Bringing the Economy Home

In Two Charts, The Potential Costs And Savings Of Expanded Medicaid Access In Idaho

Lawmakers are still in Boise, where they’re grappling with the education budget past their wished-for departure date. Even with the extra time, it appears the push to expand Medicaid eligibility won’t resume this session.

That discussion so far has centered on potential costs and savings with and without expanded access for Idaho’s poor. Counterintuitively, county budgets and the state general fund could realize millions in savings if lawmakers and the governor opt to allow more people to enroll in the federal entitlement program. So, just how much savings will state leaders forgo if they delay Medicaid expansion by, say, six months? (That is, if they expand access to the program starting in the 2015 fiscal year, instead of in January 2014.)

According to consulting firm Milliman, county budgets collectively will miss out on an estimated $16.6 million in savings during that six-month period. The state general fund will pass up $6.2 million.**

Data Source: Milliman | Chart: Molly Messick

The savings come about because there’s expected to be a great deal of overlap between those who would be newly eligible for Medicaid and those who currently receive help with emergency medical costs though county indigent services offices and the state’s Catastrophic Health Care Cost Program, generally called the CAT fund.

Together, counties and the CAT fund spent more than $55 million in the 2012 state fiscal year to pay the health care bills of those who applied for assistance and were found to be too poor to pay the expenses themselves.

As the chart above makes clear, county budgets will consistently save money under Medicaid expansion, assuming the current method of paying for catastrophic health care costs continues. For the state general fund, however, the savings are projected to turn into costs starting in the 2017 fiscal year. That’s when the federal government stops paying 100 percent of the costs for newly eligible Medicaid recipients. Between 2017 and 2020, the federal matching rate phases down to 90 percent, where it’s supposed to stay.

Looking only at the chart above, it seems the costs of Medicaid expansion to the state budget will quickly outweigh savings. But there’s something more to consider: the state is expected to see Medicaid enrollment grow no matter what beginning in 2014. That’s because there are many people in the state who are Medicaid-eligible, but not enrolled.

The federal Affordable Care Act’s health insurance mandate will encourage that population to sign up. And states must cover their previously eligible but newly enrolled populations at existing (and less generous) federal matching rates. Given that, Milliman’s estimates show Idaho’s decision to expand or not looks more like this:

Data Source: Milliman | Chart: Molly Messick

What we see, in other words, is that expanding Medicaid eligibility results in a net savings of $9.8 million between 2014 and 2024, mostly because the expansion offsets costs now borne by county budgets. Most of those savings come early on, when the federal matching rate is more favorable. That’s one reason why Rep. Tom Loertscher (R-Iona) this session introduced a bill to expand Medicaid eligibility as of January 2014.

If the state does not expand eligibility, it realizes none of those savings — but it will nonetheless be on the hook for $418 million over the 10-year period.

**CLARIFICATION: The state general fund is projected to save $6.2 million. But, as we see in the second chart, that’s compared to the alternative of spending $14.8 million. The amount of money at stake for the general fund in that six-month period, therefore, is $21 million.


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