Wesley and Andrew up here. Welcome back, folks. We are going to reconvene for our panel for State Budget Decision Making. HR1 is having a variety of near-term impacts for FY27 budgets and will have longer term impact as well. We have two great luncheon experts joining us this is afternoon to help us make sense of what states are considering this year and what they may be considering in the future. Wesley Tharpe is a Senior Adviser at the center on budget priorities. He leads the center's research and analysis and trends and opportunities. Andrew Badaracco is a senior healthcare. He's a veteran of CMS to support state Medicaid agencies and other state holders. Savings with an asterisk and the hidden math of Medicaid enrollment movement and understanding Medicaid enrollment in managed care program. West, you will go first.
>> Wesley Tharpe: Yes, that's right. Is the mic working for folks?
>> Yes, you have to eat the mic. [Laughter]
>> Wesley Tharpe: All right, that sounds a little better now. Looking forward to diving in. Hi, everybody, I am West Tharpe. I am a Senior Adviser, at Washington, D.C. I am eager to jump into our state's taxes budget. What I can promise you is that having been in this line of work for nearly 15 years now, states really are having a moment. States really are at a critical historic juncture of policymaking in the same way that was true of Capitol Hill or the administration plan HR1 this time last year. Now, attention is turned to states capitol and including not limited to healthcare. I am looking forward of setting a foundation for us to think about that and to talk about it. On the next slide.
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>> Wesley Tharpe: The Center on Budget and Policy Priorities. I have been doing this type of work for 15 years including about the last eight years at the center. With that out of the way, I will move to the next slide and we can dig in.
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>> Wesley Tharpe: So, where I like to start, resource of presentation these days is basically here. States are at a critical juncture as highlighted from this headline from Government Magazines, programs and tax changes and massive budget reconciliation bill. How will state policymakers respond? That's true for many reasons. Most, especially due to pressure policymakers are grappling with from HR1. And so on the next slide, I will highlight a little bit more about that major package.
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>> Wesley Tharpe: Some of these have been touched on previously. HR1 included about $1 trillion. As well as food assistance and climate programs. What you are looking at specifically in this chart are the cost of those major cuts to Medicaid ACA and SNAP compared to the tax cuts in that package solely for people with incomes over $500, 000 a year or more. The implication of this which brings us here today for the state and local budgets and the people they serve on health policies are wide ranging and begun to make themselves felt, next slide, please.
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>> Wesley Tharpe: So, the first and perhaps wonkiest, federal state tax confirmative. Any time there are sweeping changes made to taxes on the federal level, for example, the sort of the original Trump's Tax Cuts in 2017 and HR1. Through those linkages that I mentioned. When it comes to HR1, I won't certainly get into the weeds here. The primary things to know are those links are around corporate business tax provisions as well as poorly targeted personal income tax breaks from things like National Anthem tips and overtime. Crucially, however, these are linkages that states do not have to fully accept and it is common for states to link or delink from these federal changes. Many of them have been doing this and which is something I will come back to briefly later on. Lastly, just to use the Massachusetts example as how this is playing out in state capitols, according to estimates of what those federal tax changes could mean for states, in Massachusetts, the estimate would be about $442 million followed by $250 million a year they are after which when everyone thinks of those sorts of policies on the merit is a bit of a window and a sheer fiscal and the financial perspective of this pressure this had caused. The next slide.
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>> Wesley Tharpe: Those are really hitting more or less right now. There are things that policymakers have been wrestling with in 2026. Additional costs from last summer's federal package that's going to come online over the next couple of years across programs. This includes really in a signature way highlighted here which is a new requirement for states to shoulder for the first time in history. A substantial share of the cost of food benefits provided under SNAP program. The size of this can be substantial especially in states that have a relatively high Error Rates, sort of over and under payment in the SNAP program. Here in Massachusetts, just to highlight where we are, the state's most recent Error Rates having a two year delay and having to meet the cost responsibility, the state could owe up to the maximum -- also, in SNAP, there are some administrative cost. In Massachusetts that could add on another $64 million in additional costs. I would also highlight and it is something that'll come back to health. Experts expects there to be a measurable increase. Often times it is known as food insecurity so basically hunger.
Due to the cut under HR1, we know that carries mid to long-term in direct costs in a variety of ways, things like more difficulty staying in the workforce or worsen outcome which are --
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>> Wesley Tharpe: On the next slide, I want to think of SNAP to handle this point. We have seen the initial impact of HR1 cuts beginning to play at the local level. So, what is shown here is that between HR1s enactment and February 26th, SNAP enrollment is fallen in every state due to the new types of requirements in that program that are going to be coming on Medicaid and health programs further down. SNAP enrollment has fallen by 14% in Tennessee and 15% in Virginia. A shocking 49% and that's since July of 2025 in Arizona. That data has been benchmarked across of different sources. In Massachusetts, the decline is 11. 4% or about 124, 000 who are lost that eligibility since HR1 enactment. The next slide.
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>> Wesley Tharpe: Longer terms, states and localities are likely to face a series of longer terms spill over costs from the significant cuts in the federal package. As noted earlier, about a trillion dollars nationally over ten years in Medicaid and ACA. There is also additional costs coming down from the package, in particular the requirement for states having to spend money to stand up for the new Medicaid requirements and limit on states' provider taxes that they use to finance the program. Thinking of spill over costs that could result in coverage losses. There are array of potential ways that this could show up with the most notable one being the potential surge and compensated care cost. Uncompensated care cost can rise by $3. 7 billion over the next ten years. So, on the next slide, please.
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>> Wesley Tharpe: So, while some of the larger requirements and costs that exist through the changes to Medicaid and other health programs are maybe still in the pipeline of coming down in terms of implementation. As it has been highlighted by other speakers today, some of these are felt across the broad sections of states are highlighted here. At least in part because state policymakers and officials know that those additional larger costs are coming a bit further out and these are already taken certain types of saving measures such as the cuts highlighted here. So, on the next slide.
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>> Wesley Tharpe: Thank you. I want to briefly touch on sort of one important nuance that I think is really crucial to understand. I think a lot of folks here are aware of this. It has been talked about here today. The most sizable estimates of the losses in federal Medicaid support that could be coming down that states could see the next decade are not in the entirety. Rather a practical manner, many of those cuts would come into event to people who eligible of Medicaid do in fact lose coverage because they are caught up in the work requirement primarily. States have tools a their disposal to minimize or significantly minimize those coverage losses and in turns limit the physical harms coming down the federal medical cuts. These are sorts of things which I have mentioned here like investing and human services, agency staffing, technology and making it simple paperwork-free or hassle free as possible under the now expanded requirements. By doing those sorts of things to keep people enrolled and some of those funds would maximize the degree of which federal funds keep growing and limits those in direct longer terms spillover costs, like compensated care. On the next slide.
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>> Wesley Tharpe: I will reiterate something that Sean lifted as well for those who were here at the start. Maryland's - if we can keep most people eligible, in this case, 2. 7 billion could reduce. On the next slide, please. This is going to be pivoting a bit to a series of things and I will briefly walk through and crucial for understanding state's physical landscapes and what it means for Medicaid for help and people in the community. The case that states are grappling with pressures that are adding further fiscal strains now and will continue to in the coming years. These include most prominently of a few things of the expiration and ongoing disruptions including things in the Middle East. Something I will say a little bit more in a moment. One thing that's being lifted up on this slide particularly in the chart is if you take those things together, what we are seeing is a generally speaking nationwide, state revenue trends have normalized from the unprecedented peak that existed coming out of COVID-19 pandemic and the recovery and many states, I believe including here and fuel and record surpluses. There are also, Frankly, risks of administration proposals that are on the table currently under debate that threatens a potentially additional reductions in federal support for a wide range of state programs, housing, childcare and education and others. I will tell you a bit more of these dynamics that are important to think about.
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>> Wesley Tharpe: One of the things that's pressuring state and local budgets right now are a bucket of already expired or expiring federal aid programs that were linked to the arrival of COVID-19 and it is subsequent response and recovery. Those had to be out by end of 2024. There are additional major pot of money for K through 12 which is expired and a series of public health program funding and grants working to their way to the system as well. That's one factor to these services we have been talking about. The next slide.
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>> Wesley Tharpe: You will see a second trend that I want to say a little bit more about. In terms of understanding the fiscal landscape nationwide, many state policymakers themselves, again, depending on the state have been enacting policies over the past five years that are in the wake of HR1 starting to fully come due. And thus, further exacerbating further pressure on health programs and state budgets generally. What's being highlighted on this slide are a particular group of policies. First, over the past five years, there are now 26 states that had passed increasingly costly personal income tax cuts. Meanwhile, 17 states in the past two years enacted costly cuts or staying in property local taxes. There are now 20 states in 2025 enacted expansions to private school voucher programs which may at first glance sounds unrelated to Medicaid or health policies but many states are swelling in costs to hundreds of millions a year putting treasure on state's budget as a whole. Next slide, please.
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>> Wesley Tharpe: I know this is small and precise specifics of this are not as important as the general trend as why I have included it or why I want to lift up. This is showing the diversity and state revenue trends that's occurring nationwide over the past sort of, this is called about the past year, it is specifically July of '25 to March '26. I have seen a decline in their state's revenue collections. You see a bit of an overlap if you are paying attention to the prior slide with the states that's enacting various costs of fiscal policies of their own. These are places like Idaho or Georgia or Kentucky just to name a few. Next slide, please.
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>> Wesley Tharpe: Now, as I move closer to kind of wrapping my part as I move on the conversation, I want to sort of include just a few things - a few quick slides on what this all means and where states may go from here. So, for one is that in a world where states are required to balance their budgets, they significantly drop in federal support. They're going to have to make up for lost funding with painful trade offs. Nationwide, one and every 3 dollar available from public investment comes from the federal government. Half of that support is from Medicaid. As I note here on the slide in Massachusetts, it is closer to two-thirds of those federal dollars that are coming in every year are for Medicaid.
And so that means to avoid harmful cuts in a world where that support is reduced to healthcare and other programs. States need to find the revenues to fill that gap. That's, of course, easier said than done. History tells us some states will pursue revenues and many are. At the same time, there is various cuts like we have been talking about today. Briefly, I want to highlight and I will do it on the next slide, please.
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>> Wesley Tharpe: In a world where states are having to make choices due to those balanced budget requirements, it means that the fiscal pressure is relevant not only to health programs or food programs that were dealt with HR1 but the broad spectrum, that revenue goes to support. State general fund expenditure goes to K through 12 education and another 19% and Medicaid and 9% is higher education. So, essentially take those things, combine education and healthcare is basically comprising of two-thirds of states budget nationwide.
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>> Wesley Tharpe: A few more quick words from me. So -- you will have to forgive me. So, that brings us to where are states today? How are state policymakers depending where they are been thinking about how to respond -- states are falling into a couple of buckets. The first where policymakers placing a high priority on the need to preserve and raise new revenues in order to offset those recent federal cuts and to protect and invest in their ongoing needs. Second, though, is a bucket of states that continue to move in the opposite direction by embracing the costly revenue reducing policies that I was highlighting a bit earlier. On the next slide, please.
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>> Wesley Tharpe: Just quickly here, what I want to say is I was talking about the importance of that topic around federal states tax informty. Coming back around, we are talking about hundreds of millions of dollars in loss revenue nationwide depending on how states choose to respond to those things. For example, more than a dozen states that partially decoupled by corporate tax provisions and there is a few more examples that I will pass over for time. Move to the next slide for my last major point.
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>> Wesley Tharpe: In this group of states is something that folks should be aware of and think about how these policy debates are playing out. Several states are trying to raise new revenues to mitigate these sorts of costs. So far again just this year in 2026, we have seen three states, Hawaii, Maine and Washington, targeted income tax increases oftentimes known as millionaire taxes and Rhode Island is the fourth. We have seen no worthy revenue increases and a few other states, Illinois, California, and Colorado. Lastly on the next slide.
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>> Wesley Tharpe: There are other states not enacting those sorts of policies or considering them, looking at more costly regressive policies such as deep income and property tax cuts. There are five states, Arkansas, Georgia, south Carolina, Utah and west Virginia enacted major income tax cuts so far this year. These are policies, growing increasingly costly many states and swelling into the billions of dollars and in loss revenues in a few cases. With that, I have just a closing slide at the end. I will cue up and center the point that when it comes to state policies and etcetera, it is all about choice. Policymakers didn't have a lot of say in the passage of HR1 or what happens in the hill. They are in the driver's seat for how to respond. States have challenges right now and historic opportunity to lead. Thank you.
>> [Applause]
>> Andrew Badaracco: All right, as we wait for the slide deck to switch over. I am a senior healthcare policy. Prior with my time, I spent about 16 years with Medicare and Medicaid services. I focus on Medicaid policies as it relates to Medicaid financing and upper payment limits and general state plan reimbursements and so in this role, I partner with several of my colleagues in writing a paper talking about as states are, you know, approaching their strategy dealing with some of the challenges under HR1. Where they may find savings or unintentional consequences associated trying to find savings and what kind of strategies should they implement or what to do in their
>> So I'm going to refer to it as H.R.1. I feel like OB3 feels Star Warsy, so we'll start there. So generally speaking, our team saw some challenges coming down the road and we were talking to a few of our clients. The big thing we saw was largely because we're an actually yal firm we deal with management capitation rate setting. So we thought that as states were approaching the redetermination processes, the work requirements, that there might be a temptation to predisenroll people from managed care in the state. And we realized in a lot of ways if you think about, you know five hundreds on a per member per month basis, if you simply remove people from the roles that's 500 of savings. But there is a lot of additional revenue for states, there is a lot of additional efficiencies baked into those processes that really weren't being accounted for. So we wanted to create something that initially at least gave policymakers the best information that we could give them related to what are the inputs, what are the outputs and how does it affect managed care enrollment in states.
Next slide, please. So before we go into the calculation fund, post-lunch, the idea we wanted to really kind of set out was what are states dealing with. A lot of folks have provided everybody with a lot of great information so far. So not to belabor the point but to really kind of zero in on this. First and foremost, states' ability to raise revenue to support Medicaid payments is going to decrease. In expansion states alone, over the next several years, provider tax limits will be reduced by 0.5 % until provider tax receipts are limited to 3.5 % net patient revenue. The other wrinkle is that the H.R.1 prohibits states from implementing any taxes that have not been enacted or imposed as of July 4th. So that means that states not only will see a drop in their provider taxes; they cannot expand their existing provider tax base. They can't add new taxes for new providers. They can't find other opportunities for taxes.
What they were taxing on July 4th is essentially where their provider taxes are currently frozen. So all these considerations of dropping in Medicaid funding or reducing state revenue, there is another mechanism for states to raise money that is no longer available to them, and that's a really, really big hit.
The second piece is, and I think this is a really, really important point and it plays into the discussion we'll have here, is that those work requirements and redeterminations will have the effect of disenrolling people from Medicaid. I think that in many cases that's understood in terms of the action that there would be administrative processes or errors that go along the way, and those actions will directly impact people's enrollment in the Medicaid program. So effectively, are you reducing states' ability to raise funds and you're reducing the amount of individuals that may be eligible for Medicaid.
And then finally, it limits payments to providers through the managed care plans to 100% of Medicare. By and large, this was a very large winfall for providers providing care to managed care enrollees. The previous louns was they could make payment up to an average commercial rate H.R.1 brings it down to 100% of Medicare Al there was a rule published I believe it was 2 weeks ago that brings it down to Medicare for several other provides in the Medicaid program, including some of the fee-for-service. So there will be additional impacts that come along the way.
But taken as a whole, what it means is you're reducing payments, therefore reducing federal fund ing that you will see as a result of those payments. You're reducing eligibility, so the amount of services and utilization, which is driver of how much federal funding you receive is also going to decrease. And at the same time you're reducing states' ability to raise funding to support those services and those payments. So all in all we're expecting a very large decrease in both state and federal revenue associated with Medicaid.
Next slide, please. There is hope, I think. Sorry. It's heavy, just like the pizza.
So, what levers the states have to reduce state Medicaid spending and how might those levers be enacted in some of these environments.
So as a team, we put our heads together and realized, you know, there's some of the lower-hanging fruit that one might expect to see in such a thought analysis, reducing provider payments rates is one. Nobody wants to see that and the states don't want it. It's a big barrier to overcome. The second step is to potentially eliminate optional benefits. Again, not ideal. And the challenge is that for every Ben fet you remove under EPSGT you have to provide all the care and services. And then under, there's the cost avoidance of having preventive services provided on an optional basis that might get replaced with a hospital visit or outpatient hospital visit or something to that nature, that it's not necessarily replacing the benefits.
And then finally, I think an idea that was discussed a little bit earlier which is looking to other funding options to raise non-funding share. State like Massachusetts, for example is very adid he want at identifying funding sources and they've done a good job identifying any possible governmentable transfer that could be used to support Medicaid, looking at opportunities to certify public expenditures, like in schools, for example, where all your kids are in schools, all the schools receive some level of state funding and anybody state Medicaid eligible can receive services that are certified in those schools. Identifying funding sources to mitigate some of those spending reductions you'll experience otherwise. And we'll reduce and restrict eligibility and how and where individuals receive care and services. We're really going to focus primarily on that tier of state reduced spending.
Next slide, please. Thank you. So, as far as exercise with our actuarial team and policy team, we looked at, you know, what happens from capitation rate setting model if you were to remove individuals from the managed care pool of eligible individuals? And so, you know, we looked at you have a large portion of healthy individuals. Those individuals may or may not be considered to be somebody that could be rolled off of managed care, placed into fee-for-service or disenroll from Medicaid altogether. So what happens in the event that a state does disenroll let's say healthy people from a managed care program and shrinks the number of individuals that are covered?
So the state then, the rate of the, the capitation rated that's established reflects the averaged cost of individuals in the managed care. So having a larger pool of individuals, a greater mix of case mixes increases the spectrum of what is it going to cost to provide care to these individuals? To shrink that pool and you concentrate it with more -- with people that have higher level of complex care needs or have high general high utilization, your costs of providing care goes up. So while you're decreasing number of people with the intention of saving funds, the balance is the costs of that care for those pool that remain increases.
And that's really the as asterisk we're talking about when we say with an asterisk. There is always a trade-off when you're pulling people off and rolling them off of managed care.
Next slide, please. So what are the options that states have for, you know, lowering managed care enrollment? We would envision states taking the action of just reducing eligibility or he enrollment similar to what's been discussed so far. And of course, that includes eliminating optional covered populations, more thorough and more frequent eligibility reviews or tightened redetermination requirements. Otherwise, states could shift coverage from Medicaid managed care to fee-for-service.
So you could move low-cost members to fee-for-service where the state pays each bill and there is no managed care program that's manage or operating more efficiently, it's strictly the state operating and providing care and submitting claims for those services.
In these instances, the individual receives the same services, but a very different funding mechanism and financing. And then you would change the mix of who's left in managed care and thereby having potential detrimental effects to your managed care population and increase in capitation rates.
Next slide, please. So the downstream effects, if states took either of those two options, what happens? If you were to disenroll people you would result in a higher uninsured population. That doesn't mean costs go down. Those individuals as mentioned earlier could result in -- you could see less utilization of emergency departments and other state agencies, other programs, other providers.
You could -- you see your higher hospital safety net costs increase, as I said, DISH would increase and the payments you make to your hospitals and programs would go up. The other detrimental effect would be potentially lower premium tax revenue. As mentioned earlier, states lose the ability to implement new or increase their tax pool under H.R.1. So under managed care, you have the ability to implement a premium tax on those plans, thereby increasing the amount of revenue the state would have to support Medicaid. If you roll individuals off your managed care plans, what happens? Premium revenue goes down for the plans, premium -- tax revenue goes down for the states.
And finally, you would have an eroded provider tax base, primarily for that initial reason of because of the provider tax provisions in the rule, in the legislation, provider tax receipts are driven by utilization and they're driven by payments that plans, Medicaid, Medicare make to those providers for services. If you remove coverage from people, from their daily life, what happens? They're going to be less inclined to go to the doctor, they're going to be less inclined to seek preventive care, and so all those visits, all the claims associated with those visits would potentially reduce how much money a state could collect in prior tax revenue.
Next slide, please. So for the sake of time, we may skip over this, but I'm going to plug in quickly at the end of the slide there is a QR code to the paper. In the paper there is an interactive tool that essentially allows you to kind of run the numbers for your states. There's some -- there's slider bars for what's the state's existing FMAP rates, and I have hard copies as well if anybody would like one. There are sliders for the FMAM rates, Massachusetts 50%, how many of your premium tax revenue do you collect, what are your administrative costs, overhead, and you can do the movements yourself. You can see if I move high cost individuals out of managed care and into fee-for-service, what happens? If I move low-cost individuals out of managed care into uninsured, what happens and what might be the downstream effects? I apologize, I think we probably should have made sure we had all of our ducks in a row there, but I think otherwise, I'll be happy to talk to anybody afterwards about it.
So just generally speaking, what are the benefits of managed care versus fee-for-service? And I think typically, you know, for managed care you would have your monthly fixed payment per person per plan. The plan bears the risk and pays providers. So the plans are paid to operate more efficiently and their profits reflect that efficiency. And so for that mix of patients in those populations, there is a benefit to having a plan manage those -- the care for those individuals.
And then finally, it brings in premium taxes and Medicaid-matching dollars. And fee-for-service, states pay each bill as the services occur, so there is no regular payments for what happens. It's just when a service is provided, provider gets paid. The state bears the financial risk for that transaction directly and there is no way to draw federal dollars on financial vehicles such as health plan premiums or even the capitation payments. Every time the state makes a capitation to a plan, they get federal funding to support that payment and that goes to the plan as well. So all these transactions have federal funding that goes from the federal government to the state to the providers. So the continuity associated with that is a good thing for state budgets and state revenues.
For fee-for-service, finally, there's often less assumed -- there is an assumption of less efficiency over time, though I'm a fee-for-service policy wonk and I think there is a little bit of benefits to both programs. But anyway, next slide, please.
So what changes when members leave managed care. We've been over quite a few of these, so I'll try to go quickly through this list here. But for medical care, fee-for-service often costs more, less managed, and if someone loses Medicaid entirely the cost doesn't vanish, shifts to employers, hospitals and local governments.
The administration of the services, usually lower -- usually the administration costs are lower in fee-for-service, but the state loses some efficiency of scale as the managed care population shrinks. So again, if it's the state managing the care of individuals, it's state employees, state pension funds, it's state costs that aren't then passed on to the plan. The state has to absorb those costs.
The plan absorbs some level of risk through their margins and profit margins. And then finally taxes and federal match. The premium tax revenue associated with the plan payments is pretty significant, and giving that up and moving away from it presence a whole bunch of challenges negotiated with gathering revenue from the plans.
Next slide, please. So this is just an example of like how that works out as far as premium tax revenue is concerned. So, just taking this for an example, if you have 5% premium tax on $1,000 in payments at a 15% match rate, pretty reflective of Massachusetts. So a state would be able to collect tax revenue from an MCO about $50. That $50 would get paid back through the capitation payments and then the federal matching associated with that $50 would be $25. So in the transaction the state nets $25 because all that money is able to be used to support and pay for healthcare services in just in virtue of the fact of how the managed care program is set up.
Move that individual to fee-for-service and the $25 in net revenue disappears. Next slide, please.
So what are our key takeaways? I think generally speaking, savings are rarely one for one. There is benefits of moving individuals to managed care and fee-for-service that every state needs to consider and every state needs to weigh as they move along.
Managed care can bring in dollars fee-for-service can't, that's generally true especially related to premium taxes. Savings associated with such kind of wholesale changes I don't your populations are going to get offset somewhere else. The system is what it is and individuals are going to move and get healthcare. People's -- that's just the nature of being human. And so whether you're getting care through Medicaid or you're rolled off getting it somewhere else, you're better off having that care provided through Medicaid program as much as you can.
And then finally, we were talking about modeling the full picture. In termination of states making, terms of states, modeling how that plays out over time is really, really important to understand what's best for your state, what's best for your program and your budget.
Next slide, please. And so, I think I just want to highlight a couple of these. Just because they've been said already before. I think the best thing to do in all of these instances, and I think Sean said it and I think Wes said it and I'm pretty sure I think it was said as well, good enrollment systems, good systems that allow you to track where individuals are, where they're getting care, how are they engaging with the program, if you have to do redetermination processes every 6 months, if you have to verify work requirements being met every year or every several months, the best thing a state can do for their budget is make sure those systems are as efficient as possible and that they work and that people can use them. Because ultimately, if those systems are inefficient and they don't operate, not only do individuals lose healthcare, states lose the ability to support them and support the state budget as Wes outlined. So I would put that forward as I think one of the best recommendations that come out of some of the discussions today. And finally, do the full math. Again, run all the numbers for your program, where do people get care, where does utilization live and try to figure out where people best can receive services.
With that, I'll turn it over to Sean. Thank you, everybody.
>> Sean Slone: Gentlemen, thank you so much. We have some time for questions and while we're getting questions ready, Wes, I wanted to ask you, your nuance alert, and this sort of applies to savings with an asterisk, too, so was congress assuming a worst-case scenario that a bunch of people would be off the Medicaid role, so there wouldn't be as much federal funds in the state coffers because they failed to keep eligible people on Medicaid, was that sort of the chance that they took there?
>> Yeah. I think that's a little bit of a fair way of thinking about it, which is my expertise is primarily on kind of state finances and state policy debates and less of a kind of congressal expert or sort of accounting roles that exist I think in federal policy debates. But by and large there was a target they were aiming for for the scope of tax cuts they wanted to enact over 10 years, because of various congressesial rules, the size of the spending cuts have to match that in certain ways. And so, most of the cost savings, most of basically what is being counted as the pay-fors for those really disproportionately skewed tax cuts, just by the math, what everyone thinks of them, towards people in corporations at the top, the number assumes that it's a little bit of a quiet part, quiet rather than loud, that the coverage losses, because of the work requirement and Medicaid will be large enough to generate that amount of savings that was needed.
>> Sean Slone: Andrew.
>> Andrew Badaracco: I very much agree, and I think that the notion that, I mean, I think the redeterminations and the work requirements are going to have that detrimental impact. I think one of the things that was instructed in my understanding of it when I worked for CMS, we would regularly go down to healthcare for the homeless in Baltimore and we had a -- it was very instructive and one of the things they said more often than not is, how much paperwork do you think a homeless person keeps on them on a regular basis? When you're determining he will eligibility for a person that shows up to a clinic and they might be able to get coverage but they lack a driver's license or something like that. It was very instructive. I think that's true, administrative things that happen in a person's life make it harder to enroll sometimes, so.
>> Sean Slone: Questions in the room?
>> Yes, thank you so much for making a very complicated system, I don't know, maybe more complicated, but certainly enhanced my understanding. One of the things that's always missing from these discussions for me is the idea of the experience with the system, I'll call it, or the delivery system, both for the patient/consumer, as well as for providers.
So their experience, but also what kind of outcomes are we achieving? What's the difference in outcomes when they make these kinds of changes? You know, Medicare Advantage I think has provided us with some information about how it could change -- we'll see what happens. So I was wondering if you could speak to that because that's -- you know, policymakers care about making sure people are both happy and they're getting the bang for their buck.
>> Absolutely. I don't know why this is doing this right now. But I think you're right about that. And I think the one thing that our team really wanted to highlight was not to say that managed care is better or fee-for-service is better, but really to say that, you know, these kinds of decisions aren't intended to be made lightly, especially given, you know, in a perfect environment where you're also not experiencing such a significant loss of federal revenue, it's very hard to then -- like you have to look at your program all the time. Can we operate more efficiently? Can people get care? What are the quality outcomes we want to achieve? In light of such large cuts, you have to weigh all of that stuff.
And so I think the purpose isn't necessarily to say one's better than the other, but to say in light of all these cuts you definitely don't want to make rash decisions about where people should be receiving care. But you're absolutely right, I think one of the things most encouraging is that even in spite of some of these changes that are happening in the program, a lot of our clients have been asking a lot about quality of care, making sure that they have a quality strategy, they're making program changes that align with that strategy, and that people are getting care where they're supposed to.
>> Sean Slone: Other questions here? Do we have any questions online? Okay. Other questions in the room here?
>> So I know you said it's being said quietly that these savings are going to be realized through a decline in participation and your point is well-taken that the participation, the cost of participation is not equal. Do you have a sense, or have you done an actuarial estimate of which individuals will be dropped from the plan, and if so, what is the estimated gap between the funding that has been cut and the actual realization of savings from a decline in participation?
>> Andrew Badaracco: I'm not an actuary, just a nerd. I don't know actuarially what the answer is, but we haven't really -- our goal here was to just make sure that states had information about who was enrolled in the programs. And we're really fortunate to be able to be so many states actuary as a company that we've been able to have these conversations really at the state level with the decision makers, and they provide them with the information that they need about exactly this. And understanding what are the potential downstream effects. We don't know yet because, I think to the point that Ms. LaMontagne what she laid out was very comprehensive and thought out, if every state is as thought out as that folks are going to be in good shape. It's not that it's perfect or guaranteed to work, but having a plan or strategy to mitigate things is important but we don't know what the downstream effects are going to be yet.
>> Wesley Tharpe: And the only thing that I might add-on that is I think one distinction between Andrew and I and in some ways my presentation say little bit maybe the one that's not like the others here today, is that health policy is not my core area of expertise. My core area of expertise is tax policy. My sense of the health policy landscape is driven by smart people I work with. So when I was talking about the kind of trade-offs earlier, I'm largely indifferent in some of these choices around the best way, the best health policy levers for states to pull. It's a fiscal dollars and cents question, keeping people on Medicaid in the face of the fairly strict new federal work requirements and policies, keep the dollars flowing, when the people lose the coverage, that's when the federal dollars go away.
>> Sean Slone: We have another question over here.
>> I'm not sure how pertinent my question is to your presentation, but I can't help but ask it because in my state, the state of Maine, it's a big part because we're in a campaign season, it's a big part when we talk about Medicaid. It's a big part of the policy conversation about how it can become more affordable, what do we need to do, managed care, fee-for-service. Or at least in my state, really addressing the quote, unquote fraud. In certain corners there is a true belief that fraud is the problem. It's not whether we have fee-for-service or whether we have managed care; it's that all people that are taking advantage of the system and sucking the resources out of it in a fraudulent way.
Now, I don't believe that personally, but it's very much people and depending on who becomes our new governor next January, you know, this may become a very big issue in the state of Maine.
So how do you speak to that in the work that you do? Or maybe you don't.
>> Andrew Badaracco: So I'll just say this, there are I think a lot of interesting case studies over the last several years, one of them is in the New England region, Connecticut, where a state moved away from managed care, around 2011, 2012 they drooped it entirely and they went to managed fee-for-service model where they have an administrative services organization that helps them manage claims. But for the most part, it's entirely fee-for-service. That was intentional because they felt like they got a better, not better deal is the right way to put it, but there was a benefit to the state to doing that. Other states, for example, like Tennessee went fully managed care in the late '90s and they have not turned back.
So, it really depends on what's best for the state, you know, what is the state's internal partnerships look like with the plans, how does all that work out.
As far as fraud is concerned, I understand the argument. I mean, there is a list of Office of the Inspector General reports about fraud. I don't know, I can't say if it's systemic or if it's, you know, something -- if there's just something going on right now. But I know that generally there has been fraud, and where there's been oversight and audits and things like that, even people with the best intentions make mistakes.
And so understanding in the context of this is part of the ebb and flow of operating such a large system with so many dollars at stake, there's bound to be instances where something goes wrong or something goes sideways. The goal in a lot of ways should be proper oversight, making sure you're doing claims reviews, making sure you're documenting prior authorizations, care according to a service plan, and just making sure that people get what they need. And so I think it's like a pendulum swing in some cases and I would think that, you know, at some level in the midst, in the middle of that pendulum swing there's people doing exactly what they should be doing, getting the care that they need. But I understand that's not always the case.
>> Wesley Tharpe: The only thing that I would add here is thinking about kind of federal and state policy making generally when it comes to benefit programs, whether it's Medicare or SNAP, or the range of others, there really is I think a fairly kind of sort of evidence-based disconnect between sort of what the data show, what the research show and how widespread and common fraud is, again, across programs. And then it's durability, you might say, in the public mind, in the public discourse that there aren't a lot of great answers for but I think is kind of a foundational point. It's worth acknowledging that that is a disconnect in terms of its commonality.
I think one thing we've thought about a bit is it does tend to be the case that those voices that are lifting the fraud narrative most strongly are those who are in equal measure, perhaps most enthusiastic about cutting those sorts of programs. And so a lot of times what's happening is individual anecdotes, and again some public right issues concern about taxpayer dollars being used wisely is being sort of weaponized to advance the sorts of policies that are designed to reduce the scope of these programs. Frankly, even if they were operating 100 percent free of fraud.
>> Sean Slone: Folks, we are at time
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