By Katie Kerwin McCrimmon
Colorado would have to pay $858 million to expand Medicaid over the next 10 years, but authors of a new national study say states that participate will bring in billions in federal cash and will dramatically cut the number of uninsured.
If all states opt to expand Medicaid, the U.S. could cut the ranks of the uninsured by 21 million people or about 48 percent, the study authors found. They estimated that states would have to fund increases of about 3 percent in their Medicaid budgets or $76 billion nationwide while federal spending would increase by $952 billion or 26 percent.
The new study from the Kaiser Commission on Medicaid and the Uninsured and the Urban Institute increases cost estimates for Colorado’s Medicaid expansion over a similar analysis conducted two years ago. In 2010, their analysis estimated Colorado would spend about $470 million between 2014 and 2019 to cover low-income people who make up to 138 percent of poverty (about $15,000 a year for an individual).
The analysis estimates that Colorado’s share of paying for increased Medicaid coverage would be $858 million from 2013 to 2022. In Colorado, that would amount to an increase of about 3 percent. Federal taxes would fund about $10.3 billion for Medicaid expansion in Colorado, amounting to an increase of 31 percent in federal Medicaid spending over the next 10 years in Colorado.
The Affordable Care Act planned for the Medicaid expansion, but the U.S. Supreme Court ruled that states should be allowed to opt out. Governors and lawmakers across the country must begin deciding early next year whether to expand Medicaid. With intense focus on the “fiscal cliff” and potential cuts in federal spending, state leaders are nervous about committing to expanding Medicaid. They question whether Congress will be able to avert cuts now and deliver promised matching funds in future years.
The health reform law calls for the federal government to pick up 100 percent of the costs for Medicaid expansion from 2014 to 2016. States then would gradually pay higher portions of the cost, capping out at 10 percent.
Gov. John Hickenlooper has repeatedly said he’s concerned about unsustainable cost increases for health care and has declined to say whether he supports Medicaid expansion. His spokesman, Eric Brown, said Monday that the governor remains undecided.
“We have not made a decision yet and continue to gather information,” Brown said.
House Speaker Designee Mark Ferrandino, D-Denver, expects broad support from Democrats both in the House and the Senate to proceed with expansion. And he expects Hickenlooper eventually to join them in backing expansion.
“Given the amount that the federal government is picking up and how many more people we can cover, it’s something we have to consider moving forward with,” Ferrandino said.
While the cost estimates over the next 10 years are “not insignificant,” Ferrandino said the benefits could be great.
“What we’re getting for that increase is a huge benefit to the state,” he said, citing increases in the number of people who would have health insurance and an influx of federal cash.
Ferrandino said there are a “lot of moving parts” related to Medicaid expansion and he still wants to see much more detailed numbers from Colorado’s Medicaid managers, but he said the Kaiser estimates were within the range of what he was expecting.
Rep. Brian DelGrosso, R-Loveland, said that he’s unlikely to support Medicaid expansion, because the costs for Colorado would be too high and also because there’s no such thing as “free money” from the federal government.
“That money’s got to come from somewhere,” said DelGrosso, a member of the state’s powerful Joint Budget Committee. “It’s borrowed money. We don’t live in some kind of imaginary land where there’s just money that grows on trees. Whether it’s income taxes, sales taxes, and whether it’s federal or state money, there’s already a big tab for Medicaid.”
DelGrosso said it doesn’t really matter whether state lawmakers philosophically support or oppose expansion.
“It comes down to how are we going to pay for it?”
“(The Kaiser Foundation’s) number is close to a billion dollars. That’s a lot of money and by no stretch of the imagination does the state have a lot of extra money,” said DelGrosso.
As Colorado begins to recover from the sharp economic downturn, lawmakers face great pressure to increase funding for higher education and K-12 schools, he said.
“We’re basically competing for the same dollars,” he said. “Until we can identify how we’re going to pay for it, I don’t think it’s going to be prudent to go down that path (of Medicaid expansion),” DelGrosso said.
In Colorado, hospitals and health care providers stand to benefit greatly if fewer uninsured patients show up for care in ERs.
The report estimates that if all states expand Medicaid, they will save an estimated $18 billion on so-called “uncompensated care” for the uninsured. Colorado’s estimated share of those savings would be $277 million, according to the new Kaiser study.
The Colorado Hospital Association has been urging support for Medicaid expansion.
“We believe this report reinforces CHA’s position that Medicaid expansion is a worthwhile investment for Colorado to make, and that it would help reduce the cost shift and levels of uncompensated care statewide,” Julian Kesner, the CHA’s spokesman said in a written statement.
“However, until the State of Colorado releases its own estimates in terms of projected caseloads and costs under an ACA-related Medicaid expansion, the limitations of even the most respectable of third-party calculations should also be taken into consideration,” Kesner wrote.
He said it’s important to remember the context of the intense budget negotiations taking place now in Washington.
“We feel it’s critical to avoid any such outcomes in these negotiations that would hinder the ability to continue implementing the Affordable Care Act.”
The study authors predicted that states will face intense pressure to expand Medicaid because the federal dollars will be so generous.
“Overall, it’s hard to conclude anything other than that this is pretty attractive. It should be hard for states to walk away from this,” said John Holahan, director of the Health Policy Research Center at the Urban Institute and the primary author of the new analysis.
So far, governors in eight states have publicly stated that they won’t expand Medicaid. But Holahan predicts governors and lawmakers may reconsider those decisions either next year or in future years when they see what kind of federal money they could be leaving on the table.
“The economics of this are very strong in terms of adopting expansion. If for political reasons, states don’t want to do it, providers will put pressure on the states, Holahan said.
He and others said that states could change their minds about Medicaid expansion at any time.
“With the health exchanges, there’s a firm deadline for states to express their intentions,” said Alan Weil, executive director for the National Academy for State Health Policy.
Decisions about health exchanges are looming for many states right now. But, the Medicaid decisions are more complex and states can submit plans at any time, Weil said.
“We all expect this to play out over time,” he said.