Former longtime Idaho state chief economist Mike Ferguson argues in a new op-ed piece that the importance of a state insurance exchange is "dwarfed" by the ramifications of whether or not Idaho expands its Medicaid program, "yet we have heard almost no consideration of that issue by Idaho's legislature." He writes, "Medicaid expansion ... has enormous impacts on Idaho and Idahoans. It will impact how many people in Idaho die over the next year. It will impact Idaho’s ability to fund other essential public services (education, public safety, and other aspects of health and human services). And it will impact Idaho’s overall economic performance." Click below for his full op-ed piece.
Meanwhile, Wayne Hoffman of the Idaho Freedom Foundation has issued a press release calling Medicaid expansion "a bad choice for Idaho," contending it will shift costs to future generations; you can read his release here.
Why Is Idaho Not Acting On Health Care Expansion?
By Michael Ferguson
As Idaho’s 2013 legislative session winds down, an important piece of unfinished business sits on the backburner.
After considerable debate, the Idaho legislature enacted a state-run health insurance exchange as part of the Affordable Care Act, or ACA. Important as this decision may be, it is dwarfed by the ramifications of another part of the ACA: Medicaid expansion. Yet we have heard almost no consideration of that issue by Idaho’s legislature.
Why does Medicaid expansion dwarf the exchange issue?
Simply put, the exchange issue is an argument over who (state or feds) builds and operates a health insurance referral system. Regardless of who runs the exchange, it won’t produce health insurance plans and it won’t sell them. It will simply help consumers navigate the complexity of the nation’s new health insurance laws and the health insurance plans available in Idaho.
Medicaid expansion, on the other hand, has enormous impacts on Idaho and Idahoans. It will impact how many people in Idaho die over the next year. It will impact Idaho’s ability to fund other essential public services (education, public safety, and other aspects of health and human services). And it will impact Idaho’s overall economic performance.
What is Medicaid expansion?
In a nutshell, it is an increase in the number of Idahoans that qualify for this joint state/federal health care program. It has two main components: a mandatory expansion component, and an optional expansion component. The optional component was not intended by the drafters of the ACA to be optional, but a U.S. Supreme Court decision last June made it that way.
Idaho has no choice with the mandatory component. This part covers the “woodwork” effect, i.e. the people currently eligible but not enrolled in Medicaid. It will cost Idaho $14.8 million more in FY2014, $33.2 million in FY2015, and reaches $45.3 million in FY2024. These costs are essentially unavoidable, and add up to $394 million over the next 11 years.
Idaho does have a choice with the optional component. This part raises Medicaid income eligibility to 138% of the federal poverty line. It extends coverage to about 104,000 low income adults in Idaho. It comes with 100% federal funding of claims in the first three years, a gradual phase-down to 90% federal match over the next five years, then holds at 90% thereafter.
Unlike the mandatory component that costs Idaho‘s General Fund additional money starting in FY2014 and beyond, the optional component saves Idaho money in the form of both General Fund dollars and local property tax dollars, and does so in perpetuity.
How does extending Medicaid coverage to over 100,000 more Idahoans save Idaho taxpayers money?
Two factors yield this result: first, the federal government has agreed to pay a much higher share of the claims associated with these additional people covered by Medicaid; second, that Medicaid coverage will displace costs associated with the counties’ indigent funds and the state’s catastrophic health care fund, neither of which get any federal matching funds.
The savings from the optional expansion are immediate, enduring and significant. In FY2014 optional expansion will save $37.6 million ($16.6 million in property taxes, and $20.9 million in the state General Fund). In FY2015 the total savings grow to $77.1 million (that’s the first full year under expansion). Over time the savings to Idaho taxpayers diminish as the federal match rate is gradually reduced to 90%, but even when that permanent match rate is reached the savings continue, year after year.
But there’s a catch. In order to realize these savings, Idaho must enact legislation to permit the optional expansion to take place. Without immediate legislation, Idaho will effectively say no to saving $37.6 million in FY 2014 alone. And the next legislative session, in 2014, will be too late. In order to save almost $40 million in the fiscal year that begins in just three months Idaho needs to act now.
And there’s more at stake than just tax dollars. Much more. A recent study published in the New England Journal of Medicine found that for every 176 new adult Medicaid enrollees, one life is saved per year. With 104,000 additional adults covered, that equals 590 fewer deaths.
Then there’s the economy to consider. Optional expansion will bring an additional $365 million into Idaho’s economy in the form of federal payments to health care providers between July 1, 2013 and June 30, 2014. This will not only improve the health of many low income Idahoans, it will improve the health of Idaho’s economy by increasing employment and incomes. A 2012 study by University of Idaho economist Steven Peterson found that optional expansion in FY2014 would add about 6,000 jobs and about $200 million in compensation to Idaho’s economy in FY2014.
But there’s a catch. Idaho must act.