SENATE BUDGET AND APPROPRIATIONS COMMITTEE

 

STATEMENT TO

 

SENATE, No. 2644

 

STATE OF NEW JERSEY

 

DATED:  JUNE 13, 2013

 

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 2644.

      This bill increases the Medicaid income eligibility limit to 133 percent of the federal poverty level (FPL) for all non-elderly adult citizens and lawful residents in New Jersey, effective January 1, 2014, pursuant to the Medicaid expansion authorized under the federal “Patient Protection and Affordable Care Act”, Pub.L.111-148, as amended by the “Health Care and Education Reconciliation Act of 2010,” Pub.L.111-152 (ACA).

      In terms of 2013 annual gross income, 133 percent of FPL is $15,282 for a single person, $20,628 for a family of two, and $31,322 for a family of four. (It should be noted that the ACA provides for a five percent income disregard in determining Medicaid eligibility for non-elderly persons, which effectively raises the income eligibility limit for the program to 138 percent of the FPL.)

      In addition, the bill provides for “presumptive eligibility” determinations for persons who would be newly eligible for Medicaid under this bill and for other individuals who qualify for such determinations, at State option, pursuant to the ACA (i.e., low-income parents eligible for Medicaid family coverage under section 1931 of the federal Social Security Act and former foster care children up to age 26 who were previously enrolled in Medicaid while in foster care).

      A recent report by the Rutgers Center for State Health Policy notes that if New Jersey increases its Medicaid income eligibility limit to 133 percent of the FPL, Medicaid will expand from covering 13.6 percent to 16.7 percent of the non-elderly population in the State.  This will increase the Medicaid-eligible population in New Jersey by approximately 234,000 persons, of whom some 132,000 will be non-parent adults and some 102,000 will be children under 19 years of age.

      A recent study published in The New England Journal of Medicine concluded that State Medicaid expansions to cover low-income adults were significantly associated with reduced mortality, improved coverage, access to care, and self-reported health.  The researchers found a 6.1 percent reduction in mortality among low-income adults between 20 and 64 years of age in three states that substantially expanded adult Medicaid eligibility since 2000 (Maine, New York, and Arizona), compared with similar adults in four neighboring states that did not do so (New Hampshire, Pennsylvania, Nevada, and New Mexico).  The decline in mortality, by an overall 19.6 deaths per 100,000 adults, was especially pronounced among older individuals, minorities, and residents of the poorest counties.  This research analyzed data spanning five-year periods before and after the three states extended their Medicaid coverage to poor, childless adults.

 

FISCAL IMPACT:

      Senate Bill No. 2644 amends current law to expand the State Medicaid program to all non-elderly adult citizens and lawful residents with incomes up to 138 percent of the federal poverty level (FPL), pursuant to the federal Affordable Care Act (ACA).  The Office of Legislative Services (OLS) notes that the Governor’s Fiscal Year (FY) 2014 Budget assumes total Medicaid expansion-related savings of approximately $227 million, to be realized over the final six months of FY 2014.   Savings in FY 2015 would likely be higher based on a 12 month period of expansion.

      Of the $227 million in FY 2014 savings, informal information from the Executive indicates that $176 million in savings are assumed from an agreement with the federal Centers for Medicare & Medicaid Services (CMS) whereby certain parents and adults without dependents who are currently enrolled in the NJ FamilyCare and Medicaid programs will be deemed “newly eligible” for Medicaid as “early expansion” populations under the ACA.  Thus, expenditures for these individuals will receive an enhanced, 100 percent federal Medicaid matching rate beginning on January 1, 2014.

      In accordance with federal guidance, states will receive enhanced federal Medicaid matching funds for early expansion populations only if they elect to expand Medicaid to all non-elderly adult citizens and lawful residents with incomes up to 138 percent of the FPL, pursuant to the ACA. Thus, State savings are anticipated under the Medicaid expansion because expenditures for these currently enrolled parents and adults without dependents would only receive the State’s regular 50 percent federal Medicaid matching rate in the absence of the Medicaid expansion.

      The OLS anticipates that the Medicaid expansion may generate additional, indeterminate savings associated with future enrollments of parents and adults without dependents in these early expansion populations who are currently eligible for, but not enrolled in, the NJ FamilyCare and Medicaid programs, and who, under the Medicaid expansion, will qualify for an enhanced, 100 percent federal Medicaid matching rate rather than the State’s regular 50 percent matching rate. Informal information from the Executive indicates that the Governor’s FY 2014 Budget assumes Medicaid expansion savings of $48 million from these future enrollments.

      The OLS anticipates that, pursuant to the ACA, a 100 percent federal Medicaid matching rate will entirely offset State Medicaid expenditures in FY 2014 through FY 2016 for health care services provided to newly enrolling adults with incomes up to 138 percent of the FPL who are rendered newly eligible under the Medicaid expansion but who are not part of the “early expansion” populations described above.  However, the OLS notes the potential for increased State and local administrative costs associated with processing enrollments for these individuals and other newly enrolling individuals.

      The OLS also notes that the Governor’s FY 2014 Budget assumes $3 million in savings from certain inmates with hospitalizations exceeding 24 hours becoming eligible, under the Medicaid expansion, for an enhanced, 100 percent federal matching rate for applicable expenditures (previously, these inmates were ineligible for Medicaid and their hospitalizations were funded entirely at State expense).

      The OLS anticipates potential, indeterminate increases in State and local costs associated with the extension of presumptive eligibility to certain adults who are former foster care children and to low-income parents eligible for Medicaid family coverage under section 1931 of the federal Social Security Act.  Minimal fiscal impacts are anticipated from extending presumptive eligibility to non-elderly adults newly eligible under the Medicaid expansion, as these individuals would qualify for the enhanced, 100 percent federal Medicaid matching rate.