A Big Medicaid Question Answered, Many Smaller Questions to Come

A Big Medicaid Question Answered, Many Smaller Questions to Come

By Jeff Bontrager and Megan Lane

For months now, the burning question has been whether Governor Hickenlooper would support expanding Medicaid in Colorado. The governor finally provided the answer this morning: Yes.

The Supreme Court’s ruling on the Affordable Care Act made it optional for states to expand Medicaid eligibility to those at or below 133 percent of federal poverty level (FPL) - $14,856 for an individual or $30,657 for a family of four.  The federal government will cover 100 percent of the costs for the first three years.  Federal match rates will then begin to taper down through 2020, at which point states will be responsible for 10 percent of the costs moving forward.

With his announced support of the expansion, the governor said he estimates that an estimated 160,000 Coloradans will become eligible for Medicaid. He said that expanding Medicaid would not only help to improve health outcomes. He also said the state had worked hard to identify $280 million in savings in the Medicaid program to help cover the cost of expansion.

It remains to be seen what type of legislative action, if any, may be required to cement the expansion, although House Speaker-Designee Mark Ferrandino tweeted that he and Senator Irene Aguilar plan to carry a bill related to the expansion.

The governor’s announcement contained two types of estimates: the dollars (estimated costs/savings) and the number of Coloradans expected to be affected by the Medicaid expansion. CHI took a look at the numbers and here’s our reading of what the governor released:

  • The estimated state cost of expanding Medicaid to 133% of the FPL is $128.3 million from 2013 to 2022. This includes only those Coloradans who will become eligible for Medicaid over and above what the state already authorized in 2009 when it passed another Medicaid expansion, the Colorado Health Care Affordability Act (HB09-1293, commonly referred to as the hospital provider fee.)
  • When you add in the cost of populations who become eligible under HB09-1293, the total cost to the state of expanding Medicaid to all individuals up to 133% of the FPL exceeds $1.3 billion.
  • When combined with the federal share, the governor’s office estimates the total cost to be around $13.5 billion over the ten-year period.
  • It is important to note that the governor estimates that the expansion will not impact the state’s general fund, even after the federal share is reduced. The provider fee, other public funding and savings gained through additional strategies (such as reducing duplicative services, using health information technology and reducing fraud and abuse) will cover the additional individuals who become eligible, actually resulting in savings to the state, according to the governor. When these strategies are totaled, the governor estimates more than $280 million in savings.

How many Coloradans will be covered?

  • The governor’s office estimates more than 160,000 Coloradans will become enrolled as a result of expansion. This is primarily adults with incomes between 101 percent and 133 percent of FPL. This estimate likely also includes some degree of increased uptake by children and adults who are already eligible for Medicaid but not enrolled (a phenomenon commonly referred to as the “woodwork” or “welcome mat” effect).
  • An additional 110,200 parents and adults without dependent children who are currently authorized under the hospital provider fee are also estimated to enroll, for a total of approximately 270,200 total new enrollees.

There was little detail about these estimates released, making a more in-depth analysis difficult so early in the game.

CHI, by examining other estimates from the Kaiser Family Foundation, work with Massachusetts Institute of Technology economics professor Jonathan Gruber and other exercises, recognizes that there are many moving parts that will ultimately impact the final numbers and the final costs. These include:

  • Availability of funding sources
  • Health care costs
  • Economic conditions

In the end, it all comes down to the assumptions. Stay tuned.

Click here for a look at earlier work by CHI on the Medicaid expansion.

Jeff Bontrager is the director of research on coverage and access at CHI.