A question for Idaho lawmakers: Expand Medicaid or fight it?

A larger Medicaid safety net would shift some health costs away from Idaho counties

adutton@idahostatesman.comJuly 22, 2012 

Nothing is certain but death and taxes — and medical bills.

For most Idahoans, health care is not a choice but a necessity. Before you die, you’ll most likely visit a doctor or spend time in a hospital. If you can’t pay for that treatment, someone else will.

The Supreme Court decided in June to give states more leeway in deciding how to pay those bills. In its landmark ruling on the Affordable Care Act, the court struck down part of the law that threatened states’ federal Medicaid funding if they refused to expand Medicaid eligibility to poor adults.

That put Gov. Butch Otter and the Idaho Legislature on the spot. They must now decide whether Idaho will help pay for its poorest adults to get insured through Medicaid, the federal-state health insurance program for poor and disabled people. Or Idaho can choose to continue paying for their medical care through a patchwork of county and state programs, hospitals that get tax breaks for writing off charity cases, and low-income clinics funded by government grants and donors.

HOW THE EXPANSION WORKS

The law would broaden eligibility to all people with adjusted incomes below 133 percent of the poverty line starting in 2014. That would include a single person with no children earning up to $14,856 a year, or family of four earning up to $30,657. Idaho now offers Medicaid mainly to low-income children, pregnant women and disabled adults.

If Idaho goes along, the federal government will pick up most of the tab. The new federal money is expected to come from taxes on the wealthy, high-premium insurance plans, health insurers, indoor tanning and drug and medical device companies, along with changes to health care-related tax breaks. Those taxes will be due whether or not Idaho joins the expansion. However, it’s unlikely they will directly hit most Idahoans because of the state’s relatively low income and health-benefit levels.

Between 83,000 and 138,000 Idaho residents lacked health insurance in 2010 and were sufficiently poor to qualify for Medicaid under the new plan, according to U.S. Census Bureau data. A report used by the state predicts about 59,000 people who didn’t have insurance might join Medicaid, and an additional 27,000 or so may drop their existing insurance to join Medicaid.

A CHOICE IS LOOMING

The national expansion of Medicaid kicks in 17 months from now. If Idaho participates, it won’t pay a penny at first. It would begin paying in stages, settling in 2020 at a 10 percent share of the costs for health coverage.

If Idaho opts out, it won’t get that money, but thanks to the court ruling, it also won’t lose federal funds that now cover about 70 percent of the state’s Medicaid claims.

House Republican leaders Lawerence Denney and Mike Moyle earlier this month said they’ll fight for Idaho not to expand its Medicaid program because the cost is too high.

“It’ll cost the state, too, because we have to match Medicaid,” Denney said.

Neither leader could offer dollar amounts or cost estimates. But the Kaiser Family Foundation, a national nonpartisan research and public information group, has said the program would cost Idaho $101 million to $133 million total by 2020 — or 2.5 percent to 3.3 percent more than Idaho would have spent without the Medicaid expansion. The federal government would pay $2.4 billion to $2.9 billion of Idaho’s new Medicaid costs — or 27 percent to 33 percent more than without the expansion.

However, the Medicaid burden may cripple some states, said a report released Tuesday by the State Budget Crisis Task Force. The report, based on six states that didn’t include Idaho, said tax revenues and economic growth can’t keep up with Medicaid in the coming years as job losses force more people into the safety net and medical prices keep climbing. Medicaid will require tax increases or cuts in funding to other programs like education, the report said. The funding gap “will persist with or without Medicaid expansion,” but may grow faster with the expansion.

Denney said he doesn’t trust the federal government to keep its end of the bargain.

“The federal government’s broke; they’re going to have to find savings somewhere,” he said. “Once they get you hooked, that’s what happens.” Asked if that’s ever happened before, he said, “In some cases, yeah.”

When it comes to Idaho Medicaid, the federal government has been fairly consistent over the past five decades. Match rates change every year based on a state’s income, but Idaho’s federal match hasn’t deviated much from 70 percent since Medicaid was created in 1965. It dipped to 64 percent in fiscal 1979 and peaked at 74 percent in 1991.

The federal stimulus program gave Idaho an extra boost between 2009 and 2011. The federal match in fiscal 2010 was the highest ever at 79 percent. That money went away in fiscal 2012, and the state had to find $130 million to replace it.

Idaho this year ranks seventh in the country for the share of its Medicaid funding borne by federal taxpayers.

Moyle, too, fears Idaho will get stuck with the bill. “Are we signing up and saying we’ll take on more, or are we doing away with the protection (of Idaho’s independence), basically?” he said.

Moyle hopes the Legislature and Otter will follow the lead of other states whose Republican governors say they won’t build health insurance exchanges or add more people to Medicaid.

“It doesn’t make sense to me (to ignore) these guys who’ve done a lot more research than we have,” Moyle said. “Maybe we should listen to them.”

The Legislature’s health care task force will meet July 30 to consider the decisions lawmakers face on the health care overhaul. Meanwhile, Otter has appointed a task force and hired a consulting firm to help him decide what to recommend.

WHO PAYS NOW: TAXPAYERS, HOSPITALS

Many of Idaho’s nearly 300,000 uninsured residents lie dormant in the health care system until they have a car crash or a heart attack and show up in hospital emergency rooms.

The hospitals take a loss on those patients. But the hospitals get property tax exemptions as a trade-off for not turning patients away. In 2010 in Ada County, Saint Alphonsus received about 110 exemptions and St. Luke’s about 65.

Each exemption means foregone tax revenue for the counties. Some of those properties were worth millions of dollars the year they stopped being taxable.

In its latest tax filings, Saint Alphonsus said its land and buildings had a book value of about $213 million. St. Luke’s valued its land and buildings at about $316 million.

But hospitals wouldn’t suddenly be charged property taxes if Medicaid expands. That’s because Medicaid patients are counted as “charity care.”

The day of the Supreme Court’s decision, the head of St. Luke’s Health System said the system would lose money on each newly eligible Medicaid patient.

“However, if they access our health system anyway and don’t have any insurance and don’t have the ability to pay, we lose even more money,” said David Pate, president and CEO. “What you hope is that by having Medicaid, maybe (patients will) access earlier, before conditions become worse and even more costly. ... I think it will have some favorable effect (on hospital finances), but I certainly don’t look at this as a financial boon.”

The hospitals are made whole in some cases. If a person is in trouble with medical bills — they’re so poor, or the bill is so large, that it’s impossible to pay in a five-year period — a payer of last resort steps in.

THE LAST RESORT

Idaho counties and the state have a partnership to pay the catastrophic medical bills for people who can’t afford them. Counties pick up the first $11,000 for each patient. The state pays the rest.

That program cost counties and the state about $51 million last fiscal year. The money paid medical bills for about 4,500 people, most of whom fell into age groups that would be eligible for expanded Medicaid.

But many more patients asked for the program’s help than received it, said Tony Poinelli, deputy director for the Idaho Association of Counties. Nearly 60 percent of claims were denied, either because the person was capable of paying, because the health care provider missed the reimbursement deadline or for other reasons, Poinelli said.

Roger Christensen, who chairs the state-county partnership, said demand for payments has exploded in the down economy. Scrutinizing bills and screening claims to see if they’re covered by another payer, such as Medicaid, has helped somewhat, he said.

But it’s been “kind of like turning on the hose, with the water coming in one side and trying to adjust the pump on the other side,” he said.

THE COUNTIES ARE WAITING

Ada and Canyon county commissioners said they’re not committed to the state blocking or opening up the Medicaid floodgates in 2014.

“Does it help counties? Yeah, it could. If the federal government does what it says it will do,” said Canyon County Commissioner David Ferdinand. “My tongue is next to my cheek.”

Commissioner Steve Rule said he didn’t know enough about the law’s details. Generally “any time the state steps up and takes on a program statewide, naturally I’m for because that reduces the county having to account for those indigent people,” he said.

Ada County Commissioner Sharon Ullman said counties have “little control over the state and absolutely no control over what the federal government does.” She laughed when asked if she believed counties can influence state lawmakers’ decisions.

“If Medicaid is expanded, it will probably cut down on our costs in indigent (medical) services,” she said. “But, simultaneously, the other provisions in Obamacare raise our costs as employers.”

She said it’s “an absolute crap-shoot” how many Idahoans will be eligible for, and then apply for, expanded Medicaid.

Regardless, she wants more money going to preventive-care screenings than to treating serious medical emergencies.

The state association, which administers the medical-indigency fund, is closely watching lawmakers.

“If the Legislature does adopt everything ... then it would be my recommendation to the counties to repeal the indigent program,” Poinelli said. “I don’t believe the state and the counties can continue with the increasing costs of medical indigency. ... I think a discussion still needs to occur either way.”

How much do these bills cost the average Idahoan?

If the counties and state weren’t paying bills for the medically indigent, it “would have a significant amount of property-tax relief at the local level,” Poinelli said. That’s because about 70 percent of the property tax levy that covers indigent programs goes toward medical care, with the rest spent on utilities, rent, cremation or other assistance, he said. That tax in 2011 for Ada County was about 0.047 percent of assessed value, or about $40 on a $180,000 homeowner-occupied property.

Ada County’s director of indigent services said the county’s indigent budget has more than doubled in the past eight years. When John Traylor started running the program, its budget was $5 million to $6 million — including staff and nonmedical care — and now Traylor is seeking upward of $13 million next year. But that’s not from a mushrooming caseload.

“Without a doubt, 98 percent of the increase is because of medical costs,” he said.

Most claims come from hospitals looking to get reimbursed, not from “John Doe walking in off the street saying, ‘Can you pay my medical bills?’” he said.

Canyon County’s indigency program is budgeting $3.8 million in its next fiscal year for all services. That’s up from $3.2 million for fiscal 2012. The county approved 842 of the 1,705 aid applications submitted in the past year.

SLIDING-SCALE PROVIDERS

The state has 13 clinics, known as community health centers, that give low-income residents medical care on a sliding fee scale.

In the Treasure Valley, Terry Reilly Health Services clinics treat more than 30,000 patients a year. About 64 percent of them don’t have health insurance. Bethany Gadzinski, who handles medical operations for the clinics — and is one of the few people who have read the entire 2010 health care reform law — estimated that 13,000 patients at Terry Reilly last year would qualify for Medicaid in 2014. Most of the Boise patients would qualify, she said.

The state’s association of community health clinics is pushing for Idaho to expand its program. The clinics get a large share of their money from federal grants. Expanded Medicaid would pay for patients who now pay on a sliding scale, likely raising revenue. The group estimates that 30,000 to 35,000 low-income clinic patients would join Medicaid.

“Medicaid patients are really important to our ability to continue to operate and stay alive,” said Jesus Blanco, policy director for the Idaho Primary Care Association that represents community health centers. He said the centers provide about 700 full-time-equivalent jobs for the state.

Audrey Dutton: 377-6448, Twitter: @IDS_Audrey

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