Bringing the Economy Home

Six Months In, Evaluating The Effects Of A Medicaid Cut

It’s relatively simple to describe the Medicaid cut approved by the Idaho Legislature early this year.  State leaders made about $35 million in targeted cuts.  That meant fewer federal matching dollars, and a total funding loss of nearly $100 million to the state’s Medicaid program.  The economic and personal reverberations are more difficult to tally, but they include job loss and a change in quality of life for some of Idaho’s most vulnerable residents.

Six Months In, Evaluating The Effects Of A Medicaid Cut

The healthcare sector has been a bright spot in Idaho’s years of economic distress.  It’s the state’s fastest growing industry, according to the Idaho Department of Commerce.  So it’s worth considering the employment effects of the cut approved last session.  Idaho’s former chief economist Mike Ferguson says you can’t take away millions in spending without repercussions.  “You know, if you’re taking those dollars out of circulation, there are going to be impacts,” he said.

Molly Messick / StateImapact Idaho

Katherine Hansen is the Executive Director of Community Partnerships of Idaho, Inc.

Ferguson hasn’t done a thorough analysis, but he says it’s fairly simple to arrive at a ballpark estimate of potential job losses, because the greatest cost of the services provided through Medicaid is wages. “If you look at, say, $50,000 dollars per job,” he said, “that means a million dollars is about 20 jobs, so ten million is going to be 200 – we’re talking maybe 2,000.”

Of course agencies and hospitals can also shift costs.  Nevertheless, Medicaid service providers say last session’s cut has already had an effect.  Katherine Hansen is the Executive Director of Community Partnerships of Idaho, a for-profit company that provides services to adults and children with disabilities.  It’s one of the largest agencies of its kind in the state.  “On the whole, we lost 51 jobs in the last 12 months,” she said.  “We had 420 employees last year at this time, and this year we have 370.”

Most of those cuts were full-time positions.  And Hansen says most are due to one particular change.  Many adults and children with disabilities receive what’s called developmental therapy.  It aims to help with day-to-day skills and allow people to live more independent lives.  It’s offered individually or in groups, but a change that went into effect July 1 got rid of separate reimbursement rates.  Instead, there’s a new combined rate projected to save $3.6 million in state and federal spending each year.

Hansen says the rate change is frustrating because developmental therapy is one of many services that was found to be underfunded five years ago. “There was legislation that passed that required the department to work with providers to create a fair and reasonable methodology for rates,” she said.  “The department” is the state Department of Health and Welfare, which administers Idaho’s Medicaid program. “Providers like ourselves gave them all of our financial records to show what it costs to provide the service, and 98 percent of the services were underpaid,” Hansen said.  “And the department said, ‘Once we have money, we’ll start paying the proper rates.’  At that time, developmental therapy, as a good example, was about 80 percent of what the rate should be.”

Agencies like Hansen’s take a big hit under the cuts approved last session.  State leaders preserved services for low-income children, but changed some services for adults, including people with developmental disabilities and mental illness.  In addition, they reduced reimbursement rates.  That strikes at a broader swath of health care providers, including hospitals.  Idaho Hospital Association president Steve Millard couldn’t be available for an interview, but he did say in an e-mail that the state has placed the “continuing burden” of supporting the Medicaid program “squarely on the shoulders of hospitals, doctors and other providers.”  He said that can be a factor in hospitals’ hiring decisions. He also said that continuing to cut funding while Medicaid enrollment goes up isn’t sustainable.

As for the actual people affected by all of this, the greatest impacts appear to be on those with developmental disabilities or mental illness.  Christine Pisani is a program specialist with the Idaho Council on Developmental Disabilities.  “It’s inhumane to watch what’s happening to people with disabilities in our state,” she said.

This summer, Pisani began interviewing Medicaid recipients about how recent cuts are affecting them.  None of those she has talked to wanted to participate in a radio interview, but Pisani agreed to share some of their stories.  She says service reductions mean one man she’s spoken to, who has cerebral palsy, may no longer receive assistance with basic things like getting out of bed in the morning.  And there are other examples.  “In June, I interviewed a gentleman who has chronic depression.  He was receiving psychosocial rehab services and had those hours cut.”

Psychosocial rehab, also called PSR, helps recipients maintain good mental health by helping them stay on track with medications, for example.  Since 2009, the maximum number of weekly PSR hours has been cut and cut again, from twenty to ten to five and now to four.  “So he gets four hours a week, and for the most part, the rest of the time, he was in his apartment,” Pisani said.  “Unless he was making it to a counseling appointment or getting groceries, which he was able to get a friend to give him a ride.  But that’s probably a limited number of people that were coming into contact with him.”

Now, Pisani is worried.  This man isn’t responding to calls, or following his usual routines.  “We’ve recently tried to get in touch with him, and have not been able to get him by phone, and he doesn’t show up in the regular places where he typically used to frequent.  So there’s a lot of concern at this point about what’s happened with him.”

She’s afraid he might be suffering terribly.  Pisani says the man has developmental disabilities in addition to mental illness.  Not only was he affected by the cut in PSR hours.  He also lost services due to an earlier legislative change that forced people with dual-diagnoses to choose which disability to address through skill-building.

Idaho State Legislature

State Representative Carlos Bilbao is a Republican from Emmett.

Pisani says that’s not the only dramatic choice recipients have faced.  “I know of three individuals

whose budgets have been cut to the point where they have now moved to a nursing home,” she said.  She says these are people in their 30s and 40s.  And she says it’s evidence that cuts can drive costs up.

A number Idaho legislators did not return requests for comment, but Representative Carlos Bilbao, Vice-Chair of the House Health and Welfare Committee, did agree to an interview.  He said last session’s cuts were painful.  But, he said, revenue projections gave legislators a choice between lowering spending or raising taxes.  And he and others were firmly against tax hikes.  Bilbao said he believes that reinstating some of the Medicaid funding will be a main focus in the upcoming legislative session – but that depends on the amount of money available.


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