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State working group examines details of proposed Medicaid expansion

State working group examines details of proposed Medicaid expansion

Idaho Freedom Foundation staff
August 7, 2012

A working group established to study options for a proposed federal expansion of Medicaid eligibility in Idaho met for the first time Monday. Several legislators, state officials, medical and insurance industry representatives, and other community members who were named by Gov. Butch Otter to the group, participated in a discussion of practical details that would be involved in implementing the expansion. Although it was clear that group members didn't have solid numbers or a firm idea of what the program would look like going forward, they appeared to share a predominant consensus favoring Idaho's participation in the federal proposal.

A recent Supreme Court decision upholding the constitutionality of the Patient Protection and Affordable Care Act (PPACA), commonly known as Obamacare, held that the federal government could not threaten to eliminate existing Medicaid funding as a measure to convince states to accept the proposed federal expansion. This leaves states to decide whether to participate in the massive inflation of an entitlement program that the Congressional Budget Office estimates would cost U.S. taxpayers $800 billion in its first decade. If an insurance exchange is implemented, the provisions of the PPACA would also bar those eligible for Medicaid from opting out and seeking private insurance.

Leslie Clement, deputy director of Medicaid, behavioral health and managed care services for the Idaho Department of Health and Welfare (DHW), was one of the most vocal supporters of the expansion.

"I think it's a smart thing to do, to expand the Medicaid program," Clement said. "The current status is a mess, and we're paying for it every which way—whether it's in increased insurance premiums, whether it's at the county level, whether it's in the hospitals with cost-shifting—those costs, by and large, are incurred today in the existing system."

Still, although none of the participants appeared to be fully skeptical of the proposed Medicaid expansion, many of them acknowledged the fundamental uncertainty that lies ahead regarding eventual program costs and implementation details.

"What we don't know is, who among this expansion population might suddenly go, 'Gee, I'd like to start using lots of services,'" Clement said. "We don't know that. We don't have those identified, so that's a question mark."

Dick Armstrong, director of the DHW, pointed out that Idaho does already have some information about residents who could become newly eligible.

"Interestingly enough, we already know by name 93,000, because they're in the food stamp program," Armstrong said. "So, it's not that we don't know who these individuals are, and so it's possible for us to get really accurate as far as who they are, where they are, and what their costs are. It's data mining that is very real, and it's just a matter of time and energy." He said, though, that his department doesn't have the staff to undertake this kind of research.

During the morning session, two representatives of Leavitt Partners, a Utah-based company that analyzes health care data, presented a lengthy summary of their estimates for the Idaho population that would become newly eligible for Medicaid under the federal expansion. "We're not meaning to advocate a particular position here," said Laura Summers, a Leavitt Partners analyst. Instead, she reiterated that they hoped only to provide information that would allow Idaho's policymakers to form their own recommendation. Michael Deily, a senior advisor at Leavitt Partners, later also urged caution in using the data without full study of its implications.

"There's a lot of contradictory information out there," he said. "Just look at it carefully and be aware of unintended consequences."

Summers said that anywhere from 90,828 to 104,186 people would become eligible for Medicaid if Idaho were to join the expansion, with at least 16,111 of them in Ada County alone. These residents are expected to have a much higher rate of chronic illness than the general state population, including obesity, diabetes, mental health issues and substance abuse.

Those who would become newly eligible if the expansion were to be implemented currently receive subsidized medical treatment from a variety of sources, including disproportionate emergency room care, the county-funded Catastrophic Health Care Cost Program (CAT), community health centers, the DHW's mental health care services and, for those detained by the criminal justice system, the Idaho Department of Correction Health Services.

These programs are costly, which makes the federal funding that would accompany a Medicaid expansion seem especially attractive, but a large chunk of that funding would ultimately still come from Idaho taxpayers—along with strict federal control over how the funds are administered. This has led governors in several other states to reject the expansion and focus instead on bolstering or reforming the existing systems in their own states. Although Gov. Otter has been a vocal opponent of Obamacare, it remains to be seen whether he will choose to maintain local control.

"I think if there's a decision to go with that kind of effort, it's going to be because the state is uncomfortable with the federal requirements, and the amount of oversight and involvement they have," Clement said. "So, that's the benefit of having the state-funded-only plan—what you really do is up to you and your state policymakers to decide what the benefits look like, and who's in and who's out, and all that."

The federal subsidy for the Medicaid expansion would decrease over time, as well, leaving Idaho with an increasingly large portion to fund directly. Armstrong suggested that much of those future costs could be covered by scaling back other piecemeal health care programs, but acknowledged that he's unsure whether this kind of cost-shifting could work in practice.

"You have to look down the road to the end of any grant, and when you apply for that grant, you have to explain what you're going to do when the grant runs out," Armstrong said. "And that is an excellent exercise, because if you're going to establish a policy, you need to know how to live with it both short-term and long-term. And so, that's the protocol that I believe that we're going to follow. And what it means is that you need to analyze and document all the issues that we're talking about: Where are the costs today? And the key is that you capture those savings. So, for example, if there was, you know, an expansion, and the CAT in the counties are going to gain something, they're going to have savings because of it, then it's critical that we capture those savings, and they're real, for the long-term financial forecast to work. One of the problems with government is, if you don't have to do something, well, there's always these other needs, so the dollars always sort of slip around the corner."

Still, despite the uncertainty involved in all aspects of the potential expansion, group participants appeared to trust their guesses that it would all work out to Idaho's benefit.

"Even with additional work, we're still going to be dealing with best estimates—we won't know for sure," Clement said. "I think at the end of the day, we do the best that we can, and we know that it's not going to be perfect, because we don't have perfect data."

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