Medicaid costs rising, even before expansion

BOISE — Anyone looking to oppose Medicaid expansion on financial grounds found about $90 million worth of ammunition Monday in the joint budget committee.

The committee, which is responsible for setting agency budgets each year, heard from the Idaho Department of Health and Welfare’s Division of Medicaid.

Gov. Brad Little is recommending $2.8 billion in total funding for the division in fiscal 2020. That includes nearly $1.9 billion in federal dollars; state general fund support would amount to $684.4 million — an increase of $99.2 million, or 17 percent, over the current year.

Only about 10 percent of the additional money is for Medicaid expansion. The bulk of it — almost $90 million — is for the traditional Medicaid program; it stems from changes in caseload and service utilization rates, reductions in federal matching rates and increases in provider reimbursement rates.

In other words, it’s going to cost Idaho about $90 million more next year to provide the same services to approximately the same number of people (caseloads are projected to increase by about 1.9 percent), largely because of rate changes that the state can’t control.

For opponents of Medicaid expansion, that’s exactly why the Legislature should refuse to implement the optional program: because it simply adds to what’s already a financial sinkhole.

“Every legislator who is paying the slightest attention knows Medicaid spending is already out of control,” noted Idaho Freedom Foundation President Wayne Hoffman in his weekly column. “Twenty years ago, Medicaid took about 17 percent of the state budget; today, it gobbles up nearly 30 percent. And that’s without Medicaid expansion.”

Rep. Caroline Troy, R-Genesee, sits on the joint budget committee. Even before voters approved the expansion initiative in November, she maintained that its backers were “short-sighted” in not identifying a specific funding source to pay for the measure.

“It’s a sleeping giant,” she said Monday.

The Department of Health and Welfare expects to implement Medicaid expansion Jan. 1, midway through fiscal 2020. An estimated 91,000 people will qualify for the program, including about 62,000 working adults who currently can’t afford preventative health care.

The project cost for the first six months is about $20 million. Little’s budget pays for that with a combination of Millennium Fund dollars and program savings. His Medicaid budget includes $9.2 million in state support; however, that would be offset by savings in other Health and Welfare and Department of Correction programs, so the net impact on the general fund in 2020 is zero.

Beginning in 2021, the full-year cost of expansion is estimated at about $40 million.

“And that’s the price tag when the state is in one of its best economic times ever,” noted Troy. “So what happens when we have an economic downturn?”

Troy has previously said she’ll abide by the will of District 5 voters on Medicaid expansion (where the initiative was approved with more than 66 percent of the vote), and she maintained that position after Monday’s budget hearing.

Nevertheless, she and other budget committee members are wary about the long-term budget implications of the program.

“It will not be without cost,” said Sen. Abby Lee, R-Fruitland. “This isn’t something where we can just shift money from here to there. It will compete with other things in the state budget.”

It doesn’t appear, though, that Monday’s presentation fueled the anti-expansion movement, at least for budget committee members.

“I want to find a path forward,” Lee said. “It’s an arrogant position to thumb our noses at voters.”

Sen. Jeff Agenbroad, R-Nampa, doesn’t think Medicaid expansion is the best way to provide health care services for low-income Idahoans, but “because the Legislature dragged its feet (in dealing with the problem), it’s the solution we have.”

“At some point, you own (a problem) if you don’t fix it,” he said. “So we own it.”

Information presented at Monday’s hearing indicates that people between the ages of 19 and 34 will account for about 46 percent of the expansion population. Those age 35-64 will account for the remainder.

By contrast, 74 percent of the traditional Medicaid caseload is children and pregnant mothers, who collectively account for 30 percent of the program costs. Disabled individuals and elderly people who qualify for both Medicare and Medicaid account for 26 percent of the caseload and 70 percent of the costs.

The budget committee will begin setting agency budgets next week.

Spence may be contacted at bspence@lmtribune.com or (208) 791-9168.