0 with Medicaid or $8,000 with full cost Pennie).


Right now, consumers are forced to pay full cost outside of Pennie/Medicaid or be a drain on state resources which hurts all.


Again, thank you for your time today. Merry Christmas and Happy Holidays!


Joshua Brooker, REBC®"