Analysis: Utah Medicaid a bargain, not a budget-buster
Utah's Medicaid rolls swelled with 108,000 jobless parents and their kids during the recession, straining the budget at a time when the state could least afford it.
But the health safety net did a bang-up job, covering more people for less money than in years past, according to an analysis by Voices for Utah Children. Enrollment is projected to grow 67 percent from 2007 to 2013, but over that same period, per-patient costs actually dropped 16 percent, the report shows. Fiscal year 2013 is included in the analysis because that money has already been allocated.
"Medicaid did exactly what it was meant to during the toughest economic downturn in a generation," said author Allison Rowland, Voices' Director of Research and Budget.
The findings come as Republican governors across the country warn of an impending Medicaid-induced budget crisis. Federal health reform calls for expanding Medicaid in 2014 to cover a greater share of the nation's poor. A Supreme Court ruling on the health law makes the expansion optional for states.
But even if states do nothing, the law's requirement that people buy insurance will have a pronounced effect on Medicaid, and states' ability to pay for it, argued Republican Utah Gov. Gary Herbert in a recent guest opinion piece in The Washington Times.
"Just covering Utahns presently eligible for Medicaid but not yet enrolled will cost the state $940 million the first decade and $1.88 billion the next decade," Herbert wrote. It's this, not the expansion, that "will completely unravel our state's uniquely positive financial outlook," he said.
Rowland begs to differ. "If Utah's budget is stretched short, don't blame Medicaid," she said, noting that only 8 percent of the state's tax revenue goes to the low-income health program. The state spends four times more on public schools, more on colleges and more on maintaining roads, she said.
Rowland's calculations differ markedly from Herbert's, who claims on his campaign website that 21.5 percent of Utah's budget flows to Medicaid, nearly double what it was a decade ago.
Which is correct?
Both, explained Utah Medicaid Director Michael Hales.
Herbert adds federal spending to the mix, said Hales, noting that the feds pick up most of the Medicaid tab.
If Utah opts not to expand Medicaid, the state will forgo a sizeable chunk of the money it feeds into and draws from the federal tax pool about $1 billion a year for the next five years.
Herbert says he's in no rush to make a decision, but has argued to retain the federal money with fewer strings attached. States are better poised to innovate and bend Medicaid's cost curve, he says.
In January, Utah launches an experiment to steer Medicaid patients into managed care networks that will pay providers a lump per-patient sum up front. Providers that go over budget will have to absorb those costs. Any extra money at year's end will be shared by providers and the state.
Whether the plan will produce savings is unknown. Other penny-pinching schemes, including the state's leveraging of discounts from drug makers, have saved millions.
But the key factor in spending, the main driver of declining per-patient costs, is the health of patients, said Hales. "During the recession most new enrollees were children and their parents. They cost a lot less than a person with a disability or elderly person."
The Utah Department of Health is preparing an analysis predicting tomorrow's mix of enrollees. It's likely they'll be a mix of healthy and unhealthy patients, Hales said.