Fact check: Is Otter right on Medicaid expansion?

Some independent experts say his and Idaho lawmakers’ worries are unfounded.

adutton@idahostatesman.comJanuary 21, 2014 

idaho legislature, sine die, bedke

Gov. Butch Otter finds his way to the second floor of the Statehouse to congratulate members of the Idaho House as they finish the 2013 session Thursday April 4, 2013 in Boise.

DARIN OSWALD — doswald@idahostatesman.com Buy Photo

  • MEDICAID: NOW AND LATER

    The question before Idaho lawmakers is whether to join a federal push to expand Medicaid insurance to more people. In states including Idaho that have not joined that push, some residents earn too much to qualify for Medicaid but too little to qualify for subsidized insurance through Your Health Idaho, the state exchange. They are likely to stay uninsured.

    Q: What does Idaho Medicaid do now?

    A: The program mainly covers people who have disabilities, poor children and pregnant women, extremely poor adults, some women with breast or cervical cancer and some seniors. Most people on Idaho Medicaid are children, but they account for a small share of the program’s costs. Most of Idaho Medicaid’s spending goes to fewer than 30 percent of the people on the program — those who are severely ill or have disabilities.

    Because of recent changes in federal rules for calculating a Medicaid applicant’s income — it now excludes income such as child support — about 35,000 Idahoans have just become eligible for Idaho Medicaid even without the expansion legislators are considering. The Department of Health and Welfare estimates those new additions will cost $17.4 million next fiscal year, with about $5 million of that coming from state coffers.

    Idaho’s Medicaid program as of January covers 246,127 people at a cost of about $2 billion a year. Idaho’s general fund pays about 25 percent of the costs, the federal government covers about two-thirds, and dedicated funds and income from things such as prescription drug rebates cover the rest.

    Q: What would change?

    A: The program would start covering adults whose income is up to 138 percent of the poverty line, generally low-income working adults. That would add an estimated 104,000 people to Idaho’s Medicaid rolls.

    The federal government would pay, at first, 100 percent of the cost of coverage for those newly eligible people. The federal share would decrease in stages, starting in 2017, until plateauing at 90 percent in 2020. The state would pay the rest.

    A Medicaid expansion would significantly raise costs for Idaho Medicaid, according to consultants hired by the state to study expansion options. However, the consultants found Idaho would save money overall, because mostly federal dollars would pay for the medical care for poor adults and would ease the financial burden on county- and state-funded catastrophic medical care programs.

Money. Bargaining power. Fear. Those all play into Idaho’s decision to expand — or not expand — its Medicaid program.

Gov. Butch Otter, in his State of the State address this year, said “my answer remains no” to the prospect of Idaho expanding its Medicaid program to poor childless adults during this legislative session. Otter acknowledged the calls for expansion from business leaders, including the Boise Metro Chamber of Commerce, and reports that a mostly federally funded expansion would save Idaho hundreds of millions of dollars over the next decade.

“My concerns continue to be with the stability and sustainability of that federal support, and the risk of leaving Idaho taxpayers holding the bag for growing an entitlement that we simply can’t afford as it’s now structured,” Otter said in his address. “We must not risk our other priorities on the prospect of long-term support from a federal government that has not proved it can responsibly manage our money.”

Otter has said he wants to change how Idaho’s Medicaid program functions before signing on to a federal expansion. He wants to add more personal accountability for those receiving Medicaid money and medical care through the program.

Many Republican members of the Idaho Legislature are of the same mind.

The Idaho Statesman talked to officials in Otter’s administration and four independent experts about the state’s concerns. Most of them said it’s not unexpected for state governments to hang back and see what happens before jumping into Medicaid.

When Medicaid first was created in 1965 as a state- and federally funded public health insurance program, only about half of states adopted it right away. Idaho was one of them. It took about five years before Medicaid was offered nationwide — except in Arizona, which adopted Medicaid in the 1980s.

The experts also noted reports that say Idaho would save money by expanding its program. Idaho’s poorest who lack Medicaid coverage currently receive medical care. It’s partly paid for by Idahoans directly with taxes through a program that cost a combined $52.7 million last year. Idaho counties use property taxes to cover the first $11,000 of catastrophic medical bills for those unable to pay, and the state picks up the rest. Care for the poor is also paid for indirectly through higher private health-insurance premiums and tax breaks for nonprofit hospitals that take uninsured patients.

Here’s what the experts said about issues state officials say they’re concerned about:

1. A FEDERAL FAKE-OUT

If Idaho were to expand its Medicaid program, is it possible federal lawmakers would later change their minds and give states a smaller share? That has never happened.

Donald Barr, a physician who teaches health policy at Stanford University: “No. ... They have never reduced it. In fact, they have increased” the federal share during the recession. He predicts states like Idaho will adopt Medicaid expansion at some point. Then, state policymakers will “see this irrational double-payment scheme” — the federal government paying 70 percent for a 45-year-old poor parent, but 90 percent for a 45-year-old poor nonparent — “and they’re going to ask for the (higher) Medicaid matching rate for everybody.”

Keith Fontenot, a visiting scholar at the Brookings Institution’s Engelberg Center for Health Care Reform (Fontenot headed health care divisions at the White House budget office during the Bush and Obama administrations): “You have large, populous states like California and New York and many others that would be in serious fiscal straits if Congress were to do that,” and members of Congress are coming from those places, he said. “I appreciate the fiscal worries on the part of states, but I don’t think it’s a highly likely event.”

Laura Olson, a professor at Lehigh University in Pennsylvania, where she teaches health care policy: “It’s possible. I wouldn’t take that argument very seriously.” But an “interesting twist” could occur if fiscally conservative Republicans in Congress slash Medicaid as part of spending cuts.

Jonathan Engel, public administration professor at City University of New York: “Right now Medicaid is so poorly funded ... so far below market reimbursement rates, it would be hard to imagine even a thrifty Congress cutting it.”

Tammy Perkins, Otter’s health care policy aide: “The threat was always there, however ... it may not have occurred because we’ve always done the things we’ve been asked to do.”

Perkins added that “the way things have gone in the last year, things have changed constantly” with the Affordable Care Act’s rollout. “It’s 2020 when we would actually end up paying that 10 percent, and who knows what that 10 percent would be at that point?”

Idaho Department of Health and Welfare spokesman Tom Shanahan said he could not think of a time when Idaho was threatened with a loss of federal Medicaid funds. But, he said, last year the department was concerned it could lose some federal Medicaid money if the Legislature failed to approve a funding request to put Idaho Medicaid in compliance with new rules.

2. NEED TO REFORM FIRST

Otter said in last year’s State of the State address: “We have time to do this right, and there is broad agreement that the existing Medicaid program is broken.”

A task force Otter assembled to study a Medicaid expansion said Idaho should take the federal government up on its offer of 90- to 100-percent matches to cover people with incomes up to 138 percent of the poverty line, but said the program needs reforms including personal accountability for the insured and outcome-based payments to health care providers.

Perkins: “It’s very difficult to change things after you’ve already taken that on. ... This is one (policy) where we do have the choice to take the time on. We didn’t have that choice with the (health insurance) exchange. ... We need some time to be able to study it out a little better.”

Engel: “They’re right. It’s a very fair criticism. ... That said, I think it’s a little misleading. I mean, this is going to be a long, 20- or 30-year road to get our delivery system under control.”

Fontenot: “Whatever the desires are to sort of improve the value for the dollar ... those are great things to do. But you could do those now, or do them after (expansion).” He added, “One might argue that doing (reform and expansion) at the same time might be a more effective approach ... sync it up and do it simultaneously.”

Jon Hanian, spokesman for Otter, said Idaho needs to reform its program before taking federal funds, because that gives the state leverage: “If we agree to expansion beforehand, we give away a lot of our bargaining power.

3. IT’S JUST INSURANCE, NOT MEDICAL CARE

One concern experts do have about Medicaid expansion: Giving people Medicaid coverage is not a panacea for lack of health care. Idaho has among the lowest number of primary-care doctors per capita, and experts worry that when poor adults get Medicaid coverage, they will have trouble finding doctors. Otter has not talked about this as one of the reasons to wait for Medicaid expansion.

Barr: “That’s going to be a very real issue.”

Olson: The physician shortage is already a problem “for the Medicaid population we have right now, and if we expand Medicaid there’s clearly not going to be enough doctors.” Without a primary-care doctor to see, she said, new Medicaid patients may just go to the “very expensive” emergency room — a pattern researchers saw in Oregon after that state carried out a small-scale Medicaid expansion.

Low-income community health clinics in Idaho received federal grants under the Affordable Care Act to take on more patients. But Olson said the number of clinics is “not even close to enough to meet needs, and certainly not for specialized care. ... They may find that you have cancer but not be able to treat that cancer.”

Engel: “I’m not sure that’s a particularly good argument” against expansion. “Well, it’s a good thing you don’t have enough money for groceries, because we don’t have enough food around here.”

Audrey Dutton: 377-6448, Twitter: @IDS_Audrey

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