Medicaid expansion-insurance pool.

14LSO-0262.C1

FISCAL NOTE

This bill provides for a continuous appropriation of funds credited and accrued to the newly created Healthcare Independence Program Account.  Revenues from several sources, including increased premium taxes on health insurance policies, spending reductions resulting from this act as well as other funds provided by law (i.e. – federal funds, state funds, etc.) may be accrued to this account and used by the Wyoming Department of Health for the purposes of this act.  Expenditures from this account would be limited to available funds.

	FY 2015	FY 2016	FY 2017
NON-ADMINISTRATIVE IMPACT
Anticipated Revenue Increase:
FEDERAL FUNDS	36,690,000	156,980,000	161,700,000
SPECIAL REVENUE	0	1,105,000	1,193,000

Source of Revenue Increase:

Federal Medicaid expansion funds received by the Wyoming Department of Health (WDH) to assist eligible adult clients with the purchase of insurance from Wyoming insurers on the health insurance exchange ("Marketplace").  Also, increase in insurance premium taxes due from insurance companies serving Medicaid expansion eligible adults.

Assumptions:

The Wyoming Department of Health estimates that the Medicaid Premium Assistance program will cost about 40% more than a traditional Medicaid expansion program, resulting in a commensurate receipt of federal Medicaid funds.  Based on previous expansion estimates, the WDH estimates that for the 2015-2016 biennium, this program will cost approximately $193.67 million in federal benefit and administrative expenses.  This estimate is based on an April 1, 2015 start date, allowing approximately one year (from an estimated March 2014 potential date for bill passage) to organize and implement the program.  Overall administrative costs are estimated to be 2% of benefit costs.

Based on the bill provisions related to optional Medicaid clients obtaining insurance through Wyoming insurance carriers, the Wyoming Department of Insurance (DOI) estimates an additional $1.1 to $1.2 million collected annually from insurance premium taxes owed by insurance carriers for the increase in health insurance policies sold.  This funding would be credited to the Healthcare Independence Program Account as proposed in Section 1, 42-4-408(a)(i) of the bill.  This estimate is based on the 0.75% premium tax levied against the total amount of premiums paid for the policies that would cover all eligible individuals (17,600).  With an estimated start date of April 1, 2015, the next date for premium taxes due would be July 31, 2015, or beginning in FY 2016.  These calculations take into account expected expansion population demographics, but does not account for family composition.  Additional assumptions that may impact premiums paid, and therefore taxes owed, include an annual inflation factor of eight percent (8%) and tobacco use of thirty percent (30%) among the expansion population, which will impact the additional premium tobacco surcharge assessed on some policies.

Anticipated Expenditure Increase (Decrease):
FEDERAL FUNDS	36,690,000	156,980,000	161,700,000
GENERAL FUND	(5,500,000)	(27,300,000)	(28,300,000)

Source of Expenditure Increase (Decrease):

The bill proposes to cover increased costs of Medicaid services to newly eligible adults under a premium assistance program.  Conversely, other state-funded health programs may show reduced costs as some programs' expenditures may be shifted to Medicaid or provided at the enhanced Medicaid expansion federal match rate.

Assumptions:

The state-contracted consultant report on the state's potential Medicaid expansion estimates that about 17,600 individuals not previously covered by Medicaid or private insurance may become eligible for Medicaid under a Medicaid expansion program in the state.  Some clients that are eligible for the program, but have other health insurance options (i.e. – employer-based coverage, etc.) would have to be covered by state funds.  However, in total, the state expects to see a gross decrease or offset in state General Fund expenses (about $61.1 million from FY 2015 through FY 2017).  Current programs which may show reduced state General Fund expenses include four optional Medicaid programs, state mental health and substance abuse service programs, the Wyoming State Hospital, the Renal Dialysis program, the Colorectal Cancer Screening program, the HIV/AIDS medication program, and the Tobacco Cessation program.

Note:  Calendar year (CY) 2017 is the first year when the optional Medicaid enhanced federal matching percent is reduced (from 100%) to 95% for program benefit costs.  The remaining 5% of benefit costs would need to be made up with state funds.  Program administrative costs are not eligible for the enhanced federal match rate.

NOTICE-AGENCY ESTIMATE OF ADMINISTRATIVE IMPACT REQUESTED

This bill has administrative impact that appears to increase (or decrease) duties or responsibilities of one or more state agencies and may impact agency spending or staffing requirements. As introduced, the bill does not modify any state agency budget or current personnel authorizations.

The following state agencies will be asked to provide their estimate of the administrative fiscal impact prior to the first committee meeting held to consider the bill:

Wyoming Department of Health

Prepared by:    Michael Swank, LSO                         Phone:     777-7881

(Information provided by Jesse Springer, Wyoming Department of Health, 777-8048; Jeri Melinkovich, Wyoming Department of Insurance, 777-6870)