A consulting firm examining how much Medicaid expansion would cost Idaho significantly revised its analysis over the course of six drafts in a one-month span this year, from June 15 to July 19.
The Milliman firm swung between an estimated 10-year cost of $105 million, and a 10-year savings of nearly $200 million — a $300 million difference. As the firm got more current data about Idaho residents, it shed 28,000 Idahoans from its estimates of how many would sign up.
Milliman, hired by the state, is just one of many groups studying the effects of Medicaid expansion across America. The changes across its drafts offers one example of how even the experts are unsure what will happen if voters approve Proposition 2 next month.
People both for and against expansion point to evidence from other states to make their case. The Idaho Freedom Foundation, the most prominent critic of expanding Idaho Medicaid, argues unexpectedly high enrollments will put a financial burden on taxpayers. National policy experts and people who work in Idaho’s health care industry say expansion demonstrably saves money in the long term — and may be necessary to keep small, rural hospitals afloat.
Economic fluctuations and other changes in state spending also complicate even the most well-thought-out analyses. Lacking a crystal ball, here’s what the numbers available this fall say — and where they fall short.
The state’s research
Idaho officials have turned to Milliman several times over the past few years in their own attempts to answer the question.
The state paid $40,654 for the firm’s most recent analysis, which came out in July. Health and Welfare spokesperson Niki Forbing-Orr said the first draft relied on census data, while the subsequent drafts used real-time data from the state. The final numbers more accurately reflect what the department knows about Idahoans who currently qualify for assistance and are living below the poverty line, she said.
“Since unemployment rates have dropped significantly over the past few years, our SNAP enrollment has also decreased,” Forbing-Orr wrote in an email to Idaho Reports. “This is why we saw the Medicaid gap estimates last year drop from ... 78,000 to about 62,000.”
In the draft reports obtained by Idaho Public Television, Milliman initially estimated 118,950 additional Idahoans would enroll in Medicaid if voters choose to expand the program. But in a second draft, sent to the Idaho Department of Health and Welfare 11 days later, that number dropped to 91,192.
Of those dropped, 18,000 were at or below the federal poverty line. The revised enrollee estimate then stayed fairly consistent through the final four drafts.
Medicaid expansion allows states to pay a maximum of 10 percent of the cost of medical care for its formerly uninsured working-poor patients, with the federal government picking up the rest. That’s much higher than the rate for patients on Medicaid now: In Idaho, the federal government covers about 71 percent of the cost — one of the highest rates in the country — and Idaho picks up the other 29 percent.
The first Milliman draft estimated Medicaid expansion’s fiscal impact to the state at $65.3 million over a 10-year period. That number factored in certain offsets — savings from existing state and local programs that would partially be covered under Medicaid expansion, such as the CAT and indigent funds, substance-use disorder services, and hospitalizations from the Idaho Department of Correction.
In the final draft, the cost after offsets settled at $105.1 million over 10 years, partially due to lower savings from the CAT and indigent care programs. Compared to where Milliman began, the final estimate projects Medicaid expansion would cover fewer people, at a higher net cost to the state.
The Milliman report itself acknowledges there are a number of unknowns that will affect its numbers.
Among those: Idaho unemployment is currently at a historic low for the past 40 years — an average 2.9 percent for 2018 so far — and is constantly shifting. The Milliman report notes its 10-year projections are based on “Idaho’s current economic landscape” and that increases in that unemployment rate will likely mean more Medicaid enrollees. Over the past 10 years, Idaho unemployment rates have ranged as high as 9 percent in 2010, during the economic downturn.
“Actual results could be higher or lower than our estimates,” the report’s first page says in bold letters. “This can be due to changes in the number of persons eligible, enrollment take-up rates, per member costs, cost offsets, or federal funding.”
The critic’s research
In early October, the Idaho Freedom Foundation released a report that, in part, detailed how other states underestimated Medicaid enrollment by tens of thousands — including by relying on other Milliman estimates. The report cites the state of Iowa’s decision earlier this year to not renew a contract with Milliman. The explanations for that varied, according to the Des Moines Register. But Iowa Medicaid management companies said Milliman’s underestimates of enrollment and program needs resulted in the state not paying companies enough.
The IFF has also brought up other concerns, such as relying on the low unemployment rates for estimates — the focus of a column just released Friday by foundation president Wayne Hoffman.
But the foundation’s analysis has its own flaws, and in some cases, cites reports that conclude Medicaid expansion benefited states.
In Montana, which expanded Medicaid in 2015, state officials initially estimated 45,000 residents would enroll. By the beginning of 2018, 96,000 had signed up, the IFF said.
And that’s true, but there’s more going on in Big Sky Country that the IFF didn’t point out. According to the Montana report the foundation cited, Medicaid expansion resulted in $58 million in state budget savings, and an additional $47 million in new tax revenue.
When asked about the full Montana report, IFF vice president Fred Birnbaum was still skeptical. Montana’s expansion is about to expire; in November, voters will consider making it permanent and adding a cigarette tax to help fund it.
“If expansion had saved Montana money, why would they couple the extension of expansion with a $2 per pack cigarette tax increase?” Birnbaum said. “The whole notion that expansion, nationally, will lower costs can be deflated by the fact that the biggest increase in coverage is due to Medicaid expansion, yet health care spending as a (percentage) of GDP has never been higher.”
Medicaid, of course, is not the only factor driving health care spending. Medicare is one of the biggest spenders in the economy, making up 15 percent of the federal budget; its spending has grown by 65 percent in the past decade. In addition, health care providers and drug companies raising their prices is a major driver of increased health care spending in the U.S., an issue separate from Medicaid expansion.
Another IFF claim: Medicaid expansion in other states has resulted in less money going to higher education. The foundation’s report cites an Education Next column that examines a possible link between a decline in higher education spending and an increase in social program spending. IFF then also offers its own analysis that notes similar correlations.
The original Education Next column does note the correlation. But ultimately, author Douglas Webber goes a different direction than the IFF, saying: “(I)t is unlikely that the Medicaid expansions provided for under the Affordable Care Act (ACA) are responsible for much, if any, of the decline in state higher-education funding.”
National research continues
Iowa and Montana are not the only states where officials were surprised by the number of new Medicaid expansion signups.
While Milliman and the Idaho Freedom Foundation try to predict expansion’s effects on Idaho, other nonpartisan groups have examined what the program’s popularity means for costs and health care access in other states.
The consensus: Overall, expansion has benefited states.
“Although it is unlikely that Medicaid expansion will turn out to be entirely free to states, based on the considerable experience to date, the probable costs appear to be quite low in comparison with the economic and public health benefits of expansion,” said one analysis from The Brookings Institution.
Medicaid advocates say expansion would basically transfer into Medicaid the money Idaho is already spending on catastrophic medical care and other expenses for uninsured Idahoans — and instead use that money for more cost-effective preventive care.
Experts interviewed by the Statesman this week said that’s exactly what has happened in states similar to Idaho.
Joan Alker of the Georgetown University Center for Children and Families noted that research is finding some unexpected economic benefits beyond government budgets. Families are staying out of medical bankruptcy or collections, which is good for the economy, she said.
“States were able to take federal dollars to substitute for state spending on existing programs,” said Sara Collins of The Commonwealth Fund, a foundation that advocates for health care access and affordability. “They actually realized state budget savings as a result.”