Idaho Department of Health and Welfare (DHW) director Dick Armstrong told lawmakers on the Joint Finance-Appropriations Committee Monday that in 2014, the first year of the Affordable Care Act's (ACA) full implementation, Medicaid would need $19 million in extra state money to cover costs. A full $100 million could be necessary between 2014 and 2019, Armstrong said, for new people on the program.
The projections come through the law of unintended consequences. "Theoretically that expansion wouldn't cost us anything as a state. But that's not what happens, because there's a woodworking effect,” Armstrong said. "Now they (newly-eligible residents) come into service and their children come with them."
On Jan. 1, 2014, thousands more Idahoans will become eligible for Medicaid, but their costs are covered - at least initially - by the federal government. As many as 100,000 Idahoans are expected to join the program’s ranks.
But Armstrong predicts the dependents that the newly-eligible residents bring with them to Medicaid will not be covered by the feds completely, but will instead be covered at about 30 percent by the state with the feds picking up the rest.
For an example, Armstrong said a single, white male would be covered 100 percent by the federal government, but that his kids, who already qualified under old rules, would saddle the state with extra costs.
The newly-eligible Medicaid recipients will only be covered solely by the feds for a short period of time, however. That rate will be in effect until the end of 2016, when it starts a decline to 90 percent in 2020.
There could be some cost-savings in this for the state. Because Medicaid is expanding to cover, essentially, single, low-income people, the impact on the state’s catastrophic health fund could dramatically lessen. Armstrong says the money not needed for the catastrophic fund might be able to completely cover the Medicaid increase.
There will be more expenses to the state that come along with ACA implementation. In its 2013 budget request, DHW is asking for $3.48 million to create a real-time computer system that will interface with an insurance exchange. That money is being matched at a 90 percent rate by the federal government, meaning that the technological upgrades for DHW’s computer will cost about $35 million when state and federal moneys are combined.
Idaho has added millions to its Medicaid budget as of late and may do so again this year. Last year, lawmakers added $137 million to the program’s budget after federal support dropped slightly. Medicaid is asking for more than $40 million in new funds this year.