BOBBY HARRISON: Budgeting Medicaid costs for state an inexact science

By Bobby Harrison/NEMS Daily Journal

JACKSON – Projecting the state’s Medicaid costs is difficult because it is hard to predict a person’s health, though there are people who do that for a living.
But it is not an exact science. Each year the state Legislature appropriates money to pay the health care costs of Mississippians on the Medicaid program.
Just about every year the Legislature gets it wrong in terms of the amount of money budgeted.
Sure, it is difficult to accurately budget for most state agencies, but Medicaid is especially a challenge. After all, the expenditure on Medicaid is based on the health care costs of the people in the program. The more medical treatment the Medicaid recipients get, the greater the costs to the state.
If there is an unusually large outbreak of the flu, for instance, it could cost the state more money. It is as simple as that.
That simplicity, though, should be remembered when looking at the study released Monday projecting the costs to the state of opting into the expansion of Medicaid that is part of the federal Patient Protection and Affordable Care Act.
The law, referred to as Obamacare by some, expands Medicaid coverage to those earning less than 139 percent of the federal poverty level – or about $15,000 per year.
People currently eligible to be on Medicaid in Mississippi are poor pregnant women, poor children, the disabled and certain populations of the elderly. A person working at a fast food restaurant earning $12,000 per year is not eligible for Medicaid, and, most likely, has no insurance.
The federal government pays about 75 percent of the costs of providing health care coverage to Mississippi’s current Medicaid recipients and the state pays the rest.
The study released Monday by the University Research Center of the state Institutions of Higher Learning projects the costs to the state at $65 million in 2020 if Mississippi officials opt to expand the program to cover those earning up to 139 percent of the federal poverty level.
That $65 million reflects the state’s share of providing coverage minus the projected economic boon to Mississippi of literally billions in new federal dollars flowing into the state. By 2020, it is projected that expansion would generate an additional 9,000 jobs in Mississippi.
The expansion can start as early as 2014. Between 2014 and 2020, the projected cumulative cost to the state is $109 million. It is not until 2020 that the state is required to pick up its full share of the expansion – 10 percent. The federal government pays the rest.
After 2020, the cost to the state is projected to rise slightly to keep up with rising health care costs.
But remember, the costs will depend on how many people get sick. If more people need health care, those costs could be more. If fewer need health care, the costs could be less.
The study surmised that the costs to provide medical coverage to those new enrollees will be 75 percent of the costs of the current enrollees, the elderly, poor pregnant women, poor children and the disabled.
Most of the people currently on the program have above-average health care costs. There are considerable costs associated with taking care of pregnant women, and many of the disabled in Medicaid have significant health care costs that few Mississippi families could afford without government assistance. And of course, many of the elderly in the program are in nursing homes that are not inexpensive.
The only current enrollees who would have below normal health care costs are children
On the other hand, the new enrollees from the proposed Medicaid expansion, according to the study, will be roughly 300,000 people between the ages of 20 and 64 – primarily the working poor and relatively healthy.
Perhaps, there health care costs will average 75 percent of the costs of the current enrollees. The people doing the study at IHL are much smarter than I am.
But experience tells me nobody is crazy about going to the doctor and enduring all the inconveniences and indignities.
My experience is people – even with health care coverage – seek out medical treatment when they really need it.
The projected costs of the new enrollees could be more in a year with there is a flu epidemic or less in other years. It is anybody’s guess. But rest assured if a person gets sick enough with the flu, he or she will show up at the emergency room if there is no other choice.
And that is a cost we all pay whether the state expands Medicaid or not.
Bobby Harrison is the Daily Journal’s Capitol Bureau Chief. Contact him at bobby.harriison@journalinc.com or call (601) 353-3119.