State Politics

Idaho’s wait erodes projected savings from expanding Medicaid

Boise Mayor Dave Bieter testifies in favor of Medicaid expansion in front of the Senate Health and Welfare Committee on Tuesday.
Boise Mayor Dave Bieter testifies in favor of Medicaid expansion in front of the Senate Health and Welfare Committee on Tuesday. The Associated Press

Beyond the arguments for enacting fair, compassionate public policy, the financial case for expanding Medicaid in Idaho has been lower costs. In late 2014, an actuarial firm hired by the state put the 10-year savings of expansion to state and local governments at $173.4 million.

But in the firm’s latest projections, issued last month, those projected savings have evaporated, and what were savings are now costs — to the tune of $186.9 million.

The dramatic $360 million swing comes largely due to the state’s decision to forgo expansion and miss out on the early years of the program, which promised the largest savings. The new projections also extend one year further, where costs are higher; factor in new census data that adds potentially 15,000 more people to be covered; and uses higher insurance rates for its calculations.

The shift also reflects the success of the state health exchange created under the federal Affordable Care Act: With more Idahoans now insured, fewer are ending up in need of indigent assistance due to high medical bills, so state and county costs of covering those expenses have dropped, as have future projections. This year, in fact, the state will shift nearly $29 million from the state Catastrophic Health Care fund back into the general fund, because costs are lower.

The 2014 actuarial report estimated combined state and county indigent costs over 10 years at $915 million. Now they are estimated at $650 million.

FODDER FOR OPPONENTS?

Still, the shift from savings to expense is likely to be taken up by opponents of Medicaid expansion — most of whom oppose the entire system of subsidized insurance set up under the health care act — as a sign that projected savings have been misjudged or overstated by expansion proponents.

If costs were the most important issue, we should have done this three years ago. I think cost is an important issue, but I think the relationship with our citizens is more important.

Sen. Dan Schmidt, D-Moscow

But those proponents, who this year finally gained a legislative hearing on an expansion bill, maintain that the higher projected costs do not reflect savings to be realized elsewhere in the health care system, as well as stimulus to the economy as a whole. Nor do they reflect that the debate for or against expansion has always been a question of politics and policy more than cost.

“If costs were the most important issue, we should have done this three years ago,” said Sen. Dan Schmidt, the Moscow Democrat whose expansion bill was heard this week before the Senate Health and Welfare committee. The committee took no action, leaving open the possibility of more discussion on the bill.

“I think cost is an important issue, but I think the relationship with our citizens is more important. Helping our citizens be productive. That’s what enrolling them in insurance will do.”

74 percentAmount of change attributable to lower future costs for indigent care, made possible by the state health insurance exchange

Expanding Medicaid would help 78,000 uninsured Idahoans who don’t qualify for Medicaid but whose incomes are too low to qualify them for subsidized insurance on the exchange. Along with that population is another group with slightly higher incomes who could opt in to health insurance subsidies under Idaho’s expansion plan. That population, in the new projections, is 39,000, an increase of 15,000 from before, based on census data.

THE EXPANSION ALTERNATIVE

With Republicans, who control the Legislature, opposed to Medicaid expansion, Gov. Butch Otter’s administration this year proposed a state-sponsored program that would subsidize doctor visits for people in the gap group, giving them at least entry-level access to health care. The program, estimated to cost $30 million annually, would not cover acute, emergency or chronic care, or most medications, but it would at least get people into a health care routine that could identify issues before they become critical.

With Medicaid expansion, a similar state outlay — about $25 million next year — would be met with $577 million in federal assistance that would pay for a full insurance offering for people in the gap. By 2026, the state outlay of $83.5 million would be combined with $978 million from the federal government.

Further, while cumulative state costs are now projected higher, counties would see consistent savings ranging from $23 million to $33 million per year, a total of $281 million over 10 years, according to the projections prepared by Seattle-based actuarial firm Milliman.

 

The revision came to light because the financial impact statement that accompanies every piece of legislation was revised for Schmidt’s expansion bill.

The state-sponsored proposal, known as the Primary Care Assistance Plan, has yet to be taken up by the Legislature.

“Neither Medicaid expansion nor PCAP are free, but they do provide tremendous savings,” said Tom Shanahan, spokesman for the state Department of Health and Welfare. “Either one offers tremendous value to the state.”

Bill Dentzer: 208-377-6438, @IDSBillD

Projected Medicaid expansion costs change

The actuarial firm Milliman prepared cost projections related to Idaho’s implementation of a customized Medicaid expansion plan in late 2014 and again in January 2016. Here’s how they compare. (Totals do not add up due to rounding):

Medicaid expansion 10-year cost projections (Costs and savings (-) in millions)

FY

2014

2016

2016

-$64.7

not measured

2017

-$50.5

-$31.1

2018

-$31.2

-$12.3

2019

-$25.1

-$4.5

2020

-$10.7

$11.5

2021

$1.0

$25.8

2022

$1.3

$29.8

2023

$1.6

$34.2

2024

$2.0

$39.0

2025

$2.7

$44.3

2026

not measured

$50.1

Total

-$173.4

$186.9

Here’s the projected change for the fiscal year that starts in July:

FY 2017

Costs/Savings

2014

2016

Expansion claim/admin costs

29.2

24.7

State Catastrophic Fund

-37.3

-22.0

County indigent claims/admin

-32.0

-23.4

Behavioral/Public health

-10.5

-10.5

Net total

-50.5

-31.1

  Comments