The potential cost of Medicaid expansion

The potential cost of Medicaid expansion

by
Parrish Miller
December 10, 2014
Parrish Miller
December 10, 2014

Medicaid expansion advocates have a couple of key talking points on their side, and perhaps the most persuasive is the 90-10 Enhanced Federal Medical Assistance Percentage (FMAP) that the federal government is offering to pay for expanded Medicaid programs. Although Idaho receives approximately a 70-30 split for its current Medicaid program (71.75 percent in FY 2015), Congress has promised to maintain this higher 90-10 split for the costs incurred under the expanded portion of Medicaid.

There is a problem with this promise, however. According to the Supreme Court, one Congress cannot legally bind a future Congress. In other words, a promise made by Congress can be changed at any time. This concern is underscored by a warning issued by Sen. Mike Crapo who said, "I think that states will have to assume that they’re going to begin assuming increasing portions of that [the costs associated with Medicaid expansion], if not all of it, rather rapidly."

In fact, an attempt to lower this match rate is already underway. Sens. Tom Coburn, R-Okla., and Richard Burr, R-N.C., have introduced a bill in the Senate to do away with the enhanced FMAP for Medicaid expansion. It hasn't made much headway under the Democrat-controlled Senate, but a similar bill could very well be passed once Republicans take control in January.

What would this mean for Idaho? Estimates of the cost of Medicaid expansion suggest the total cost paid by both the state and the federal government will reach nearly $1 billion annually by 2025. If Idaho pays just 10 percent of this, the direct annual cost would be approximately $100 million. If the match rate were lowered to the same rate as Medicaid overall, Idaho's direct cost for Medicaid expansion would triple to $300 million.

Let's go a bit further down the rabbit hole, though. Currently Idaho has the second most favorable FMAP rate in the nation behind only Mississippi. Across the border in Wyoming, the FMAP rate is just 50 percent. If Idaho had to pay for Medicaid expansion at that rate, the cost would be a staggering $500 million annually.

Expanding Medicaid because we believe the feds will pay for most of it is a dangerous gamble that may well come back to haunt us. If Congress (perhaps with the aid of a Republican president in 2016) sets about balancing the budget, there is a significant deficit to make up and cutting payouts to states is likely to be near the top of the list.

Spending a billion dollars a year to push more Idahoans into dependency under the failing Medicaid program is a bad idea for numerous reasons, but the fact that it could directly cost Idaho hundreds of millions more than we are currently being told is one of the most compelling.

 

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