State’s Medicaid costs growing sharply

BOISE – The fastest-growing piece of Idaho’s state budget – the Medicaid program – is still growing, both in costs and caseload, legislative budget writers heard Wednesday.

David Rogers, Medicaid administrator, flashed charts and graphs at the Joint Finance-Appropriations Committee that showed a projected 65 percent increase in Medicaid caseload from 1999 to 2007, and a 35 percent jump in medical inflation. Gov. Dirk Kempthorne’s proposed reforms to Medicaid would trim the growth only slightly next year – likely by less than 1 percent.

If current trends hold, Medicaid spending would eclipse public school spending by the year 2021 – which would be a huge change. Public school spending takes up about 45 percent of the state’s general fund budget, and historically has taken about half. Medicaid now takes up about 15 percent of the state budget.

JFAC, the joint legislative panel charged with setting the state budget, is holding a full week of hearings on state Health and Welfare Department budgets, and Medicaid is a major piece.

Medicaid is the joint state-federal program that provides health coverage for the poor and disabled.

Kempthorne’s proposed Medicaid budget for next year totals $374 million in state general funds, a 12.9 percent increase from this year. Overall, the Health and Welfare budget the governor proposes is up 11.8 percent and includes 36 new positions, but the department requested a 16 percent state funding increase and 186 new workers.

The panel also had lots of questions Wednesday about the $29.1 million contract award for a new Medicaid Management Information System – a huge contract that went to a new firm, Unisys Corp., after the company that’s had the contract for the past 25-plus years was disqualified. The previous contractor, EDS Inc., has sued, charging that it was unfairly knocked out of the competition.

Sen. Brent Hill, R-Rexburg, asked why Idaho attracted only three bidders. Health and Welfare information technology administrator Bruce Dunham said there are only half a dozen or so firms in the business, and some are busy in other states. Plus, Idaho’s bid specifications required a system that’s already up and running in another state and available for a full test-drive.

Karl Kurtz, state Health & Welfare director, told the committee on Monday morning, “Of the three bidders, two demonstrated working systems. Much to our surprise, EDS was not one of them. … They showed us a system under development. While trying to test-drive their system, it simply did not work as required.”

EDS disputes that and says it pitched a system now successfully in use in Kansas that it has sold to seven other states in the past year.

“Everything functioned properly,” said Dennis Dworman, EDS’ regional vice president.

The firm is the largest in the business and runs Medicaid systems in 19 states.

Senate Finance Chairman Dean Cameron, R-Rupert, questioned Wednesday whether the Unisys system that was demonstrated is actually the one that company plans for Idaho.

“My understanding is the version Unisys showed in their demonstration was a different system than the one they have bid, with a different partner,” he said.

Dunham responded, “I’m actually not aware of that – if it were, it would have to be considered for disqualification.”

Health and Welfare spokesman Ross Mason said later that Unisys demonstrated the same system it proposed for Idaho. “Unless there’s something that somebody’s not telling us, it is the same system,” Mason said.

Cameron said, “Obviously there are a lot of questions,” and noted that the dispute follows the recent brouhaha over alleged improper political considerations in the award of an Idaho Transportation Department contract to oversee the state’s largest-ever highway construction project.

“Lately we’ve had a number of huge contracts that are somewhat under question,” Cameron said. “One might draw parallels.”

The Idaho Transportation Board re-interviewed both bidders for the highway contract after the concerns arose and a lawsuit was filed, and again selected WGI and CH2M Hill. On Wednesday, the board affirmed that decision and began contract negotiations.