Pages 70 - Glossary BUDGET CATEGORY Special Supplememental Food Program for Women, Infants, and Children (WIC) BUDGET PROJECTIONS (OUTLAYS IN BILLIONS) Fiscal Years 1995 1996 1997 1998 1999 2000 20001 Increase in 0 .2 .2 .2 .3 .3 .3 regular appropriations Special fund 0 .2 .4 .4 .4 .4 .4 Total 0 .5* .6 .6 .7 .7 .7 * Total does not add to rounding. POLICY DESCRIPTION The Special Supplemental Food Program for Women, Infants, and Chilldren (WIC) has been proven to play a key role in health promotion by providing nutritional supplements to pregnant women and young chiledren. WIC services to pregnant women have been found to reduce medical costs the first 60 days after birth. WIC also increases micronutrient intake among infants and children, thus reducing conditions such as iron deficiency anemia. Fully funding WIC is a strong priority of the President's and builds on our commitment to preventative and primary care. The bill seeks to guarantee full funding for WIC by the end of FY 1996 by creating a special fund to supplement annual appropriations. The amounts in the fund will automatically become available for WIC if appropriations bills include the amounts shown in the first line in the table below. FY 1996 1997 1998 1999 2000 (BA in millions) Regular appropriation HCR 3,660 3,759 3,861 3,996 4,136 anticipates Special fund 254 407 384 398 411 Full funding level 3,914 4,166 4,245 4,394 4,547 [Page 70] KEY TECHNICAL ASSUMPTIONS The cost estimate for the WIC provision in the bill is the difference between current services and full funding. [Page 71] BACKUP DOCUMENTATION (savings negative, costs positive) (Outlays in $ billions) BUDGET CATEGORY Academic Health Centers and Graduate Medical Education BUDGET PROJECTIONS FY 1995 1996 1997 1998 1999 2000 '95-00 Gross 5.93 6.3 6.75 8.0 9.5 9.6 46.08 Medicare Offset -5.9 -3.6 -3.6 -3.6 -4.0 -3.9 -24.6 Net New Spending 0.03 2.7 3.15 4.4 5.5 5.7 21.48 POLICY DESCRIPTION The "Gross" spending line represents the policy commitment to Academic Health Centers and Graduate Medical Education support for physicians, nurses, and other health professionals. The Medicare Offset represents proposed law IME and current law DME payments for physicians (DME for nonphysicians is assumed to continue to flow to Academic Health Centers). KEY TECHNICAL ASSUMPTIONS The projections of IME/DME dollars are made by OACT consistent with their appraisal of overall health reform and the Medicare savings package in general. [Page 72] BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ millions) BUDGET CATEGORY Program for Poverty-Level Children with Special Needs BUDGET PROJECTIONS Fiscal Years 1995 1996 1997 1998 1999 2000 1995-2000 0 264 869 2,453 3,025 3,157 9,768 POLICY DESCRIPTION A new Federally-funded program will provide certain medically necessary and appropriate items and services (that are not in the comprehensive benefit package and are not Medicaid long-term care services) to qualified low-income children. KEY TECHNICAL ASSUMPTIONS The estimate assumes that Federal expenditures would be limited to total (Federal and State) Medicaid spending for these services in FY 1993 in participating States, trended forward through the year of implementation for each State by the appropriate growth rates in 9003(a). Thereafter, the annual Federal expenditure limit is trended forward by the growth rates in 9003 (b). [Page 73] This estimate includes administrative costs, which are not explicitly accounted for in the legislation. The estimate also differs from the legislation in the calculation of the annual Federal expenditure limit: (1) The estimate trends FY1993 expenditures for wrap-around services by projected spending growth for these services for children; (2)1934 (d)(2)(A)(i) requires that FY1993 spending also be adjusted to take into account annual increases or decreases in the number of qualified children; (3) the legislation requires that FY93 spending for these wrap-around services be trended forward according to a schedule that does not take into account when States become participating States. This estimate applies the trend factors noted in 9003(b) for spending in each State in the year following the year in which it becomes a participating State. [Page 74] BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ millions) BUDGET CATEGORY Long-term care: New Federal spending for community-based program BUDGET PROJECTIONS Fiscal Years 1995 1996 1997 1998 1999 2000 1995-2000 community 0 4,500 7,800 11,000 14,700 18,700 56,700 LTC program POLICY DESCRIPTION The new community-based LTC program is a capped entitlement to States to finance community-based care for the severely disabled (i.e., disability with at least 3 ADLs). The program is not means-tested but includes an income-scaled coinsurance schedule. The Federal matching rate for the program is a approximately 28% higher than current Medicaid FMAP in each State. KEY TECHNICAL ASSUMPTIONS Estimates are from ASPE/Lewin-VHI long-term care model, the key components of which are outlined in the attached document. Figures reflect phased-in funding of total program costs according to the following schedule: 20% in 1996, 30% in 1997, 40% in 1998, 50% in 1999, 60% in 2000, 80% in 2001, and 100% in 2002. Thereafter, the capped amounts are trended forward by CPI and the percentage change in the severely disabled population. Absolute capped amounts are derived from the following assumptions (per Lewin-VHI): 3.1 million individuals are eligible for the program; 80% of eligibles participate in the program; elderly participants receive approximately 120 visits per year; physically disabled adults and children receive approximately 122 visits per year; mentally retarded participants receive care 365 days per year. Costs per visit are assumed to be $56 for elderly and physically disabled patients, $85 for mentally retarded (in 1993 dollars). Per ASPE, the capped amounts now include the Federal share of [Page 75] administrative costs. No Medicaid offset dollars are included in these capped amounts. [Page 76] KEY COMPONENTS OF HOME AND COMMUNITY-BASED CARE PROPOSAL NUMBER OF ELIGIBLES 1993 estimates in thousands total -- 3,090 children -- 150 adult physical -- 420 MR/DD -- 270 elderly -- 2,250 The estimates are based on a number of different data sources used for different age groups in an attempt to use the best available data source. * Children -- For persons under age 18, both the 1989 National Health Interview Survey (NHIS) and the 1987 National Medical Expenditure Survey (NMES) were used to estimate the number of children with at least three of five ADLs. * Working-Age Adults -- For persons age 18 to 64, the 1990 Survey of Income and Program Participation (SIPP) was relied upon to estimate the number of persons who required help with at least three of five ADLs. SIPP was also used to estimate the number of persons who have severe or profound mental retardation or developmental disabilities (MR/DD). Because SIPP does not have data on levels of MR/DD, we used data from Charles Lakin at the University of Minnesota to estimate the total number of community-dwelling persons with severe or profound MR/DD (approximately 220,000 in 1990). * Elderly -- The 1989 National Long Term Care Survey (NLTCS) was used to estimate the number of elderly who would be eligible. The NLTCS provides a large sample of elderly Medicare beneficiaries with disabilities that have or are expected to last at least three months. The data were used to estimate the number of persons with at least three of five ADLs or a similar level of cognitive impairment. A similar level of cognitive impairment was defined as: 1) missing four of ten questions on the Short Portable Mini-Mental Status Questionnaire (SPMSQ); and 2) demonstrating one of the following: disability in at least one of the cognitive Instrumental Activities of Daily Living (IADLs) of medication management, money management, or telephoning; evidence of a behavior problem; or disability in one or more ADLs. [Page 77] PARTICIPATION RATE total -- 77% children -- 60% adult physical -- 65% MR/DD -- 77% elderly -- 80% AVERAGE EXPENDITURES 1993 estimates of average expenditures under fully phased-in program Average Annual Average Annual Total Expenditures Public Expenditures Per Per User Per Per User Eligible Eligible TOTAL $9,320 $12,150 $8,415 $10,970 Children $4,100 $6,830 $4,100 $6,830 Adult Physical $4,440 $6,830 $3,900 $6,000 MR/DD $24,095 $31,290 $24,095 $31,290 Elderly $8,840 $11,100 $7,950 $9,940 CURRENT LAW PROGRAMS AFTER REFORM Medicare -- assumed unchanged Other Federal Sources (OAA & VA) -- assumed unchanged State Supported Programs -- expenditures estimated for severely disabled are incorporated into match rate on an aggregate basis $1.7 billion current law state-only spending in 1993 for the eligible population has been distributed among the states according to the estimated distribution of MR/DD state-only spending by state state spending for other populations assumed to remain unchanged Medicaid -- In 1993, we estimate $7.1 billion for Medicaid home and community-based care expenditures; this is less than HCFA actuaries $8.8 billion and more than the annualized first three [Page 78] quarters of HCFA 64 data at $6.5 billion One-half of current Medicaid home and community-based care spending ($3.55 billion) is assumed to be for persons eligible for the program. The estimate of one-half of current Medicaid home and community-based care expenditures for the eligible population is based on NMES data and HCFA form 64 and 372 data. For Home Health, Personal Care, and Home and Community-Based Waivers, the distribution among all elderly, adult disabled and children who are Medicaid home and community-based care recipients and the subset that would be eligible for the program is based on 1987 NMES data. These data indicate that approximately 50 percent of Medicaid expenditures are for those meeting the severely disabled criteria. The split between MR/DD Medicaid Home and Community-Based Waiver recipients and others is based on a Congressional Research Service paper by Richard Price ("Medicaid Home and Community-Based Care Program," 92-902 EPW). This report indicated that approximately 65 percent of Home and Community-Based Care Waiver expenditures in 1991 were for persons with MR/DD. Based on data from the 1987 NMES Institutional sample for residents of small (beds less than 16) MR facilities, we assumed that 47 percent of these expenditures were for persons with severe or profound MR/DD (those eligible for the program). [Page 79] BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ billions) BUDGET CATEGORY Net Federal Discount Payments to Alliances (Capped Entitlement) BUDGET PROJECTIONS FY 1995 1996 1997 1998 1999 2000 '95-00 Gross Discounts 0 12.8 35.7 96.3 100.6 103.6 349.0 State Maintenance of Effort 0 -2.5 -7.4 -20.6 -21.7 -22.6 -74.9 Net Discounts 0 10.3 28.3 75.7 78.9 81.0 274.1 POLICY DESCRIPTION Although all Americans will be asked to contribute to the cost of their health care, there are some groups that will not be able to meet their full contribution: low income families, individuals who have lost their jobs, and small businesses. Low income households and all firms in regional alliances are eligible for premium discounts. Low income households without access to low cost-sharing plans are also eligible for discounts on their out-of-pocket expenses. There are special discounts for early retirees as well. No firm in the regional alliance will pay more than 7.9% of payroll, and small, low-wage firms will pay less, according to a specified schedule. These numbers also reflect a direct grant program for state and local governments as employers ($2B over the period). State maintenance of effort payments (detailed documentation follows this page) to alliances offset Federal discount payments. The Federal liability is capped at the Net Discounts amount, to ensure fiscal responsibility. [Page 80] Discount eligibility summary: 20% share: households with AGI less than 150% of poverty, no household pays more than 3.9% of AGI for this portion; 80% share: households with less than at least one full-time worker which have AGI - wages - unemployment compensation + tax exempt interest less than 250% of poverty; out-of-pocket: households with AGI less than 150% of poverty without access to an HMO; 7.9% payroll cap: all firms in the regional alliance; small-firm schedule: firms with fewer than 75 employees and average wages less than $24,000. The self-employed are treated as a firm of size one for the 80% share. KEY TECHNICAL ASSUMPTIONS Discount estimates came from a collaborative estimation process involving HCFA/OACT, AHCPR, Treasury, and the Urban Institute models. The actual numbers used were from the HCFA/OACT model. An additional 15% contingency was added to the point estimate of the premium discounts. This 15% is an allowance or "cushion" to cover potential behavioral responses that are difficult to model. [Page 81] BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ millions) BUDGET CATEGORY Medicaid: State maintenance-of-effort payments to alliances. BUDGET PROJECTIONS Fiscal Years 1995 1996 1997 1998 1999 2000 1995-2000 Non-DSH: Alliance-covered -1890 -5570 -15590 -16270 -16970 -56,290 services State share of new -70 -230 -640 -790 -820 -2,550 wrap-around program Less ER svcs for 70 180 470 490 510 1,720 undocumented persons DSH: -630 -1800 -4880 -5100 -5320 -17,730 TOTAL: -2520 -7420 -20640 -21670 -22600 -74,850 POLICY DESCRIPTION Each State contributes a maintenance-of-effort (MOE) payment to alliances that is equal to the level previously spent for services in the standard benefit package for non-cash Medicaid recipients and for wrap-around services for children who receive AFDC or SSI benefits. Medicaid will continue to provide emergency services to undocumented persons and current State spending for these services is netted out of the MOE computation. KEY TECHNICAL ASSUMPTIONS State phase-in schedule assumes States with 15% of Medicaid spending implement 10/1/95; States with 25% implement 10/1/96; and States with the remaining 60% of spending implement 10/1/97. [Page 82] KEY TECHNICAL ASSUMPTIONS (cont.) The State contribution is based on the State share of spending for non-cash recipients (comprehensive benefits package only); cash children (wrap-around services only); and DSH spending attributable to non-cash recipients in FY 93, trended forward according to national projected growth rates for Medicaid through the first year of implementation. Projected annual growth rates will be those included in section 9003 of the Health Security Act. Following the first year of implementation, the MOE is trended forward according to the 1 + general health care inflation factor (section 6001) multiplied by 1 + the annual percentage increase in the US population that is under age 65. States assumed to phase-in on fiscal year basis. BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ millions) BUDGET CATEGORY Information Systems and Quality Assurance ADMINISTRATIVE COST BUDGET PROJECTIONS FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 Total FY95-00 Estimated Cost 891 248 248 250 250 260 2,147 POLICY DESCRIPTION The Health Security Act specifies that the Federal government would help develop and maintain the new health information systems and would perform quality assurance activities in the new system. KEY TECHNICAL ASSUMPTIONS The estimate includes pricing for the following major administrative functions: support of information systems , support of the National Quality Management Program, and technical assistance to alliances, plans and states. The estimate assumes that, in addition to new resources, existing resources could be used to help support the quality assurance and information collection activities of the National Quality Management Program. [Page 84] BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ millions) BUDGET CATEGORY Monitoring of Alliances and States ADMINISTRATIVE COST BUDGET PROJECTIONS FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 Total FY95-00 Est. Cost 63 120 205 240 250 262 1,140 POLICY DESCRIPTION The Health Security Act specifies that the Federal government would be responsible for overseeing certain state and alliance functions. Major monitoring activities would include: overseeing the financial operations of alliances, ensuring that plans and alliances adhere to applicable regulatory requirements, and overseeing the premium targets. KEY TECHNICAL ASSUMPTIONS The estimate assumes a number of Federal auditing functions, and includes costs associated with the hiring and contracting of auditors needed to carry out these activities. [Page 85] BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ millions) BUDGET CATEGORY Program Oversight and Financial Management ADMINISTRATIVE COST BUDGET PROJECTIONS FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 Total FY95-00 Estimated Cost 301 218 242 293 300 300 1,654 POLICY DESCRIPTION As reflected in the Health Security Act, the Federal government would be responsible for developing rules/standards for the new system, and managing existing Federal programs within the new system. KEY TECHNICAL ASSUMPTIONS The estimate includes several oversight functions of the National Health Board, including: updating the comprehensive benefits package, monitoring new drug prices for consumers, development of enrollment rules for plans, monitoring of alliance grievance procedures, development and management of a risk adjustment factor for premiums in the alliances. The estimate also includes the cost of Federal support for antitrust reform, and fraud and abuse activities. [Page 86] BACKUP DOCUMENTATION (savings negative, costs positive) (outlays in $ millions) BUDGET CATEGORY Transition to the New System ADMINISTRATIVE COST BUDGET PROJECTIONS FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 Total FY95-00 Estimated Cost 419 360 393 783 39 39 2,033 POLICY DESCRIPTION As reflected in the Health Security Act, the Federal government would be responsible for helping states make the transition to the new sytem. The Federal government would help administer planning and implementation grants, issue standards, provide technical assistance and approve state plans. The Federal government would also administer a national risk pool for the uninsured during the period before universal coverage fully phased-in. KEY TECHNICAL ASSUMPTIONS The estimate reflects the costs of organizing and maintaining a new National Transitional Health Insurance Risk Pool for uninsured individuals. The cost of administering the risk pool would phase-down as universal coverage is phased-in. The estimate also reflects the administrative costs of processing approvals of state plans and waivers for states opting to implement single payer systems, as well as the cost of state planning and start up grants. [Page 87] Glossary of Acronyms AAPCC Average Adjusted Per Capita Cost ADL Activities of Daily Living AFDC Aid to Families with Dependent Children AHCPR Agency for Health Care Policy and Research ASPE Assistant Secretary for Planning and Evaluation (HHS) CABG Coronary Artery Bypass Graft CBO Congressional Budget Office CEA Council of Economic Advisers C/MHC Community/Migrant Health Centers CPI-U Consumer Price Index -- Urban Area CY Calendar Year DME Durable Medical Equipment DoD Department of Defense DSH Disproportionate Share Payments to Hospitals ESRD End Stage Renal Disease FEHBP Federal Employees Health Benefits Program FMAP Federal Matching Percentage (Medicaid) FY Fiscal Year GDP Gross Domestic Product GME Graduate Medical Education HCFA Health Care Financing Administration HCR Health Care Reform HHS Department of Health and Human Services HI Hospital Insurance HIV Human Immuno-Deficiency Virus HMO Health Maintenance Organization IADL Instrumental Activities of Daily Living ICF/MR Intermediate Care Facility/Mentally Retarded (facilities) IME Indirect Medical Education LTC Long-Term Care MOE Maintenance of Effort MR/DD Mentally Retarded/Developmentally Disabled MRI Magnetic Resonance Imaging MSP Medicare Secondary Payer MVPS Medicare Volume Performance Standard NHSC National Health Service Corps NLTCS National Long Term Care Survey NMES National Medical Expenditures Survey OACT Office of the Actuary, Health Care Financing Administration OBRA Omnibus Budget Reconciliation Act OMB Office of Management and Budget OPM Office of Personnel Management PHS Public Health Service PNA Personal Needs Allowance QMBs Qualified Medicare Beneficiaries QDWI Qualified Disabled Working Individual PPS Prospective Payment System RVS Relative Value Scale RVU Relative Value Unit SIPP Survey of Income and Program Participation [Page 88] SLMB Specified Low-Income Medicare Beneficiaries SNF Skilled Nursing Facility SSI Social Security Income VA Veterans Administration VPA Vulnerable Population Adjustment WIC Women, Infants, and Children [Page 89] End of Document