Medical Care in Idaho
Medical Care in Idaho
It is important to remember the Legislature has not now nor in the past abandoned making provisions for medical care to uninsured Idahoans. Indeed, Idaho initiated a process to handle this in the early 1980’s. However, this program, Medicaid and all medical programs such as the expansion of Medicaid now clearly need review. Some of the results from my limited study of these issues over the past few months are listed below. It seems to me any medical reform in Idaho must at least meet the unique needs of Idahoans (items 1, 2, 10, 13, 14), be cost effective (items 3, 4, 5, 11, 12)and be sustainable (items 6, 7, 8, 9).
1. Idaho’s Catastrophic Health Care Cost Program (CAT)
In 1982, legislation was enacted to establish the Catastrophic Health Care Cost Program. The program is designed as an insurance program for the counties to cover the cost of treatment for catastrophic illness suffered by county residents who have no means to pay for the cost of that care. The program picks up the additional medical costs of these residents once the counties’ claim payments have exceeded $11,000 during a 12-month period. Legislation was enacted in 1991 to shift the program from county to state funding in FY 1994.
The CAT fund is governed by an administrative board. The Board meets approximately every six to eight weeks or as necessary for the administration of the CAT fund. The purpose of the CAT fund is to assist in covering providers’ expenses when patients are defined as medically indigent. These indigents qualify first through the counties and the counties pay the first $11,000.00 of each indigent’s medical bills. The counties then submit the cases to the CAT fund for consideration of payment. After a review by the Board of Directors, through the contract administrator, the CAT fund pays bills that exceed $11,000.00 during a 12-month period. This is an inefficient and inadequate system and needs to be changed.
2. An overview of the Federal Medical Programs
Medicaid is a federal program created in 1965 without a direct funding source that Idaho manages under federally mandated criteria. In Idaho, Medicaid is currently financed with 70 % federal and 30% state general tax dollars. Over forty percent of all federal Medicaid dollars are borrowed and as an entitlement, costs increase automatically. On the other hand, Social Security has FICA-SSDI Tax as a dedicated funding source. Medicare also has the FICA-SSHI Tax as a dedicated federal funding source. How best to utilize the programs in Idaho needs to be updated.
3. How is Idaho’s Medicaid payment calculated?
Federal Medical Assistance Percentage (FMAP) rates are used in determining the amount of federal matching funds for state expenditures on certain social services and state medical and medical insurance expenditures. The formula for state FMAP rates is outlined in Section 1905b of the Social Security act. The state rates are federally reviewed and set. Currently Idaho pays 30% and the federal portion is 70% but these rates can and do change.
4. Current Idaho Medicaid spending
In fiscal year (FY 2014), 17.2% of the Idaho general fund budget, or $0.47 billion, was appropriated for Medicaid. That’s in addition to $0.2 billion in dedicated funds and $1.3 billion in federal funds. The total increase in Idaho Medicaid appropriations averaged 9.9% a year since 1997 (FY 1997 $0.42 billion to FY 2015 over $2 billion). A $23 million increase just from 2014 to 2015 appropriation.
In 2013, Milliman, an independent actuarial consulting company , prepared an analysis of Medicaid expansion in Idaho for the Idaho Department of Health and Welfare (DHW). Page 4 states, “Although a full economic impact to the state is beyond the scope of this analysis we have projected the total state and federal increased spend in the state of $9.2 billion over state fiscal years 2014 – 2024.”
The Milliman report, table 3, page 9, lists the assumed FMAP rates by year and population. Given the federal deficit, questions persist about the ability of the federal government to sustain any proposed increase in the federal FMAP participation rate. Indeed, the Milliman report states “A decrease from the assumed 90% expansion FMAP down to the assumed 70% for the current Medicaid population would result in an increased Idaho cost of $184.81 million in FY 2024 alone.” (pg. 9) And over-the-years Idaho has received requests for the return of federal dollars such as funds paid to counties under the Secure Rural Schools and Community Self-Determination Act and the regular reduction in funds sent to Idaho under Payment in Lieu of Taxes. Such federal actions are having a devastating impact, particularly on small rural communities in Idaho. In short, Idaho and other states will be hard pressed to keep up with the Idaho portion much less backfill federal funds in the event of future cuts.
5. What would Medicaid expansion cost Idahoans?
The Kaiser Family Foundation (pg. 11) and Heritage Foundation report that on net, Medicaid expansion will increase Idaho Medicaid expenditures by 2.2% or an estimated $149 million through 2022. Even without Medicaid expansion, the 2014 to 2015 General Fund Medicaid funding increase was 4% ( see legislature.idaho.gov budget information, budget publications, FY 2015 legislative book, General Fund Comparisions).
Also, administrative costs do not receive the same match rate. The Milliman report states that “In addition to the expenditures associated with providing medical services to the expansion population, the state of Idaho will incur additional administrative costs as 3.5% of the total expected medical expenditures for the population-based ACA changes.” (pg. 9) A simply Medicaid expansion will either divert resources away from other essential Idaho programs or require tax increases. Neither of these alternatives is acceptable. Simply stated, expansion will increase Medicaid costs in Idaho. And, as the Kaiser Report pointed out (pg. 5), “… even small incremental costs are a factor that must be considered by states with limited resources.”
6. Idaho Medicaid enrollment will continue to increase adding to general fund costs
PL 111-148, “Obamacare” (ACA) mandates increases in the current 240,000 Idaho Medicaid enrollment. The Milliman report (pg. 4) shows that ACA mandates immediately add about 11,000 individuals to Idaho Medicaid and will provide quick enrollment of another estimated 35,000. And expansion will mandate 105,000 new Idaho Medicaid recipients for a total of 150,000. The Kaiser report (pg. 10) estimates an 82.2%increase. The number of people on Medicaid in Idaho has increased almost 6% since the beginning of the health exchange in October 2013. With expansion, Idaho would accept current ACA requirements and costs, unless a waiver is requested. It is important for Idaho to request Medicaid waivers.
7. The minimum Medicaid qualifying criteria is established by the federal government and any federal change can increase Idaho caseloads
Depending on how it applies the law, HHS can change enrollment by adjusting eligibility criteria. One example is the interpretation and application of Modified Adjust Gross Income (MAGI) requirements in the ACA. If future interpretations lead to increased caseloads, increased costs will likely follow.
8. Idaho must have a balanced budget and increases in entitlement programs such as Medicaid will divert resources from other programs
This is already occurring today. According to the Idaho Legislative Fiscal Report (Gen Fund 22 Year Histories), from FY 1993 to FY 2014 the percentage of the general fund appropriation for Health and Welfare increased by over 6% while the total appropriation for education decreased by almost 10%.
Nothing is a good deal if the money is not available. It is unrealistic to place the Idaho taxpayer in bondage by agreeing to expand a federal program with open-ended future Idaho costs, particularly when the decision is based upon questionable availability of federal funds. It would be a breach of the public trust to allow ourselves to follow the federal or California fiscal management model.
9. Medicaid expansion will not address health care costs in Idaho
Health care costs have continued to escalate dramatically in the past few years. The average cost of the privately insured population under age 65 in the Treasure Valley rose an average of 11.3% per year between 2008 and 2010. The national average was 8.2% and for the State of Idaho it was 7.9%. These hospital costs have an adverse impact not only on individuals, but everything in the system including the cost of insurance and government health programs. Adjustments to Idaho medical care must include cost transparency and provide consumer choice.
10. Simply expanding Medicaid would still leave some Idahoans without healthcare
The Milliman report indicates Medicaid expansion will also leave some Idahoansπp without healthcare. Milliman report p10 Administrative and healthcare responsibilities will continue in order to meet the healthcare needs of that group. We must find a way to provide that care within acceptable spending limits. One way would be to move this financial obligation to a capped state fund to be used for items such as; incentives for personal accountability, medical savings accounts, managed care, or shared costs based on outcomes.
All the requirements of the ACA will place increased pressure upon Idaho’s very limited healthcare delivery system. According to an Idaho Department of Labor white paper, Idaho is currently either at the bottom or very close to the bottom among the states in number of healthcare providers per capita. The increased pressure on a very limited medical service force could be devastating to the availability of doctors, particularly in small rural Idaho communities. The access issues resulting from expanded coverage will result in excessive ER visits and this will translate into increased costs for everyone both public and private.
The federal government has indicated it will fund an increase in some fees to primary care physicians in CY 2013 and CY 2014 but not after CY 2014. The Milliman reports states “Given the shortage of primary care physicians serving this population, it should be assumed additional county and or state funding will be required to provide sufficient access to care.” The Milliman report p10
11. Medicaid expansion will substantially contribute to the federal deficit
The Medicaid mandatory entitlement program is financed with federal and state dollars. Under the ACA, as noted on page 3 of the Kaiser report, Washington expected to spend roughly $952 billion expanding Medicaid between 2014 and 2022. However, an April 2013 analysis prepared by the Goldwater Institute shows that if states decline to expand Medicaid, future federal spending decreases. This presents a unique opportunity for states to veto hundreds of billions of dollars in new federal spending. Goldwater estimated that the 18 states that had opted out of Medicaid expansion already reduced federal spending by more than $424 Billion over the next 8 years. At the time of the analysis there were an additional 12 undecided states (of which Idaho is one), and, if all 12 decided to opt out, there would be an additional $185 Billion in savings.
12. What is the individual life-time burden of the national debt?
Based on the U.S. Senate Budget Committee (Republicans) long-term debt projections, the lifetime share of the national debt burden for an Idahoan born on January 1, 2013 is more than $1.5 million, $1,543,340. We must not ask our federal government to borrow money from our children and grandchildren to meet our present wants.
13. Maintain an Idaho solution to Medicaid
As the legislature considers how to deal with ACA, the words of the 2013 Idaho Health Exchange Bill, H 248 are important: “It is the public policy of the State of Idaho to actively resist federal actions that would limit or override state sovereignty under the 10th amendment of the United States constitution… the state of Idaho asserts its sovereignty by refusing to surrender decision-making authority over health care issues, which are matters appropriately left to states and individual citizens.”
14. Some alternatives to Medicaid expansion
Idahoans are smarter than simply buying into a risky federal alternative. We must use the collective knowledge, experience and pioneer spirit of Idahoans to find an Idaho, non-federal, state-based approach to the critical healthcare issues facing our citizens. Some of the alternatives being discussed, in addition to those mentioned earlier, to help Idaho address the myriad healthcare issues are: tying the Medicaid growth to general fund growth, increase patient deductible for wrongful use of emergency room, fixed payment per patient per service, incentives for less costly care, increase access to non-institutional services, increased use of managed care and encourage mid-level practitioners, medical saving accounts, and insurance premium assistance. Any solution must include the education of our citizens, must address the exponentially increasing healthcare costs, and must contain a market-based individual responsibility component.