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Attached is 38th special edition of the COVID 5 Slide Series, and the final edition of CY2020. The progression of the pandemic throughout the year has been devastating, including the most recent weeks and days as reported herein. Key findings from this edition, which tabulates monthly cases and deaths by state, are summarized below:
- We expect that more COVID deaths will occur in December than in any prior month in the US overall and in 33 states. December’s new COVID cases are at record highs nationally and in 35 states.
- The 3,400 new COVID deaths reported on December 16, are nearly 200 above the next-highest day the US has experienced to date.
- One positive development is that the percentage of monthly new cases resulting in death is far lower in more recent months (approximately 1%) than was the case during April and May (approximately 6%).
- Multiple points of research, including data we present herein, compellingly demonstrate that overall deaths in the USA during 2020 are far higher than occurred during 2019.
Thanks for your interest in our Series and for your many kind and guiding comments. Please let us know if you’d like to be added to (or removed from) our distribution list, and wish you a very happy New Year!
COVID Case Progression; Death Rates and Hot Spots
Most of the efforts of the outgoing administration to transform the program have failed.
Trump entered office seeking a massive overhaul of Medicaid. Four years later, his administration has fallen short
President Donald Trump entered office seeking a massive overhaul of the Medicaid program, which had just experienced the biggest growth spurt in its 50-year history.
His administration supported repealing the Affordable Care Act’s Medicaid expansion, which has added millions of adults to the federal-state health program for lower-income Americans. He also wanted states to require certain enrollees to work. He sought to discontinue the open-ended federal funding that keeps pace with rising Medicaid enrollment and costs.
He has achieved none of these ambitious goals.
Although Congress and the courts blocked a Medicaid overhaul, the Trump administration has left its mark on the nation’s largest government-run health program as it has sought to make states more responsible for assessing its impact and improving the health of enrollees.
One notable achievement: The Trump administration pushed some states to be more aggressive in weeding out ineligible recipients — an initiative that led to a drop in enrollment of children in several states, including Missouri and Tennessee. About half of those enrolled in Medicaid are children.
A recent report from the Georgetown University Center for Children and Families found that the number of uninsured children rose by more than 700,000 to 4.4 million from 2017 through 2019. The increase of uncovered children stands out since uninsured rates typically drop during periods of economic growth, such as the one occurring from 2017 to 2019.
Advocates for the poor say the administration’s efforts contributed to an increase in the number of uninsured children, after years of decline. “The administration has not succeeded on any of its goals in any meaningful way,” said Joan Alker, executive director of the Georgetown center. “But they still have inflicted some damaging changes to the program.”
“The administration has not prioritized the health of children,” said Bruce Lesley, president of the child advocacy group First Focus on Children.
Alker attributes the rise in uninsured children to federal officials’ decision to slash outreach funding for the Obamacare insurance exchanges — through which families eligible for Medicaid are often identified — and the administration’s focus on the “public charge” rule. That provision allows the federal government to more easily deny permanent residency status, popularly known as green cards, or entry visas to applicants who use — or are deemed likely to use — publicly funded programs such as food stamps, housing assistance and Medicaid.
Medicaid officials said the increase is partly due to loss of health coverage by middle-income families who are not eligible for Medicaid. They say those families don’t qualify for government subsidies for the ACA’s marketplace plans and were forced to drop their plans because of high premiums.
But Alker said federal data suggests that families who have incomes over the 400% federal poverty level eligibility limit for subsidies (about $87,000 for a family of three) saw a slower rate of increase in the number of uninsured children as opposed to lower-income kids.
A spokesperson for the federal government’s Centers for Medicare & Medicaid Services said the agency was “committed to ensuring that eligible children are enrolled and retained in coverage” and it spent $48 million in grants for outreach and enrollment effort last year.
The Trump administration opposes the ACA’s expansion of Medicaid, which provided billions in federal dollars to cover nondisabled, low-income adults. Yet seven states adopted the expansion during the past three years, including Republican-controlled Utah, Idaho, Oklahoma, Nebraska and Missouri.
Despite the aim to shrink the program, about 75 million people were enrolled in Medicaid in June 2020 — roughly the same number as in January 2017, when Trump took office.
One reason is that Medicaid enrollment soared this year following the COVID-19 outbreak as unemployment spiked to historic highs and federal stimulus money forbid states to drop anyone unless they moved out of state.
But that is far from the administration’s goal of “ushering in a new day” for Medicaid, as CMS Administrator Seema Verma said when she laid out her bold vision in a 2017 speech.
Verma acknowledged she was stepping into a hornet’s nest of entrenched stakeholders and interest groups.
“I would like to invite everybody here today who have fought the political healthcare battles over the last decade to take a deep breath, exhale and agree to reset as a group,” she said.
They didn’t. The administration’s major Medicaid changes were met with opposition from hospitals, doctors and patient advocacy groups, who feared the efforts would lead to cuts in funding or add obstacles for enrollees seeking care.
Officials spent two years seeking to allow states to require enrollees to work or volunteer as a condition for enrollment. They approved proposals from 10 states, but only Arkansas implemented the new requirement before a federal judge ruled it illegal. Arkansas’ brief experience resulted in more than 18,000 adults losing coverage.
After losing in federal district and appeals courts, the Trump administration has appealed to the Supreme Court, which will decide later this year whether to take the case.
The push for work requirements and other changes have altered the culture of Medicaid so that officials are more intent on keeping people out of the program instead of welcoming more in, said Lesley, of First Focus.
Before the pandemic, he said, the administration allowed states to add hurdles for families to get enrolled and stay enrolled, such as requiring them to more frequently recertify their income eligibility.
Aaron Yelowitz, a professor of economics at the University of Kentucky, said one of the Trump administration’s biggest impacts on Medicaid was prodding states to be more active in making sure they were covering only people who met the states’ eligibility rules. He noted the ACA gave states incentives to enroll newly eligible adults over traditional groups such as children and the disabled because the federal government paid a higher share of the cost.
Seeking flexibility for states
The administration — as well as Republicans in Congress — favored a fundamental change in how Medicaid is funded. But Congress failed to move the program to a “block grant” approach, which would have given states a set annual amount — rather than the current system that provides funding determined by how many people qualify for the program and health costs. The GOP proposal also would have allowed states more flexibility in running the operations.
Critics predicted a block grant would have cut billions in state funding and led to cuts in services and eligibility.
Once the legislative proposal was dead, the administration sought to enact the strategy via its authority to test changes in payment methods. Only one state applied — Oklahoma — and it dropped its application this year after voters passed a Medicaid expansion ballot initiative.
Verma promised to give states more flexibility in running their programs in other ways, while also holding them more accountable for care to Medicaid enrollees. CMS has approved dozens of Medicaid waivers since 2017, including allowing states to be more innovative in helping enrollees with substance abuse or addiction problems and serious mental illness. It granted more than 30 states waivers to enhance treatment options.
With Medicaid paying for more than half of all births in the United States, Verma also sought to improve oversight of prenatal and early childhood services.
While CMS has started a scorecard to track Medicaid outcomes, the data is missing for several states or outdated on several measures. For example, the low-birthweight measure is missing data from more than 20 states and no data is listed on children born with an addiction.
CMS officials said they are working to provide more updated information on its report card.
Changes implemented by the administration, officials added, have elicited more timely data from states, allowing them to spot problems quicker. For example, in September, CMS determined that many children were delayed from March through May in seeing a doctor and getting important vaccines as the pandemic took hold. CMS pushed states and health providers to remedy the problem but did not offer specific help.
Asked during a recent phone briefing with reporters about Medicaid’s legacy under her stewardship, Verma didn’t mention the expansion, work requirements or efforts to turn Medicaid into a block grant program for states.
“We have aimed to try to ensure the program is sustainable for generations to come and ensure better outcomes for those it serves,” she said.
Curator, Rx, Roundtable show
The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.
Roughly half of Medicaid spending is on specialty drugs based on this 25-state study.
Magellan Rx Management, the full-service pharmacy benefits management division of Magellan Health, Inc. (NASDAQ: MGLN), released its fifth annual Medicaid Pharmacy Trend ReportTM, the industry’s leading report exclusively detailing trends in the Medicaid pharmacy fee-for-service (FFS) space and the only detailed source examining Medicaid FFS gross and net drug spend trends.
“As a national leader in pharmacy benefit management, with more than 40 years of experience, we maintain a deep understanding of the complexities within the Medicaid space related to prescription drug costs and utilization trends,” said Meredith Delk, PhD, MSW, general manager and senior vice president, government markets, Magellan Rx Management. “The Medicaid Trend Report is one tool of many we deploy that provides value to our more than 25 government customers and Medicaid agencies across the country. We are delighted to release it for the fifth consecutive year.”
Developed through in-depth data analysis and supported by Magellan’s broad national experience managing Medicaid FFS pharmacy, the Medicaid Pharmacy Trend Report highlights the evolving landscape of Medicaid prescription drugs and anticipates the trends and challenges in the Medicaid FFS space. The report also now includes a standard in-depth analysis of the top drug classes including six additional categories that provide a superior overview of classes with significant net dollar impact.
Key findings in this year’s report include:
- In 2019, specialty drugs accounted for 48.5 percent of net cost in Medicaid while making up just 1.3 percent of utilization.
- Traditional net spending on drugs decreased 0.4 percent from 2018 to 2019.
- Unit cost, not utilization, drove specialty trend in 2019. The net cost per claim increased by $141.12, while utilization decreased by 0.9 percent.
- While claim volume remains virtually unchanged, the total net spend on specialty drugs increased by 2.4 percent which indicates that specialty drugs will account for 50 percent of total net spend for 2020.
“States are faced with inherent challenges related to the variability in the Medicaid program due to fluctuations in enrollment, enabling legislation and pharmacy program design,” said Chris Andrews, Pharm.D., vice president, value-based purchasing, Magellan Rx Management. “The Medicaid Trend Report clearly illustrates critical data-driven observations and helpful solutions that can assist states as they continue to explore and implement efforts to balance the growing cost of state Medicaid programs with state budget projections as they focus on achieving improved outcomes for Medicaid patients.”
The Magellan Rx Management Medicaid Pharmacy Trend Report includes data derived from Magellan Rx’s Medicaid FFS pharmacy programs in 25 states and the District of Columbia.
About Magellan Rx Management: Magellan Rx Management, a division of Magellan Health, Inc., is shaping the future of pharmacy. As a next-generation pharmacy organization, we deliver meaningful solutions to the people we serve. As pioneers in specialty drug management, industry leaders in Medicaid pharmacy programs and disruptors in pharmacy benefit management, we partner with our customers and members to deliver a best-in-class healthcare experience.
About Magellan Health: Magellan Health, Inc., a Fortune 500 company, is a leader in managing the fastest growing, most complex areas of health, including special populations, complete pharmacy benefits and other specialty areas of healthcare. Magellan supports innovative ways of accessing better health through technology, while remaining focused on the critical personal relationships that are necessary to achieve a healthy, vibrant life. Magellan’s customers include health plans and other managed care organizations, employers, labor unions, various military and governmental agencies and third-party administrators. For more information, visit MagellanHealth.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201113005178/en/
Media Contact: Lilly Ackley, email@example.com, (860) 507-1923
Investor Contact: Darren Lehrich, firstname.lastname@example.org, (860) 507-1814
The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.
COVID has led to a 9% decrease in MLR for Medicaid health plans.
State revenues were projected to increase in the previous survey- but now they have taken significant hits due to COVID. General fund revenues are now at 6% below where they were projected to be. Gaming revenues have taken the largest hit, with 17.5% YOY decline.
State Revenues Decline for First Time Since the Great Recession, With the Worst Still to Come
The majority of states have closed out fiscal 2020 and, as expected, most states experienced a decline in general fund revenues, both compared to prior-year (fiscal 2019) collections and to pre-COVID revenue projections. This large swing in tax collections led to a roughly 6 percent shortfall for states for fiscal 2020 in just a few months’ time. This initial decline is only the beginning of what is projected to be a multi-year revenue challenge facing states with the potential to dampen the economic recovery. As states continue to experience high unemployment rates and lower consumption levels, the trends seen in the fourth quarter of fiscal 2020 are expected to further depress state revenues in fiscal 2021 and beyond.
- Despite three quarters of strong growth through March 2020, fiscal 2020 revenue collections could not overcome the impact of the COVID-19 pandemic in the fourth quarter (April-June), as the vast majority of states operate on a July 1 to June 30 fiscal year. States saw general fund revenues decline 3.0 percent compared to fiscal year 2019 collections, whereas prior to the COVID-19 crisis, collections were expected to grow 3.0 percent based on states’ latest pre-COVID revenue estimates reported to NASBO in the spring, creating a roughly 6 percent shortfall. States, required by law to balance their budgets, have responded to these revenue shortfalls with spending cuts, in addition to using reserves and other one-time measures. New York, which operates on an April 1 fiscal year start, experienced a 10 percent decline in General Fund revenues in the April-June 2020 quarter compared to the prior year, after adjusting for the tax filing extension and liquidity financing to offset the delay.
- Facing more severe revenue losses ahead, many governors and their administrations have directed agencies to develop budget reduction plans of as much as 15 percent or 20 percent for fiscal 2021 and/or fiscal 2022. Declines in state tax collections (and state spending) tend to lag the economic cycle, and can take a long time to recover. After steep declines during the Great Recession, state general fund revenues took a decade to return to fiscal 2008 levels, after adjusting for inflation. Additionally, state general fund spending did not return to the inflation-adjusted pre-recession fiscal 2008 level until fiscal 2019, only to be hit with the current fiscal crisis the following year. Rising public health costs, as well as increased caseloads from citizens needing assistance during the economic crisis further increase state budget gaps.
- These declines do not include those to non-general fund revenues such as gas taxes and program fees that have also been hit hard by this fiscal crisis.
Update on Fiscal 2020 Revenue Collections Compared to FY 2019
Based on a survey of states and territories, general fund revenues are showing year-over-year declines for fiscal 2020 compared to fiscal 2019, as shown in the chart below.
Note: Some states reported estimates for fiscal 2020, as preliminary actual data were not yet available.
* The figures reported above only include states that operate on a July to June fiscal year, as these states all experienced a similar period of COVID-19 impact on their fiscal 2020 revenues. The states that do not operate on this cycle include New York (fiscal year starts on April 1), Texas (September 1), Alabama and Michigan (October 1), and New Jersey (only for fiscal 2021, October 1).
- Sales tax collections, which states had estimated to increase 5.0 percent, instead declined by 0.5 percent, representing a roughly 5.5 percent revenue loss compared to pre-COVID projections. This decline comes despite the strong start to the fiscal year and the impact of temporary federal stimulus measures on spending levels. Figures from the Federal Tax Administrators (FTA) show a median drop in sales tax collections of 10 percent in the fourth quarter, an ominous predictor of what is in store for states dependent on sales tax as economic activity remains constrained by the pandemic and recession. Enhanced Unemployment Insurance and direct payments to individuals kept personal consumption levels from falling further than they would have otherwise. Most states have also been able to collect taxes on online sales activity, which helped soften the blow to collections.
- Personal income tax collections, which states had expected to increase 2.7 percent, declined by 3.7 percent compared to fiscal 2019, resulting in a 6.4 percent revenue loss compared to projections. This category of revenue is expected to show a much steeper decline in fiscal 2021, since personal income tax returns collected in fiscal 2020 for most states reflected 2019 economic activity and income levels. In states that withhold taxes from unemployment benefits, withholding collections were buoyed by temporary stimulus provided by the federal government, namely the Enhanced Unemployment Insurance benefits. Additionally, the Paycheck Protection Program loans kept individuals employed and paying income taxes.
- Corporate income tax collections, which states had predicted to see a modest annual increase of 1 percent, took a large hit, declining by 9.5 percent compared to fiscal 2019 – a 10.5 percent revenue loss from projections. This drop reflects a decline in corporate profits, even as stimulus measures such as the Paycheck Protection Program sought to keep companies operating.
- Gaming/lottery revenues declined 17.5 percent from fiscal 2019, due to the closure of casinos and other gaming establishments during the pandemic, and continued negative impacts on this revenue source can be expected as consumers change their behavior. The scale of this reduction speaks to the magnitude of the pandemic’s impact on this revenue source, given that this represents a sharp year-over-year decline while casinos and other gaming were only shuttered for a few months of fiscal 2020. Before COVID-19, gaming/lottery revenues were projected to decline 3.6 percent (due primarily to one state’s elimination of this revenue stream as a general fund source), so the net revenue loss compared to projections is 13.9 percent.
- All other general fund revenue declines include large hits to severance taxes in oil producing states. Collapsing oil prices and a sharp decline in demand will continue to depress this source of revenue. All other general fund revenue, which may also include fund transfers for some states, declined by 1.6 percent compared to fiscal 2019 overall. This broad category of revenues was expected to grow 0.7 percent, so this decline represents a 2.3 percent revenue loss compared to projections.
Impact of Delayed Tax Filing Deadline
An unusual circumstance impacting fiscal 2020 was the delay of the federal tax filing deadline. Most states extended their tax filing deadlines to conform with the federal government, which resulted in 19 states counting revenue in fiscal 2021 rather than fiscal 2020. Among those 19 states, 17 states were able to report preliminary or estimated amounts for those deferrals. If we account for those filings in fiscal 2020, the revenue comparisons improve slightly but continue to show the same troubling trends, especially when one remembers that the COVID-19 crisis only affected revenues for the last few months of the fiscal year. After adjusting fiscal 2020 revenues to include these deferred amounts, total general fund revenues declined 1.6 percent compared to fiscal 2019, with personal income taxes declining 1.1 percent and corporate income taxes declining 6.8 percent.
Fiscal 2020 Revenue Collections Compared to Pre-COVID Projections
As reported in NASBO’s Spring 2020 Fiscal Survey of States, before the COVID-19 crisis, states were estimating general fund revenue growth of 3.0 percent. Instead, this preliminary data shows revenue declines for fiscal 2020 of 3.0 percent, resulting in a roughly 6 percent general fund revenue gap for states, on average. States budgeted based upon forecasted tax collections, so these revenue losses left a sizeable budget gap for states to close, requiring them to take actions including spending cuts to core services such as education. Even some states that ended fiscal 2020 with general fund revenues up slightly year-over-year had to make budget cuts or turn to reserves, since they still fell short of projected tax collections. Deeper cuts will be necessary in fiscal 2021 and 2022 as budget gaps grow wider due to an expected continued decline in revenues and rising expenditure pressures from the public health crisis, economic downturn, inflation and population growth.
State Revenue Outlook Expected to Worsen
States are expected to see the impact of COVID-19 on their revenues for years to come. While most states saw revenue decreases in fiscal 2020, state revenues are expected to see more severe declines in fiscal 2021 than they experienced in fiscal 2020 for several reasons:
- For the vast majority of states, only the last quarter of fiscal 2020 revenue collections were impacted by the economic fallout of COVID-19. Coming into this crisis, most states were seeing revenues coming in at or ahead of projections. This provided some immediate cushion for states to soften the blow of the precipitous declines experienced in the fourth quarter. As economic activity remains significantly depressed and unemployment remains high, this crisis will affect the full fiscal year of state revenue collections for fiscal 2021.
- Federal stimulus measures, including checks to individuals, enhanced unemployment compensation, the Paycheck Protection Program, and other measures, have been propping up the economy, and therefore state tax revenues, but those have largely ended.
- State tax returns for fiscal 2020 reflected the strong economic activity of 2019, while returns for fiscal 2021 will reflect the much weaker economy in 2020.
- The decline in state tax collections typically lags the start of national economic downturns. For example, state revenues grew 4.2 percent in fiscal 2008 even though the Great Recession began in December 2007 (the middle of fiscal 2008 for most states), while tax collections declined 10.0 percent in fiscal 2009.
Forecasted Revenue Declines and Budget Impacts for Fiscal 2021 and Fiscal 2022
For the reasons outlined above, state revenue forecasts for fiscal 2021 (and fiscal 2022 for those states that have released estimates) are projecting more significant losses, especially without additional federal aid. Overall, state revenue losses resulting from the COVID-19 recession are expected to exceed the 11.6 percent drop states experienced over two years during and following the Great Recession, with some states anticipating revenue declines of 20 percent or more. Moody’s Analytics released an analysis on stress testing state budgets based on its latest economic forecasts, which estimates budget shortfalls through fiscal 2022. According to that analysis, state budgets could experience a fiscal shock (revenue declines plus increased Medicaid expenditures) of $498 billion due to a prolonged economic recovery and continuation of COVID-19 cases in the fall. This analysis assumes flat spending by states with no increases to combat the epidemic or address other needs.
States have already begun making budget cuts in response to these forecasted revenue declines, and more adjustments are expected. Numerous states that enacted budgets for fiscal 2021 based on pre-COVID revenue forecasts have called special sessions to revise those budgets, eliminating pay increases and making cuts to baseline spending and personnel. Meanwhile, states that passed budgets after the onset of the COVID-19 crisis similarly cancelled planned investments, implemented furloughs and other actions, and cut base spending. Many governors and their administrations have directed agencies to develop contingency plans to reduce their budgets, for fiscal year 2021 and/or fiscal year 2022, by as much as 15 or 20 percent.
Looking Beyond General Fund Revenue Impacts
This analysis is limited to general fund revenue impacts only, and therefore does not show the full magnitude of revenue loss facing states. States are also seeing significant losses and ripple effects in other critical revenue streams, such as gas taxes and various program user fees, due to the public health crisis. These revenue sources are typically less vulnerable to the economic cycle, but the COVID-19 pandemic is not a typical recession.
Strained State Budgets and the National Economy
State and local governments are major economic drivers. Their spending totaled $3.1 trillion in 2019, representing 14.7% of gross domestic product. As states continue to experience high unemployment rates, the trends seen in the fourth quarter of fiscal 2020 are expected to further depress state revenues in fiscal 2021 and beyond. Without additional federal aid to mitigate these revenue losses, states will be forced to make deeper cuts to services and spending, as well as turn to tax increases, creating a drag on economic growth at a time when the nation’s economy is attempting to recover.