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Tuesday, July 17, 2012

New figures: Medicaid expansion would save Arkansas money

Posted By on Tue, Jul 17, 2012 at 7:13 PM

WILL HE OR WONT HE?: Gov. Mike Beebe still merely leans toward Medicaid expansion, though new figures indicate it wont cost the state anything.
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  • WILL HE OR WON'T HE?: Gov. Mike Beebe still merely leans toward Medicaid expansion, though new figures indicate it won't cost the state anything.
Late this afternoon, the state Human Services Department released estimates on the cost of Medicaid expansion.

Bottom line: IT WILL SAVE ARKANSAS MONEY TO EXPAND MEDICAID.

Once more, where Jason Rapert, Missy Irvin, Nate Bell, John Burris, etc. can hear: IT WILL SAVE ARKANSAS MONEY TO EXPAND MEDICAID.

This according to figures authored by Andy Allison, the state Medicaid director, a health economist by training and head of the national organization of state Medicaid officers.

Debate will certainly ensue, but the Republican predictions of imminent bankruptcy from covering 250,000 more of the state's sick and poor seem now a little overwrought, in large part because of factors pointed out here earlier.

The chart that follows comes from DHS. Even with the state 10 percent match three years out, after three years of full federal coverage of all new Medicaid coverage, the state of Arkansas won't incur new net costs from the expansion. This is because of a huge infusion of new federal money (unless Republicans in Congress block it or Republicans in the Arkansas legislature refuse to accept it); savings in payments now required for uncompensated hospital care that will be covered by new insurance programs under the new law, and because of money Arkansas will save from moving existing Medicaid reimbursement from a 75-25 to a 90-10 federal match. The biggest savings will be a reduction in the cost to the state of covering the really sick working people who spend themselves into medical bankruptcy. Under Obamacare, they'll either be covered by health exchanges or with a better match — 90-10.

This is based on my quick discussion with Amy Webb of DHS. Much more to come, including, I'm sure, skeptical harrumphing from the Republican side of the aisle. But this sounds to me like a political debate game-changer.

The state put the savings at $372 million through 2021 and DHS Director John Selig said the state comes out way ahead. (Yes, the state will spend more on Medicaid, but a poor state with a big infusion of new federal money won't have to dig into its own pocket to do it.) I've asked whether this moves the governor closer to the sane decision on expansion, but he's apparently still being cautious, as is his wont. Republicans are already howling that this is going to cost somebody money, if not Arkansas.

UPDATE: from Matt DeCample in the governor's office:

"The numbers are of course encouraging, and Governor Beebe continues to lean toward expansion while awaiting word from the federal government on state flexibility down the line.  If we face some unforeseen fiscal calamity and are having to adjust the state budget years in the future, can we adjust expanded Medicaid as well, or will we be locked in at a particular rate of obligation.  Other states have similar questions, HHS is said to be working on answers in light of the SCOTUS ruling."

Which brings us, again, back to the core Brother's Keeper argument. Does this state want to cover its working poor with health coverage or does it not? And can Republicans really ride to electoral triumph by vowing to prevent that coverage, even if paid from federal sources?

This doesn't deal with an expected shortfall next year in the existing Medicaid program, but the expansion could produce perhaps an initial $40 million in savings on that to go along with some $200 million already in reserve to meet that cost before the changes kick in.

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Here's a full spread sheet on how the figures break down in coming years for covering 250,000 more people.

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