Catastrophic Health Care fund costs drop, but will trend continue?

Idaho’s Catastrophic Health Care Program is how the state covers medical expenses for people who can’t pay when they get hit with huge medical bills. Last year, the state set aside nearly $35 million for those costs.

It spent less than $19 million.

For 2015-16, the set-aside was $27 million. But for the six months ending Dec. 31, just $8.4 million was spent — less than a third of the full-year appropriation.

It’s a pretty exceptional turnaround. Just four years ago, the state’s CAT fund bill was $38.6 million for nearly 1,300 cases. Counties cover the first $11,000 of each claim out of property tax revenues and the state picks up the overage. The total state and county cost for 2012 topped $55 million — the highest ever.

Then costs and caseloads started to drop, and slowly at first. But from 2014 to 2015, they went off a cliff. Both caseload and total expenses declined by roughly one-third.

What caused it? The Affordable Care Act.

“We weren’t 100 percent sure of cause and effect,” said Sen. Dan Schmidt, D-Moscow, a member of the state CAT board. “I’m pretty sure now.”

Your Health Idaho, the state health insurance exchange, was created by the Legislature in 2013. Last year, 97,000 Idahoans applied for private insurance through the exchange, and 86,000 people had coverage in effect at the end of the year.

Enrollment for 2016 opened in November and runs through the end of January. As of mid-December, with six weeks remaining to enroll, 93,000 people had applied.

TWO YEAR DECLINE: $29 MILLION AND COUNTING

Gov. Butch Otter’s proposed state budget for next year calls for returning to the state general fund nearly $17 million that the CAT fund didn’t spend last year. On Friday, the Joint Finance-Appropriations Committee, on a motion by Schmidt, signed off on that amount plus nearly $12 million more, because this year’s costs are running so much under budget.

The full Legislature must sign off still, but the total returned to the general fund — about $29 million over the two years — still leaves the CAT Fund with $14 million for now through June. That includes the amount expected to come in from reimbursements. People who turn to the CAT fund to cover medical bills get a lien placed on any property they own and have to pay back what they owe.

Jared Tatro, a legislative budget analyst who outlined the cost picture to JFAC Friday, noted two additional factors for declining CAT costs: Screening at the front end — when people seek care — determines whether they’re eligible for Medicaid. On the back end, CAT fund claims are reviewed to determine what portion of the claim was medically necessary. Disallowed costs fall back on the provider, not the patient. Ultimately, private payers bear the burden when providers pass along those disallowed cost in higher fees for everybody else.

But both of those steps were enacted in 2010. The biggest CAT Fund dropoff coincides with when Idaho’s health exchange really got underway.

“We have cut costs at least one-third with Your Health Idaho,” said Schmidt, who is also a member of JFAC. “We could totally get rid of them by insuring everybody in Idaho.”

HELPING THE STILL-UNINSURED

What about that? The remaining un-enacted portion of Obamacare in Idaho is expansion of Medicaid to cover adults who either earn too much to qualify for existing Medicaid, or too little to qualify for subsidized insurance available on the exchange. There are 78,000 single adults in that gap group.

To date, Medicaid expansion in Idaho is also un-enactable. Republicans, who control both houses of the Legislature, won’t even permit a bill to be introduced and heard in committee.

The Otter administration’s answer to that last week was to propose a $32 million program that will give people in the gap group a way to get basic preventive medical care. The program would pay about $32 per person per month to primary care facilities where they can go for doctor visits. It will be funded through cigarette and tobacco taxes.

But bear in mind: It is not health insurance. It does not cover emergency or ongoing care or prescriptions. And although some lawmakers favor it for being an Idaho-sponsored proposal, with no federal government tie-in, others question whether there are any incentives in the plan to encourage people to get preventive care.

And it won’t reduce the CAT fund. It might even make CAT fund costs start climbing again, if more people go to the doctor and then end up incurring major medical expenses.

It all makes supporters of Medicaid expansion hope that a full airing of the governor’s proposed plan might prompt expansion opponents to reconsider — and to speculate whether that might have been the administration’s aim along.

This story was originally published January 17, 2016 at 11:36 PM with the headline "Catastrophic Health Care fund costs drop, but will trend continue?."