By Katie Kerwin McCrimmon
Expanding Medicaid would cost Colorado about $1 billion over 10 years and add an estimated 240,000 to the state’s Medicaid rolls, including as many as 73,000 people who could switch from private to public health insurance, according to a new cost-benefit analysis from the Colorado Health Institute (CHI). http://www.coloradohealthinstitute.org/
The Colorado Trust commissioned the study. Dr. Ned Calonge, president and CEO of The Trust, urged lawmakers to consider the profound impact that Medicaid expansion could have on the health of Coloradans as they ponder financial costs and benefits.
Using other studies as a basis, Calonge estimated that expanding Medicaid to a greater share of low-income people in Colorado would save at least 629 lives a year, more than the number of Coloradans who die of either breast or colon cancer every year.
“If we can save lives and save money, that’s a health care home run,” Calonge said. “It’s fine to see that there are costs here. In the same breath, let’s put a face on this. We’re going to save the lives of real Coloradans.”
CHI’s analysis pegs total costs of expansion through 2022 at $12.4 billion with the federal government paying $11.4 billion of that cost. The CHI cost projections are somewhat lower than two other recent estimates. Colorado’s Medicaid managers last month projected state costs of $1.4 billion along with a federal share of $12.3 billion for total costs of $13.5 billion over 10 years.
An earlier study from the Kaiser Commission on Medicaid and the Uninsured found that Colorado would foot the bill for $858 million for new Medicaid enrollees plus $639 million for people already expected to qualify for the program. That brought total state costs for Colorado to $1.5 billion with the feds picking up $11.6 billion for a total of $13.1 billion.
Calonge said that spending about $5,000 on average per person per year is a relative bargain, especially when health insurance and preventive care can help people avoid illnesses and extend their lives. (Costs per person would vary widely with children being relatively inexpensive to add to Medicaid rolls and people with complex health problems potentially costing much more than $5,000 per year.) In terms of a preventive strategy, Calonge said Medicaid expansion provides much more bang for the buck than highly touted preventive measures like mammogram screenings for breast cancer.
During a health forum in Denver on Wednesday, Gov. John Hickenlooper said that on average, the U.S. is spending about $8,000 per person per year on health costs, about double what many other countries spend to get better outcomes.
Hickenlooper announced his support for Medicaid expansion in early January. He pledged to pay for the program without further burdening Colorado taxpayers by finding cost savings through more efficient care.
Colorado lawmakers expect to introduce a bill in the coming weeks that will outline plans for Medicaid expansion.
Hickenlooper acknowledged Wednesday that “there are people in the state who are militantly opposed to this” and claim that Medicaid expansion “amounts to wasting taxpayer dollars.” But the governor linked Medicaid expansion to his goal of making Colorado “the healthiest state in the nation.”
“As we expand coverage, we always want to be improving outcomes. If we can do that, create cost controls and have high universal coverage, it would have a huge economic impact,” Hickenlooper said during at a town hall on community health hosted by The Atlantic at Denver’s Seawell Ballroom. http://events.theatlantic.com/conversation-community-health-denver/2013/ .
Among the surprises in the new CHI analysis is the finding that as many as 73,000 people who previously obtained health insurance through private plans could switch to Medicaid. Under the expansion, people ages 19 to 64 who earn up to 133 percent of the poverty level would be eligible for Medicaid. That amounts to annual incomes of about $15,856 for individuals and $32,499 for a family of four.
Michele Lueck, president and CEO of CHI, said that the 73,000 figure is likely “in the high range,” but that analysts did not want to underestimate how many people might switch.
“This is a legitimate point of concern,” Lueck said. “We didn’t want to be accused of looking for the best vision on this.”
Under its charter, CHI provides health policy and budget analysis, but does not take a position on whether Colorado should expand Medicaid.
Conservative health expert Linda Gorman of the Independence Institute had earlier predicted that as many as 86,000 college students would become eligible for Medicaid under Colorado’s expansion plans. http://www.healthpolicysolutions.org/2013/01/24/opinion-colorado-medicaid-expansion-would-make-86000-college-students-eligible/
Calonge said that young people with low incomes would indeed qualify and that they are exactly the kind of people who should have health insurance.
“They’re cheap,” said Calonge. “Now, if something bad happens to them, then there’s a payer source. If there’s a group you want to get (in health plans) it’s the young, healthy invincibles.”
Lueck said the differences in estimates come because the entities asked different questions. CHI focused on what expansion would cost and who would be covered. Colorado Medicaid managers were looking at how they could make expansion affordable. The CHI estimate is $400,000 lower than the state’s, Lueck said, because state managers included some disabled people who earn too much to qualify for Medicaid, but buy in to the program. Lueck expects the state to be able to save money on that program over time.
“Estimating the cost of Medicaid expansion is a complicated undertaking,” Lueck said. “People who could potentially qualify under the expansion don’t necessarily enroll, and those who do enroll do so at different rates. Also, the way in which different populations use health care services adds another layer of complexity. Our team estimated both the number of people expected to enroll and the total costs associated with those people.”
CHI did not study whether Hickenlooper can really save money while expanding Medicaid as he has promised. But, Lueck said there is great potential for savings through Colorado’s provider fee, which would help pick up state costs for Medicaid. In addition, major changes are expected to CHP+, a health insurance program for low-income kids. As the Affordable Care Act (ACA) goes into effect, many of these children will be eligible for subsidies to help pay for insurance.
States across the country are grappling with whether to expand Medicaid. The ACA had called for expansion for all people earning 133 percent of the poverty level, but the U.S. Supreme Court ruled that the federal government could not force states to expand Medicaid. There are major financial incentives for states to add to their Medicaid rolls. The federal government will pay 100 percent of the cost in the first three years, from 2014 to 2016. After that, the federal government will pay 90 percent of the costs while states will pay 10 percent.
While some conservatives don’t think the government should be picking up the health care tab for the poor, people without health insurance still get sick and still seek care at ERs. Hospitals, business owners and people with health insurance are paying for the care of the uninsured.
Calonge said it makes sense to expand Medicaid for both economic and moral reasons.
“It almost sounds Scrooge-ish to say we wouldn’t take federal dollars to save Colorado citizens,” Calonge said. “In my opinion, that’s putting ideology in front of the good of the people.”