With a troubled state budget, Louisiana is banking on an extra $184 million in savings.
That’s the amount that Louisiana officials have projected the state would save by expanding its Medicaid program to low-income adults under the Affordable Care Act. The $184 million would offset some of Louisiana’s huge deficit, largely due to hard times in the state’s vital energy industry,
Louisiana Gov. John Bel Edwards, a Democrat who took office this year, launched the expansion process, breaking with the position of his Republican predecessor.
Other states have looked to similar fiscal forecasts before plunging into Medicaid expansion.
Michigan and Ohio, both with Republican governors, went forward with expansion after studies found they would save by having federal funding replace state dollars, especially in such areas as adult mental health services and prisoner hospitalization costs.
And Kentucky had data predicting an $800 million budget gain as its governor launched expansion there in 2014.
No such study of potential savings from Medicaid expansion has occurred in Georgia, industry experts say.
The option to expand Medicaid to adults up to 138 percent of the federal poverty level, which most states have approved, would extend coverage to hundreds of thousands of low-income Georgians. A state has the option to decline or accept expansion of Medicaid, but its plan for expansion must get U.S. government approval to qualify for the additional federal funds.
So far, Georgia’s Republican-led government has opted against expansion, saying it would ultimately be too costly for the state. Support for the idea has shown some momentum lately, but it faces opposition from Republicans in the General Assembly.
Still, it’s unclear when, or whether, there will be any study of expansion’s possible financial impact on the Georgia budget.
Such an analysis would help identify potential gains from expansion, says Bill Custer, a health insurance expert at Georgia State University. “I am confident it would show significant savings.”
A recent national study found that 11 states that expanded Medicaid have seen savings and revenue gains.
Critics of expansion in Georgia say cost is their main concern. In his State of the State speech in January, Gov. Nathan Deal, a Republican, said expansion would have cost Georgia more than $200 million in the fiscal 2017 budget. “That number would only continue to grow exponentially,” he told a joint session of lawmakers. The GOP-controlled General Assembly, for its part, has passed a law making any future expansion harder to enact.
The Georgia Republican Party, at its recent convention, passed a resolution calling for GOP legislators to “show their continued support of responsible state budgeting by publicly voting against and aggressively oppose any expansionary form of Medicaid pursuant to the Affordable Care Act (Obamacare) in the state of Georgia.”
Still, a key Republican lawmaker says she expects legislation on expansion to be introduced and debated in the upcoming Georgia General Assembly.
State Sen. Renee Unterman (R-Buford), who chairs the Senate Health and Human Services Committee, made headlines recently by calling for Georgia to “re-examine’’ the issue of expansion. She favors an Arkansas-style “waiver’’ plan (unlike most states’ expansion plans), under which newly covered individuals would be required to do some cost-sharing.
The response from legislators of both political parties has been positive, she told GHN last week. “They are very receptive to talking about it,” she said.
Meanwhile, a task force created by the Georgia Chamber of Commerce is formulating proposals to increase access to medical services for the state’s uninsured people.
Studies find savings in several states
A study released in March found that data in 11 states — Arkansas, California, Colorado, Kentucky, Michigan, New Mexico, Oregon, Maryland, Pennsylvania, Washington state, and West Virginia — and the District of Columbia confirm that states continue to realize savings and revenue gains as a result of expanding Medicaid.
The study, sponsored by the Robert Wood Johnson Foundation and conducted by Manatt Health, concluded that every expansion state should expect to achieve savings related to previously Medicaid-eligible people being moved into the new adult group under expansion.
The enhanced federal match for those individuals would be at least 90 percent, versus a current 67 percent in Georgia.
Expansion would also bring in additional revenue from existing insurer or provider taxes, the study added.
Specific savings in the report include:
** Michigan projected savings of $190 million in its fiscal 2015 by transitioning enrollees in a state-funded program that provided services for the seriously mentally ill into the new adult group.
** Washington state expected savings of $11.5 million in fiscal 2014 and $35 million in fiscal 2015, as individuals in a ‘’medically needy’’ program enrolled in the new adult group.
** Arkansas saved $15.2 million in spending related to pregnant women because of expansion in fiscal 2015, representing a 50 percent decrease in spending. The state projects savings of $24.4 million in spending related to pregnant women in state fiscal year 2016.
Kentucky’s overall savings estimate has increased to a positive cumulative fiscal impact of $819.6 million by fiscal 2021.
Already, Washington state projects that it will net more than $1 billion in savings and revenue gains from expansion by June 2017, says Nathan Johnson, a state official. “I haven’t heard from a single state that implemented Medicaid expansion that regrets it from a state financial standpoint,” he says.
In Georgia, much of the savings would come from adult mental health and substance abuse funding, experts say.
That’s now dominated by state dollars. The state budget for adult mental health services is more than $350 million for this fiscal year.
Many of those patients are have low incomes and are currently uninsured, and would qualify for the new coverage, experts say.
Tim Sweeney, former health policy director at the Georgia Budget and Policy Institute, says the state’s savings on mental health services for adults “would be at least $100 million.” Other experts estimate savings that would be higher.
Sweeney says GBPI requested information from state officials in order to do a budget analysis of expansion “but was thwarted in getting it.”
A spokeswoman for the state Department of Behavioral Health and Developmental Disabilities said in an email to GHN that the agency has not been asked to conduct a formal study of the impact of a Medicaid expansion on the agency budget.
“However, as Georgia’s behavioral health authority, we are preparing both internally and through our provider network for the health care environment of the future,’’ said the spokeswoman, Angelyn Dionysatos.
Medicaid expansion is relatively new, and no preliminary study can foresee all potential outcomes. The ultimate test of the idea will be in long-term results. But so far in Georgia, there is more speculation than hard data.
Meanwhile, the debate about costs continues.
Kelly McCutchen of the Georgia Public Policy Foundation says Medicaid expansion’s total cost “is high for taxpayers and unsustainable because it still doesn’t help individuals gain access to primary care and pays hospitals less than cost.”
“Expanding Medicaid is undoubtedly the worst option for providing more Georgians access. For providers — even with more money from the federal government — Medicaid still pays less than their cost,’’ he says. “It’s a bad deal for taxpayers: Expansion is estimated to cost more than $7,000 for able-bodied adults; the current Medicaid program spends $3,022.”
Nevertheless, Unterman says considering Arkansas-like expansion would be part of addressing “a crisis’’ in Georgia’s health care system
Georgia faces an array of health care challenges, she says, including rural hospitals closing; the feds cutting funding for hospitals’ indigent care; consumer bankruptcies due to medical costs; and consolidation among insurers and medical providers (a trend that could potentially reduce competition and raise costs).
On expansion, Unterman says, Georgians are sending federal tax dollars to other states for their own Medicaid moves. “Why don’t we draw our [own] federal dollars?” she says.