Thursday, July 23, 2015

Medicaid Expansion turns sour for states.

Medicaid expansion has turned into a budget buster for several states as Paul Volker predicted several years ago.   Oregon is now looking at coughing up nearly $2 billion to cover its Medicaid expansion as the federal spigot covering ten percent of the expansion costs is now closed.  Other states face the same dilemma.  The Associated Press reported this week:

More than a dozen states that opted to expand Medicaid under the Affordable Care Act have seen enrollments surge way beyond projections, raising concerns that the added costs will strain their budgets when federal aid is scaled back starting in two years.

Some lawmakers warn the price of expanding the health care program for poor and lower-income Americans could mean less money available for other state services, including education.

In Kentucky, for example, enrollments during the 2014 fiscal year were more than double the number projected, with almost 311,000 newly eligible residents signing up. That's greater than what was initially predicted through 2021. As a result, the state revised its Medicaid cost estimate from $33 million to $74 million for the 2017 fiscal year. By 2021, those costs could climb to a projected $363 million.....

For patients who have only recently gained access to health care, the program is about far more than dollars and cents. And supporters downplay the budget concerns, pointing to studies that indicate the economic benefits of expanding health care will result in significant savings over time.

Several expansion states have already revised their budget estimates due to the larger than expected enrollments, according to an Associated Press review.

McDaniel said the added Medicaid costs will reduce the pool of money that can be invested in higher education, pension plans or other services.

Supporters of the expansion, including Kentucky Gov. Steve Beshear, predict their states will save money in the long run because Medicaid will allow some state-run services to be eliminated and will stimulate the economy through new revenues and job creation. Beshear, a Democrat, released a study earlier this year touting the creation of 12,000 jobs and nearly $1.2 billion in new revenue to health care providers as a result of expansion.

Thirty states and the District of Columbia have expanded Medicaid, or plan to do so, to include all adults with incomes at or below 138 percent of the federal poverty level, currently $16,243 for an individual.

The federal government agreed to pay all costs for the new enrollees through 2016, but it will begin lowering its share in 2017. States will pay 10 percent of the costs by 2020.

In the expansion states, enrollment for Medicaid and a related program for children have increased an overall 28.2 percent compared with a three-month period before the law's implementation, according to the federal government. In a recent report, economic experts at the U.S. Department of Health and Human Services said they expect estimated enrollment and per-person cost increases to level off and even decline over the long run.

At least 14 states have seen new enrollments exceed their original projections, causing at least seven to increase their cost estimates for 2017, according to an Associated Press analysis of state budget projections, Medicaid enrollments and cost details in the expansion states. A few states said they could not provide original projections.

California has enrolled nearly 2.3 million people so far — almost three times more than the 800,257 the state had anticipated. Enrollment in neighboring Washington more than doubled. Oregon's new enrollments have exceeded estimates by 73 percent.

In Michigan, estimated costs have shot up by 50 percent because of soaring enrollment. Ohio's projected costs more than doubled.

Some states that expanded their Medicaid programs prior to the federal health care law are also seeing enrollment increases based on people signing up because of increased publicity and outreach efforts.

In states where ongoing discussions over Medicaid expansion have yet to be resolved, opponents are quick to cite the surging enrollments and costs. Last month, Republicans in the Florida House repeatedly warned about the costs before soundly defeating an expansion bill.

"Every piece of metrics and data we have seen has showed the Medicaid rolls have exploded," said state Rep. Blaise Ingoglia. "And it's putting taxpayers and future prosperity at risk."

Health care already consumes a large portion of state spending each year, second only to K-12 education. It now represents more than half of all federal funds received by states, according to the National Association of State Budget Officers....

An Associated Press review earlier this year found at least 22 states were dealing with budget shortfalls for the 2016 fiscal year.

"In those states that do have budgetary balance, it's somewhat tenuous," said credit analyst Gabriel Petek with Standard & Poor's Ratings Services. Add the cost of rising Medicaid enrollments and "something has to give. Most likely, it means they have to spend less in other areas or they have to increase their tax revenues."

Oregon originally estimated 222,700 newly eligible Medicaid recipients would sign up by the end of June, but that number ballooned to 386,000.

Paying for the new enrollees isn't the only Medicaid cost troubling Oregon lawmakers. Starting in 2017, the state loses $1.9 billion in federal aid that has propped up the Medicaid program since 2012 under a special deal with the government.

Between the Medicaid expansion, the lost federal aid and normal growth, Oregon's Medicaid budget is expected to need $500 million between 2017 and 2019, said Democratic state Sen. Richard Devlin, one of two lawmakers who oversee the budget.

The best solution, he said, is to make sure people are working and don't need the government health care program.

"I think, really, the only way to keep this manageable is to keep those costs under control, get people off Medicaid," he said....

Supporters of expanding Medicaid say states will eventually save money by doing away with some of their own services for the uninsured, such as mental and behavioral health programs, and by reducing payments to hospitals and other providers for treatment of the uninsured.

Kentucky saved $9 million in 2014 as enrollees in behavioral and mental health programs were fully covered by Medicaid, according to a report by the State Health Reform Assistance Network, a program of the Robert Wood Johnson Foundation. Some states, including West Virginia and Arkansas, are reporting costs are lower than expected.

Elsewhere, there are signs that some of the hoped-for savings might not be realized quickly.

In New Mexico, where enrollment under the Medicaid expansion surpassed projections by 44 percent, legislative analysts warned last month that the state will not save as much money as originally projected because cost-containing measures have proven difficult to implement..... Rest of article.

Such problems should not surprise anyone who read Paul Volker's report three years agoFull report.  Mr. Volker's report said:

Medicaid, the single largest spending category in most state budgets, is growing faster than the economy and faster than state tax revenues. This trend will continue as long as health care costs grow faster than the overall economy and Medicaid caseloads continue to increase.

According to the federal Centers for Medicare and Medicaid Services (CMS), total Medicaid costs are likely to grow at an average annual rate of 8.1 percent between 2012 and 2020 if the health care reforms in the Affordable Care Act (ACA) are implemented and at a rate of 6.6 percent if they are not.If state Medicaid spending and state tax revenues continue their trends of the past decade, with a 7.2 percent average annual growth for Medicaid and a 3.9 percent growth rate for revenues, the gap between Medicaid and state tax revenue growth will increase by at least $22 billion annually within five years and will grow even larger thereafter.
 Federal health care reform, as upheld by the Supreme Court, will not change the fundamental imbalance between rising Medicaid costs and state revenues. The longer term cost pressures resulting from dramatic increases in the elderly population and the inexorable growth in health care costs continue to build. As the CMS Actuary puts it, “The increased Medicaid costs associated with growing caseloads and the pressures on government revenues are likely to add to the financial stress of States’ Medicaid programs...


Anonymous said...

Mississippi didn't expand, but the Milliman study underestimated the woodwork effect in line with the numbers mentioned above. That's where MS's money has gone the past 3 years.

Anonymous said...

The US healthcare system was and still is broken.

The reason for the cost increase is that enrollments have greatly exceeded projections. There goes the argument that no one needed or wanted health insurance.
The present system is flawed because insurance is required, profits go to the insurance companies, and the costs are shared by users, hospitals and the government.

We need a single payer system like the rest of the civilized world, including countries like Australia and Canada. It's not just for the French.

Kingfish said...

Karl Denninger would argue the problem is the antitrust laws are not enforced in health care.

Kingfish said...

Karl Denninger would argue the problem is the antitrust laws are not enforced in health care.

Anonymous said...

We already have an example of a single payer system in the United States. It's called the VA. Be careful what you ask for 9:33, I fear you will eventually get it.

Anonymous said...

It is past time to get rid of the state CON law. Competition in the marketplace will ultimately drive down costs.

Anonymous said...

The Dems have accomplished what no one had thought was possible: They made Phil Bryant look brilliant.

As for the tired rant about single payer system - our veterans already have that. See yesterday's articles about the Detroit VA hospital disaster to see how that government run, single payer system is working out for the vets.

Anonymous said...

"It is past time to get rid of the state CON law. Competition in the marketplace will ultimately drive down costs."

Yes, brilliant. Seen abandoned Walmarts around the state? That will be the Jackson hospitals.

Somehow, other countries manage single-payer - it's not a panacea, but it helps control costs. But America isn't smart enough for that?

Anonymous said...

It's no surprise that anyone who has the opportunity to sign up for Medicaid is doing so. The rest of us are spending a fortune on insurance.

pittpanther said...

11:22am the answer is not to go back to the system where the poor have no insurance. That's not going to lower your insurance costs. The answer is to have Single Payer.

Anonymous said...

Some of us are inclined to believe that the PPACA is just a pretext to force us into a single payer system with government cost controls. The lovely " Medicaid for all" thing they rant and rave about.
If you've ever noticed anything about governmental patterns, when they have a plan to fundamentally change things, they do it in steps incrementally. The uber liberals claim that the problem with the law is that it's too capitlistic and not socialistic enough.

Some of you might agree with this after the employer mandate is thoroughly enforced. It's how they change public opinion. The PPACA has been deemed constitutional too many times to count, so that battle has been lost. I have a feeling that in several years, most will be begging for a single payer ( gov't pays all) system with cost controls on care and meds. You might come to this conclusion as well without ever voicing it.

What will really seal the deal on my little theory is the raise on fed. Min wage. Right now, businesses are changing hours so as to avoid full time status for employees, but what really counts is how much they make, not the hours they work in relation to the federal poverty line.
It's kinda like torturing someone to point to where they beg for death but only get neosporin and a bandaid.

I hope I'm wrong, but yeah.

Kingfish said...

The employer mandate has not hit yet. That is probably going to be the game changer. They keep putting it off for a reason.

Anonymous said...

Certificate of Need? That isn't the problem. How about some friendly competition between insurance companies, regardless of state lines?

And when that employer mandate really kicks in you are going to see a bunch of pissed off people. We went from paying $550/mo pre-Obabmacare to $1,100/mo post-Obamacare, and that's with higher deductibles and co-pays so we didn't have to pay $1,350/mo for the same plan we had before. That's a house note people (a really nice house by Mississippi standards). How is that equitable? That spike in premium isn't going to pay for someone else's doctor visit. It's going to the insurance company.

Anonymous said...

In places throughout the world where there is a single-payer system, and that payer is the government, tax-paying citizens all pay significantly higher tax rates than what Americans are accustomed to. Moreover, those citizens understand and accept full responsibility for their health and actually are interested in preventive care and exercise and moderation of alcohol, etc. With a generally healthier populace, people need and utilize medical care less often than Americans.

What upsets the apple cart in these single-payer customs is when there is a strain on the system. Immigrants who pay no taxes yet demand equal access to medical care being just one. This is somewhat offset by the taxes everyone pays in but not completely. Therefore, these non-tax-paying citizens are often denied healthcare altogether. And it holds up in their courts.

Please, please believe me... as a healthcare provider, I would dearly love to tell people who clog my clinic/hospital who are there for problems of their own causing/neglect, have no insurance and are not taxpayers, or are illegal immigrants to get out and stay away until they can pay for services. Until we as a country are willing to withhold care for patients who meet certain criteria, we will never have a single-payer system. Until we cease subsidizing people for multiple births and their self-destructive behaviors and their general idleness, we will have continuous and perpetual strains on healthcare.

Anonymous said...

So, instead of "death panels," we should have Dr. 1:23 telling us whether or not we are morally worthy of health care.

I'm always surprised the Nazis aren't more popular in America, when I read comments like that.

Anonymous said...

There you go 2:16, going to the ridiculous to make a point you are ill-equipped to make with reasonable thought. Makes you look simple.

Agree with KF (which seems rare these days) that we haven't seen anything until the employer mandate kicks in. It's going to hit every employer (regardless of size) in one way or another, although smaller applicable large employers will feel it the most.

Anonymous said...

Almost always the best solution is more capitalism and less government. When the oxygen masks come down, put the masks on the grownups first. That is - fix the system for the people who can pay, then worry about charity. Obomacare went in exactly the wrong direction. Here is a rough outline of how to proceed.
The full explanation is longer, but the basic idea is until people pay with money out of their own pockets and we have more competition in the market place, costs will never be under control.

Hey Barry, the Muslims are Killing the Homosexuals said...

We'll all be Greeks soon.

Anonymous said...

And, 2:16PM, it's called "health care rationing" and is practiced all over the globe except, for the most part, here. Patients receive government-mandated services, and nothing more. Sometimes using government-mandated limitations on drug availability. If you feel that you should be treated otherwise, hope you have enough money to travel to the USA and pay for whatever services you can afford. Participation by patients onto clinical and research trials is far greater in Europe and Canada because it allows an option for some patients to receive extra care they ordinarily wouldn't receive. And, to your point, who would be better suited to decide who gets what treatment? Your president is doing a bang up job, buddy.

Anonymous said...

I love an unencumbered marketplace about as much as any good conservative, but I believe CONs are a good idea. In smaller markets (which is nearly all of Mississippi) hospitals are about like Quarterbacks: If you have 2, you have none. They bring down the overall quality. For an example, see Vicksburg & Natchez.

Victor Fleitas said...

Funny how when some ridicule single payer they go straight to the VA as an example of how it cannot work here. Let's start with the fact that the VA covers far from a representative sample of the population and has been criminally underfunded for decades. We root and cheer when we send 'em off to war then deride them as malingerers when they come home broken.

Any who, we have single payer in the United States and it works so reasonably well that almost everyone looks forward to turning age 65. It's called Medicare. Bundle it with an affordable supplement and you're in pretty good shape healthcare-wise.

Want to make it even better? Rewrite that Bush era boondoggle to "Big Pharma" called Part D, which prohibits the federal government from using its purchasing power to secure lower prices for medicines.

Single-payer works very well elsewhere, in all its different permutations around the globe. It could work well here. We can do Medicare for all.

Anonymous said...

What we need is Bill Billingsley's medical wisdom and the leverage from his campaign contributions to Congressional Democrats.

Kingfish said...

Medicare is on a path to going broke as stated in the annual actuarial reports. More and more doctors don't take medicare as often there is no profit or they lose money.

Anonymous said...

5:04, that's absurd. More hospitals drive competition. Our entire healthcare system is moving rapidly to a pay-for-performance (P4P) system. This enables higher performers (those with less complications, repeat admissions, etc.) and centers of excellence to receive more money. If there is one hospital in a town, under the network adequacy laws, if an insurer has covered lives in the area, it must use the hospital as a provider. If two hospitals are there competing, i.e., trying to out-perform the other, the community is better served.

And CMS is going broke because the population is getting older and Bush allowed Part D (pharmaceuticals) to be added. Nothing pressed the accelerator to a doomed system like Part D.

Anonymous said...

Medicare is a terrible example. When the government cuts providers pay on Medicare, providers can raise prices for private patients. If all patients were paid by the government there is no place to offset price cuts. A business cannot operate at a loss in the long run. If we had single payer, government would not be able to control costs as with Medicare.

Anonymous said...

Single payer in Europe has been a disaster.

Anonymous said...

A few years ago the full cost of Family insurance was only $14,000 per year. Now it is $18,000 per year.

$77 for gauze pads? $492 for an X-ray?

Anonymous said...

Dear " health care provider",

Some of us are old enough to remember that once upon a time, a doctor's first duty was to care for the sick and dying. Those who couldn't pay bartered for their care and teaching/charity hospitals took care of the poor.

I realize you now think you are in a business and not a profession as apparently do many ministers ,priests and nuns.

Here's something to consider...when , in a culture, money has become everything and the wealth is concentrated in the hands of a few, eventually the hordes storm the gates and your money becomes worthless.

I've not heard the words " noblesse oblige" lately, but the concept that unless the privileged want to lose their privileges they shouldn't be self centered, greedy bastards .Remember that if your society fails, you are at risk unless you can flee in time.

Anonymous said...

There is no real competition in the insurance industry. There is no real competition in the pharmaceutical industry. There are unnecessary middle men that didn't exist in the 50s.
This isn't capitalism, it's an oligarchy created and fed by lobbying and buying politicians!

Worse, a lame duck Congress, gave the insurance industry the tools to steal legally. Fear of the Clintons wanting to look at health care caused the industry to open their wallets and buy some politicians so there are NO facts on the insurance industry that the industry itself doesn't provide. It is impossible to do to them what was done to the tobacco industry.

And, you can keep saying " single payer is a disaster in Europe" but that's BS. European economic problems are NOT the result of single payer health care.

And, did y'all not get the memo that doctors ( those with ethics) are now protesting the costs of drugs , particularly cancer drugs?

Keep not bothering to get non-biased information and keep ignorant of key details! ISIS will likely give you a medal one day!

Anonymous said...

Blah, blah, blah, blah 9:09 AM. Keep not bothering to get that frontal lobotomy and that serious delusion you have of being an expert on everything will likely continue.

Anonymous said...

8:03 - you may be old, but you need to grow up.

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