Healthcare Business News

Reform Update: Some states remain skeptical of widening Medicaid eligibility

By Virgil Dickson
Posted: January 14, 2014 - 4:15 pm ET

As 25 states begin to cover millions of additional residents in their Medicaid programs this year, leaders in other states continue to argue whether the promise of federal funding to pay for the coverage is enough to warrant the burden.

In Maine, Republican Gov. Paul LePage is justifying his opposition to raising Medicaid eligibility under the Patient Protection and Affordable Care Act with a new report that projects the impact on enrollment and costs. Patient advocates say the conclusions are flawed.

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“There are significant flaws in the report that make us skeptical of its findings,” Christine Hastedt, public policy director, Maine Equal Justice Partners, a nonprofit legal aid provider.

The report was generated by the Alexander Group, a Rhode Island-based consulting firm headed by Gary Alexander, former welfare chief in Pennsylvania under Republican Gov. Tom Corbett. It concluded that expanding Medicaid to Maine residents with incomes up to 138% of the federal poverty level would cost the state about $807 million over the first 10 years, even with even with 100% federal funding promised by the Obama administration to those states that increase their program. About 70,000 more Mainers would be immediately eligible under expansion.

Some policy experts, however, have arrived at very different conclusions. According to a Kaiser Family Foundation study last fall, states that raise eligibility would see their own costs increase 4.4% in 10 years, while costs in states that don't would go up 6.6%. That's because those states would forgo federal funding while publicity generated by expansion of the program elsewhere would lead to a “woodwork effect” driving up enrollment anyway.

The Maine report found that the state's Medicaid program, known as MaineCare, would grow 5.5% each year for 10 years, even without expansion. With expansion, it would grow 7.4% annually.

In 10 years, according to the report, MaineCare would grow from the 318,000 enrolled now to 530,200 in fiscal 2024. Without expansion, enrollment would reach 406,100 in 10 years.

Hastedt argues that unlike similar reports done by other states, Alexander's doesn't examine the potential benefit the additional federal funds will have on job growth, and the potential tax revenue those new positions could provide for the state.

Even before the report's release, Eugene DePasquale, the auditor general in Pennsylvania, released an op-ed that said Alexander's credibility should be questioned.

Representatives from the Maine Hospital Association and the Maine Children's Alliance, an advocacy group, added that the report has not changed their positions that Medicaid needs to be expanded in the state.

Maine Department of Health and Human Services Commissioner Mary Mayhew, however, said the study “reinforces the unsustainable costs associated with MaineCare expansion.”

The report preceded news on Jan. 13 that the state is facing a $119 million shortfall, which LePage spokeswoman Adrienne Bennett said was mostly caused by the state's Medicaid program. She said it's further evidence that expanding the program is a bad idea.

However, she did not rule out the possibility of state officials seeking a waiver such as the ones granted to Arkansas, Michigan and Iowa, which allowed the states to expand their programs in alternative ways.

“We continue to explore other options to figure out whether expansion is affordable or sustainable in the long term. However, we're not seeing the numbers add up,” Bennett said.

In Alaska, meanwhile, the nonpartisan legislative office issued a research brief (PDF) projecting that declining to raise Medicaid eligibility means the state will lose out on the creation of 5,500 jobs and the $220 million in wages they would create. The brief also suggests that “scores of deaths” may occur that could be prevented by expanding the program.

Officials in other GOP-led states appear to be softening their opposition to growing their Medicaid rolls. Next month, Wyoming's legislative bodies will vote on two bills that would expand the program.

Follow Virgil Dickson on Twitter: @MHvdickson

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