Idaho tempers Medicaid

BOISE – Idaho’s Medicaid program is doing something very unusual this year: It’s turning back nearly $12 million to the state treasury.

The fast-growing government health insurance program for the poor and disabled is better known for gobbling up an increasing share of the state budget than for giving money back. But this year, a strong economy, new Medicare drug coverage and various reforms have helped keep budgets down, and for next year, Gov. Butch Otter is calling for just a 5.1 percent budget increase for Medicaid.

House Health and Welfare Committee Chair Sharon Block, R-Idaho Falls, called that increase “very impressive, compared with the 15 percent average increase we have been experiencing.”

Medicaid now accounts for about 15 percent of Idaho’s state budget – the state pays about a third of the cost while the federal government pays the rest – but it also has been the fastest-growing part of the state budget in recent years. If the past decade’s trend continued, Idaho’s Medicaid spending would surpass spending for public schools by 2021. Schools long have been the state’s top budget priority. The state spends nearly half its general fund budget on public schools, a little over $1 billion.

State Health and Welfare Director Dick Armstrong said the biggest factor in the Medicaid cost turnaround has been the economy. “The economy has been extremely strong, so whenever the economy is strong and you have more full employment, then you don’t have the demand on services from Health and Welfare,” he said.

Medicaid caseloads this year, in all categories, simply didn’t grow as quickly as expected. The program also benefited from the new Medicare Part D prescription drug coverage program for seniors. That program decreased Idaho’s costs for pharmaceuticals in Medicaid, though it also includes a “clawback” provision that will require states to return large payments to the feds next year.

Lawmakers who held a hearing on the Medicaid budget Wednesday were eager to hear if sweeping reforms of the program approved last spring were contributing to the savings. It may be too soon to tell.

“We’re very early in our reform process, and I think we’ve been fortunate to begin it at a time when the economy is treating us well,” Medicaid Administrator Leslie Clement told the Joint Finance-Appropriations Committee. Clement said she didn’t want to “overstate” the impact of the reforms, but said, “I think our initial building blocks are very positive.”

The reforms, for which federal authorities gave the go-ahead last May, were a major initiative of then-Gov. Dirk Kempthorne, who spearheaded plans to change Medicaid from a one-size-fits-all program into programs tailor-made for the elderly, the disabled, and healthy low-income children and working-age adults.

For the healthy children and adults, the focus of the program is on wellness and prevention, and the program includes cost-sharing and premiums.

For the disabled, the focus is on giving clients more control over treatment plans and removing obstacles to work. And for the elderly, the focus is on incentives to keep people out of institutional settings such as nursing homes, and promoting non-public financing options for long-term care.

Clement said Medicaid already has seen savings from two aspects of the new reforms: Idaho’s participation since October in a multistate purchasing pool for prescription drugs, and stepped-up requirements that any client eligible for Medicare, which is fully federally funded, must enroll in that program before turning to Medicaid.

“It looks good right now,” Clement said. But overall, she said, “We need some time under our belt to see whether these early reforms are producing the kind of results we anticipate.”

Initially, clients were offered a choice of going into the new three-part program or staying with traditional Medicaid. Clement said by the end of the fiscal year in June, all of Idaho’s Medicaid clients should be on the new “modernized framework.”