Idaho's Medicaid expansion choice could help businesses

An Idaho lobbying group says its estimates show opening up the program would cut costs.

adutton@idahostatesman.comJuly 6, 2013 

A decision by the Legislature not to broaden Medicaid's reach would cost $12.3 million to $18.5 million a year in penalties for large companies that don't insure their employees and unspecified amounts for other businesses as their insurance and taxes continue to subsidize care for the uninsured, the Idaho Association of Commerce and Industry says.

Idaho has the largest share of minimum-wage workers in the nation, with about 1 in 13 employees earning $7.25 an hour or less. Many of them can't afford health insurance - and starting in 2015, their employers may face a choice between offering them insurance or paying large fines.

Some of the low-paid workers are part-time or occasional members of the state's workforce. But many are full-time employees who would qualify for Medicaid if Idaho chooses to offer its taxpayer-funded health insurance program to all low-income adults, instead of the few who now qualify.

The Affordable Care Act required states to expand their Medicaid programs, though a Supreme Court decision a year ago made that expansion optional.

Idaho can decide at any point to offer Medicaid to its poorest adults, but state lawmakers have made no moves toward expanding the program by next year.

Under the expansion, a single person working 30 hours a week at minimum wage - or the $3.35 hourly minimum wage for restaurant servers and others who earn tips - would qualify for Medicaid coverage.

At the same time, businesses with 50 or more full-time equivalent employees must offer health insurance benefits starting in 2015 or be subject to federal tax penalties.

If their employees qualify for Medicaid, though, the businesses won't have to provide health benefits and won't be charged fines. As a result, Idaho's decision on Medicaid could have a multimillion-dollar ripple effect on the state's businesses.

Smaller employers have no obligation to offer benefits.

SCENARIO 1: MEDICAID OPENS TO LOW-WAGE WORKERS

Gov. Butch Otter and the Legislature could expand Medicaid in next year's legislative session to offer coverage to low-wage workers and other low-income adults. The federal government would pay almost all of the cost.

The Medicaid program would gain thousands of patients, many with untreated chronic illnesses. Federal taxpayers would pay 100 percent of the cost for the first few years, then shift slowly to the state, with the state required to pick up 10 percent starting in 2020.

But large employers in Idaho could save millions of dollars in health benefits and other costs as their lowest-paid employees enrolled in Medicaid, according to estimates from the Idaho Association of Commerce and Industry.

SCENARIO 2: NO EXPANSION

Otter and the Legislature could rule out a Medicaid expansion, shifting to the private sector the responsibility of covering low-wage workers at large businesses. If the businesses don't offer low-premium plans to workers, they may be fined thousands of dollars for each employee who buys a subsidized health plan to comply with the rule that all Americans be insured.

This scenario would result in the penalties for employers. IACI is still nailing down exact costs. President Alex LaBeau said it's unclear how the just-announced employer-mandate delay will affect those estimates. But the group's goal is to take part in Idaho's Medicaid debate using math instead of emotion.

"For us, it's a business-numbers issue," LaBeau said. "It's pretty clear from the information and the numbers that Medicaid expansion would save industry a lot of money."

IACI's estimate includes:

- A $2,000-per-person tax penalty for large businesses that don't offer health insurance.

- Higher insurance premiums resulting from hospitals shifting the costs of uninsured patients to those with insurance.

- The costs of uninsured Idahoans' catastrophic medical bills continuing to flood taxpayer-funded state and county programs.

LaBeau said IACI has not yet decided how it will use the results, which still are being refined. But the group has presented its findings to Otter.

Mark Warbis, a spokesman for Otter, told the Statesman in an email Friday, "As you know, a team led by Health and Welfare Director (Dick) Armstrong is continuing to assess all the issues surrounding Medicaid in Idaho. It's too soon to draw any conclusions about our path forward."

SOME BUSINESSES FORESEE LITTLE CHANGE

The Idaho gas station and convenience store chain Stinker Stores has about 550 full-time employees, making it one of the Idaho businesses that will be required to offer benefits or pay a penalty.

For owner Charley Jones, the state's decision on Medicaid won't make a huge difference, because he will continue to offer health plans to those full-timers.

"We're not going to play a game" to avoid penalties and insurance costs, he said. "A full-time employee who's competitively paid (with) competitive benefits gives my customers better service."

MANY UNINSURED ARE WORKING POOR

About 91,000 Idahoans between ages 18 and 64 - one-third of whom live in Ada or Canyon counties - had incomes in 2009 low enough to qualify Medicaid under an expanded system, according to U.S. Census Bureau data. Nearly half of them were going without insurance.

What about the adults with jobs? State figures show that about 61 percent of Idaho's uninsured adults work full-time or part-time. Not all of them would qualify for Medicaid. And not all of their employers would be required to offer health insurance.

"I think most would qualify for Medicaid or a subsidy ... because their median income is $13,140," said Tom Shanahan, a spokesman for the Idaho Department of Health and Welfare.

But he cautioned that without real-time, detailed information from eligible enrollees, it's hard to know where Idaho's working poor would fall in a new, larger Medicaid universe.

Audrey Dutton: 377-6448, Twitter: @IDS_Audrey

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