Studies point to savings under Medicaid expansion

Depending on who’s doing the numbers, Georgia’s cost to expand its Medicaid program under the health reform law has been projected at between $2 billion and $4.5 billion over 10 years.

But there has not been a publicly available breakdown of potential savings in current state and local spending under an expansion of the government health program.

Those savings would come largely from the federal government paying for at least 90 percent (100 percent the first three years) of the cost of prisoners’ hospitalizations; community behavioral health services for many low-income adults; and a Medicaid program for people with high medical costs.

These savings “are flying under the radar’’ in the current debate about the costs of expansion, says Tim Sweeney, health care analyst for the Georgia Budget and Policy Institute (GBPI).

The U.S. Supreme Court last year, in its one significant weakening of the Affordable Care Act, made Medicaid expansion more of a choice for states than a requirement. So far, Georgia is among the states that have no plans to pursue expansion.

Earlier this year, a Georgia State University study found the state could gain an estimated 70,000 new jobs – and see an annual economic impact of $8 billion annually – if Gov. Nathan Deal were to approve Medicaid expansion. That study, though, did not delineate the savings in current state spending on health care.

Deal, in a May interview with the AJC, didn’t rule out ever considering Medicaid expansion, but he said the door remains shut “for now.” He has cited the cost of expansion as the major reason for rejecting the move.

A Deal spokesman said in an email to GHN on Wednesday that it’s very difficult — if not impossible — to do an accurate prediction of costs and savings.

“But under any scenario, implementation of Obamacare would be a huge new cost to the state,” spokesman Brian Robinson said in the email. “There are no savings to be had anywhere that come close to filling the gap. It’s like buying a new Bentley and bragging you got free floor mats from the dealer.”

Medicaid, jointly financed by the state and federal governments, currently covers 1.5 million low-income and disabled Georgians.

An estimated 650,000 more residents in the state would be covered under expansion. The program would begin covering mostly single adults whose income is below 138 percent of the federal poverty level, or roughly $15,800 per year.

Projecting Georgia’s savings from expansion would require a detailed study. Still, there are reasons to believe the figure could be substantial, and offset much of Medicaid expansion’s cost for the state, experts say.

“We are all trying to get a handle on it,’’ says Cindy Zeldin of Georgians for a Healthy Future, which supports Medicaid expansion. “There’s a whole lot of interest in this topic.’’

Inmate services affected

Reports on savings have been done for Michigan and Ohio, two states with Republican governors that have similar populations to Georgia. Neither has approved Medicaid expansion, though both states’ governors are pushing for it.

The Michigan study, done by the Center for Healthcare Research & Transformation, says many residents who receive community mental health services there would enroll in Medicaid, with federal money largely replacing state funding. The study estimated the state, if it opted for expansion, would save at least $1.6 billion over 10 years in mental health funding.

In addition, while Medicaid does not cover health care within a prison or jail, the program can cover the costs if an inmate requires hospitalization.

(The Georgia Department of Corrections says it uses the current Medicaid program to pay for some medical expenses. These include costs for pregnant inmates when they are admitted to hospitals to deliver their babies.)

The Michigan study puts the savings at $44 million in correctional medical services in 2014 that would qualify for Medicaid reimbursement under expansion.

Total savings in these and other programs would more than offset Michigan’s costs of expansion, says Joshua Fangmeier, lead author of the report. The state would end up netting $1 billion in savings over 10 years, he adds.

Meanwhile, Ohio’s estimated savings for prisoner health care, including nursing home services, are $273 million over nine years, according to a report by Regional Economic Models, Inc., the Urban Institute, Ohio State University and Health Policy Institute of Ohio.

Ohio also calculates expansion savings from the Medicaid “spend down’’ program for individuals with high medical expenses at $709 million over nine years, the Ohio study says.

The report also lists savings in a breast and cervical cancer program under Medicaid.

Potential savings

Sweeney of GBPI also includes as potential savings the taxes that managed care companies would pay for serving the additional Georgia Medicaid enrollees. This would amount to $750 million over 10 years, he says.

Local governments would benefit if Georgians in county custody could also be served with Medicaid, especially because many in county jails are awaiting trial and haven’t been convicted, Sweeney says.

In addition, Georgia annually spends more than $300 million for adult mental health and addictive disease services, GBPI says. Many of these residents would qualify for Medicaid under expansion, experts say.

About 60,000 Georgians would come onto the Medicaid rolls for mental health services alone under an expansion, says Ellyn Jeager of Mental Health America of Georgia.

Matt Carrothers, a spokesman for the state Department of Behavioral Health and Developmental Disabilities, says the agency has not done a review of possible savings under Medicaid expansion.

“Georgia is not expanding its Medicaid program,’’ he says.

The Department of Corrections says it hasn’t done a study, either.

The agency, responding to a state Open Records Request from Charles Bliss of the Atlanta Legal Aid Society, said that it paid $22.6 million in fiscal 2012 for inpatient hospital services.

Besides potential prisons costs, “there are other savings out there,’’ Bliss says.

The state should conduct a comprehensive study of any potential savings in order to make a decision on expansion, Bliss says.

“I think the state needs to get the data together,” he says.