State health agency outlines spending increases

A state health agency is budgeting an extra $24 million this fiscal year, and a similar amount next year, to pay for costly hepatitis C drugs in Georgia’s Medicaid program.


The state is also expected to pay $14.1 million more this year, and $37.9 million in fiscal 2016, for lengthening the time between eligibility reviews for Medicaid and PeachCare beneficiaries, as required by the Affordable Care Act.

Those were among the financial projections made in a budget presentation Thursday for the board of the Georgia Department of Community Health, which runs the Medicaid and PeachCare programs in the state, as well as the state employee health plan. The presentation is the beginning of a long budgeting process for the agency.

The Community Health board approved the budget requests.

The hepatitis C drugs are considered breakthrough medications for patients. One drug, Sovaldi, has a 90 percent cure rate for newly infected patients — much better than previously available treatments for hepatitis C.

But it also costs roughly $84,000 for a 12-week treatment, or about $1,000 per day.

The second drug, Olysio, is about $66,000 for a 12-week treatment, but is approved for fewer types of patients.

Hepatitis C is a contagious liver disease that ranges widely in severity. Some infected people experience only a mild illness lasting a few weeks, while others develop a serious, lifelong illness. The hepatitis C virus is spread primarily through contact with the blood of an infected person.

Tim Connell
Tim Connell

Community Health said it expects to treat 800 hepatitis C patients with the new drugs.

The agency’s chief financial officer, Tim Connell, reminded board members of the magnitude of the agency’s reach in presenting the budget figures. Its health programs cover one in four Georgians, and 47 percent of the state’s children, he said.

Connell said the programs’ financial outlook had improved considerably. The State Health Benefit Plan, which covers roughly 650,000 state employees, teachers, other school personnel, retirees and dependents, ended fiscal 2014 with a cash surplus of $576 million. Medicaid and PeachCare (Georgia’s version of the Children’s Health Insurance Program) ended the year with a surplus of $1.8 million.

But Connell also said the ACA has had “a profound effect’’ on the agency’s spending. He put the amount of increased costs in Medicaid and PeachCare from the federal health law at more than $100 million in state funds annually.

One factor, he said, is the switch in the eligibility reviews in Medicaid and PeachCare from six months to 12 months. And he noted the enrollment increase of 51,000 Georgians due to the “woodwork effect,” in which people already eligible but not enrolled in Medicaid and PeachCare have joined the programs as a result of the ACA. The state must pay millions more annually in “presumed eligibility” of patients requiring hospital care, as outlined under the health law.

The ACA also has increased spending in the state employee health plan, Community Health said, bringing the state’s total annual figure from the law to $150 million.

Tim Sweeney
Tim Sweeney

Tim Sweeney, health policy director at the Georgia Budget and Policy Institute, said after the board meeting that the agency appeared to be slamming the ACA for its costs while not mentioning its benefits.

The 12-month eligibility reviews, for example, “help drive greater coverage, particularly among children,” Sweeney said. Georgia has had the fourth-highest number of uninsured children in the nation, he said. The new length of time “maximizes their health coverage, and that’s good for kids.”

Almost 1.9 million Georgians are covered by Medicaid and PeachCare, the majority of whom are children.