Cost of Medicaid expansion depends on assumptions

Mar 24, 2010

 

By Carol Gentry
3/23/2010 ©  Health News Florida

The cost of enrolling additional Medicaid beneficiaries in Florida under new rules passed in the federal health law would start at $149 million four years from now and rise to $1.05 billion by the end of the decade, according to a new chart released Tuesday by the Agency for Health Care Administration. 

The chart provides partial support for  Attorney General Bill McCollum's claim on Monday that the federal health law signed by President Obama today will cost Florida $1.6 billion to $2 billion a year by the time it is fully implemented in 2019. Health News Florida questioned the totals when McCollum's staff said they were based on an AHCA chart drawn up in January, before recent changes in Medicaid enrollment and to the federal legislation.

In response, the staff of McCollum and AHCA Secretary Tom Arnold provided a chart that they said reflect the new numbers in the Senate bill signed into law today. It shows a buildup in enrollment and spending between 2014 and 2019 that totals 1.1 million more Floridians in Medicaid at a cost to the state of $1.05 billion.

Staff for McCollum and Arnold said they arrived at the $1.6 billion figure by adding in $100,000 to $200,000 in administrative costs and $300,000 in higher pay for primary-care doctors who treat Medicaid patients. (The pay boost is part of the reconciliation act, now pending in the Senate.) 

Some familiar with the federal law -- the Patient Protection and Affordable Care Act -- immediately questioned the chart's assumptions and McCollum's claims.
 
For example, said Joan Alker, a senior researcher at the Georgetown University Health Policy Institute, "the $300 million in raising Medicaid fees to the Medicare level is not correct. It is 100% federally funded for 2013 and 2014 and then (the requirement) stops unless Congress moves to continue it."
 
Alker said the law may also cover administrative costs, but that is not clear yet.

As always with statistics, the total depends on the assumptions that policymakers and accountants make. The AHCA chart includes as new Medicaid enrollment a quarter-million Floridians who already qualify for Medicaid under current rules but who have never signed up; the assumption is that they would do so because of the federal requirement that everyone  have coverage. 

That assumption accounts for half of the $1 billion in additional costs, the chart shows

It also assumes that the state will have to spend about $73 million on low-income workers who are now privately insured but who will lose that coverage and become enrolled in Medicaid, a phenomenon called "crowd-out."

McCollum, who is running for the Republican nomination for governor, was one of 13 state attorneys general to file suit against the federal government today after President Obama signed the law around noon. The imposition of costs on states that can't afford it was one of the factors, he said; the other is that he believes it is unconstitutional for the government to require individuals to buy something -- in this case, health insurance. He called it a "tax on living."

Almost 4 million Floridians lacked health coverage as of last year, according to recent estimates based on the census.

Supporters of the Medicaid expansion said they will do their own number-crunching and expect to release a report later in the week.  

Meanwhile, they noted that whatever the increase in Medicaid costs, they are dwarfed by the increase in benefits to the private sector from the health law. The House Energy and Commerce Committee said health insurance reform would help Floridians in the following ways:

* 9.6 million Florida residents who have employer-based coverage will have added protections against being dropped if someone in the family gets sick.

* 3.2 million on Medicare will get free annual screenings and checkups.
 
* 313,000 Floridians will gain by having the "doughnut hole" in prescription coverage closed. Under the existing system, Medicare stops paying prescription drug costs after a patient reaches $2,830 and then starts again after $4,550.

* 488,000 small businesses in Florida will be eligible for tax credits. That means employers can better afford to keep employees on the payroll, avoiding layoffs.

* More than 1.3 million young adults will be able to obtain coverage under their parents’ plans.

* 2.7 million Floridians who currently don’t have health insurance will be covered.

--Carol Gentry can be reached at 727-410-3266 or by e-mail.