Aging of the population, Medicaid, and the budget outlook James R. - PowerPoint PPT Presentation

Aging of the population, Medicaid, and the budget outlook James R. Moody For George K. Baum January 2016

Our Aging Population Circa 1989 Circa 2010 James R. Moody & Associates

Tom Gillaspy on Aging “ There is a new theory in demography. It’s one of those math theories. Most of us age one year every twelve months. It’s a pretty regular process….We are poised on a very enormous retirement boom unprecedented in history…We are an aging society. This has never happened before.” -Tom Gillaspy, retired Minnesota demographer James R. Moody & Associates

Data Sources A few of the slides were developed for a presentation by Tom Gillaspy (retired Minnesota State Demographer) and Minnesota State Economist Tom Stinson. The population pyramid slides for Missouri were developed by a demographic team headed by the Missouri Office of Administration.

The Number Of Americans Turning Age 65 Increased Sharply (25%) In 2012 Millions 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 US Census Bureau ACS; The New Normal

By 2020 The United States Will Have More People 65+ Than School Age 90,000 80,000 70,000 Thousands 60,000 50,000 40,000 65+ 30,000 5-17 20,000 10,000 0 Census Bureau forecast 2012; The New Normal

Missouri’s Aging Population • Between 1950 and 2000, the 65 and over population grew by 85% to 755 thousand persons. • Between 2000 and 2030, this group is expected to grow an additional 87%, to 1.4 million persons. • In 1950 in Missouri those over 85 represented one- half of one percent of the population — 21,000. • By 2000 those over 85 were 99,000 persons — or 2% of the population. • By 2030, those over 85 will represent 2.5% of the population, or 176,000 persons. James R. Moody & Associates

What Is A Reason The Average Population Age is Increasing? Fewer Teen Lower Overall Pregnancies Fertility Rate • Teen births in 2013 • The birthrate for (274,641) were the younger adult women lowest number ever fell to a record low of reported in the U.S. 81.2 births per 1,000 women aged 20-24. • The new record-low • The general fertility teen birthrate (26.6 births per 1,000 rate slipped to a record women age 15-19) is a low of 62.9 births per 10% decline since 2012 1,000 women aged 15- and a 57% decline 44. since 1991. James R. Moody & Associates

Missouri Population Population Pyramid of Missouri – 1900 85+ Male and Female Combined 80 - 84 75 - 79 70 - 74 65 - 69 60 - 64 55 - 59 50 - 54 45 - 49 40 - 44 35 - 39 30 - 34 25 - 29 20 - 24 15 - 19 10 - 14 5 - 9 0 - 4 6 5 4 3 2 1 0 1 2 3 4 5 6 Percent of Total Population Missouri Office of Administration, Division of Budget & Planning

Missouri Population Population Pyramid of Missouri – 2000 85+ Male Female 80 - 84 75 - 79 70 - 74 65 - 69 60 - 64 55 - 59 50 - 54 45 - 49 40 - 44 35 - 39 30 - 34 25 - 29 20 - 24 15 - 19 10 - 14 5 - 9 0 - 4 6 5 4 3 2 1 0 1 2 3 4 5 6 Percent of Total Population Missouri Office of Administration, Division of Budget & Planning

Missouri Population Population Pyramid of Missouri – 2030 85+ Male Female 80 - 84 75 - 79 70 - 74 65 - 69 60 - 64 55 - 59 50 - 54 45 - 49 40 - 44 35 - 39 30 - 34 25 - 29 20 - 24 15 - 19 10 - 14 5 - 9 0 - 4 6 5 4 3 2 1 0 1 2 3 4 5 6 Percent of Total Population Missouri Office of Administration, Division of Budget & Planning

The Rectangular AGe Pyramid in 2030 Year 2030 – By Age Percent of Cumulative Percent Group Population of Population Preschool 6% 6% Kindergarten to 8th 11% 17% Grades 9 to 12 5% 22% Age 18 to 24 9% 31% Age 25 to 44 25% 56% Age 44 to 64 22% 78% Over 65 21% 100% Cumulative is rounded Source: Missouri Office of Administration to equal 100% James R. Moody & Associates

What Services Does Medicaid cover Because Medicare Does Not? • Skilled Nursing Care • In-Home Services, such as personal hygiene care, homemaker and chore services • These services are normally required for elderly people. James R. Moody & Associates

MO Healthnet Enrollees & Expenditures MO HealthNet SFY-2012 100% In SFY-2012, seniors and persons with disabilities 18.7% 90% comprised more than 27% 80% of enrollees, however, they 8.7% 48.5% accounted for nearly 66% 70% ($3,398.0 M) of MO HealthNet expenditures. 12.1% 60% Number of People SFY-2012 50% (Average Monthly) Persons With Disabilities 17.4% 40% (167,367) ($1,218.6 M) Seniors (77,460) 30% 60.5% 8.9% ($626.1 M) 20% Pregnant Women & Custodial Parents (108,325) 25.2% 10% Children (540,824) ($1,762.1 M) Total (893,976) 0% Percent of Enrollees (893,976* Average Percent of Expenditures ($7,004.8 M) Monthly Enrollees) Missouri Department of Social Services

The Impact of Elderly and Disabled on Medicaid • The elderly and disabled account for 27% of the Medicaid eligible population. • However, the elderly and disabled account for approximately 66% of Medicaid program expenditures.

The aging of the population May stress our systems • Fewer working people to pay for the future costs. • Older citizens are less likely to want to pay more to take the payment stress off of younger citizens. • The aging of the population will create challenges for most government programs.

Missouri’s Uninsured Population All Persons In Persons Under Persons 65 and Children Under Missouri 65 Over 18 773,000 768,000 4,000 98,000 Uninsured Uninsured Uninsured Uninsured 13% 15.2% 0.5% 7% Source: US Census Bureau 2013 American Community Survey

Growth in medicaid coverage for kids Custodial Parents Medicaid and CHIP Children March 2013 78,361 535,084 October 2015 90,406 589,025 Growth 12,045 53,941

Missouri Medicaid and CHIP Income Eligibility for Children Age Medicaid CHIP Infant 0-1 185% FPL (No Premiums) Children 1-5 133% FPL 150% FPL (No Premiums) Children 6-19 100% FPL 150% FPL (No Premiums) Children 0-19 300% FPL (With Premium)

fY 2016 Medicaid Supplemental and fy 2017 new decisions General Federal Total Revenue FY 2016 $197.7M $129.0M $327.6M Supplemental FY 2017 New Decision Item Specialty $50.6M $89.1M $139.7M Pharmacy Non-Specialty $11.9M $21.0M $33.0M Pharmacy

Budget Outlook Impact of Senate Bill 509

June 2015 Fiscal year 2015 General Revenue Receipts Category YTD Gross % YTD Net % Increase Increase (net of refunds) Individual Income Tax +8.5% +10.1% Sales Tax +2.3% +3.3% Corporate +3.3% +10.1% Income/Franchise Insurance Premium Tax +18.1% +21.7% Total Year To Date +8.8% Source: FY 2015 Net Increases are net of Consolidated Revenue refunds paid Report James R. Moody & Associates

Governor’s Revenue Estimate FY 2016 — 2.8% FY 2017 — 4.1%

Growth In Declarations and Remittances Through June 2015 FY 2014 FY 2015 Growth Declarations $741,748,000 $832,310,000 $ 90,462,000 Remittances $797,468,000 $918,125,000 $120,657,000 Total $1,539,216,000 $1,750,435,000 $211,219,000

No Great Reason To Celebrate Fiscal Year Fiscal Year Fiscal Year 2008 2014 2015 Individual $5.210B $5.403B $5.947B Income Tax Sales Tax $1.931B $1.925B $1.988B Total GR $8.003B $8.003B $8.709B Total GR ZERO!!! $706 M Growth Over FY 2008

The consensus revenue estimate • It appears to us a certainty that the current FY 2016 consensus revenue estimate will be exceeded. • The FY 2016 consensus GR estimate from Governor Nixon’s December 18, 2014 press release is $8.673 billion. • Actual receipts from FY 2015 were $8.709 billion. So the FY 2015 actual receipts were higher than the FY 2016 consensus estimate. • Thus, even a zero % growth rate (which we do not believe will happen) would exceed the current FY 2016 consensus estimate.

Recent Net General Revenue Growth Net GR (in billions) 9 Negative 8.5 Negative 8 7.5 Billions 7 Negative 6.5 Net GR (in 6 millions) 5.5 5 James R. Moody & Associates

Revenues Since FY 1998 If SB 509 Were In Effect Net GR (in billions) 9 Tax cut triggered Triggers tax cuts 8.5 8 7.5 7 Triggers tax cut Billions 6.5 6 5.5 5 Fiscal Year FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Actual Net GR If SB 509 In Effect James R. Moody & Associates

GR Growth Since FY 2002 Fiscal Year GR Growth % Total GR 2002 -2.79% $6.21B 2003 -4.58% $5.92B No 2004 7.08% $6.34B Growth 2005 5.76% $6.71B 2006 9.25% $7.33B 2007 5.24% $7.71B 2008 3.73% $8.00B 2009 -6.91% $7.45B 2010 -9.08% $6.77B No 2011 4.94% $7.10B Growth 2012 3.25% $7.34B 2013 10.1% $8.08B 2014 -1.0% $8.00B 2015 8.8% $8.70B

Odd consequences of SB 509 • Proponents of SB 509 sold the concept on rising state general revenues. • However, five of the past fifteen fiscal years have seen negative general revenue growth. • When this phenomenon of negative revenues occurs, the $150 million in growth will come from a reduced base. • Missouri has economic downturns due to a recession roughly every ten years. The last recession started in 2008. So a recession in the early years of SB 509 implementation is highly likely. • If that occurs we will be cutting taxes in the midst of an economic downturn.