Medicaid surge triggers cost concerns for states

By Ricardo Alonso-Zaldivar

Associated Press   May 27, 2014

WASHINGTON — From California to Rhode Island, states are confronting new concerns that their Medicaid costs will rise as a result of the federal health care law.

That’s likely to revive the debate about how federal decisions can saddle states with unanticipated expenses.

Before President Obama’s law expanded Medicaid eligibility, millions of people who were already entitled to its safety-net coverage were not enrolled. Those same people are now signing up in unexpectedly high numbers, partly because of publicity about getting insured under the law.

. . .  the catch is that they must use more of their own money to cover this particular group.

In California, Democratic Governor Jerry Brown’s recent budget projected an additional $1.2 billion spending on Medi-Cal, the state’s version of Medicaid, due in part to surging numbers. State officials say about 300,000 more already-eligible Californians are expected to enroll than was estimated last fall.

‘‘Our policy goal is to get people covered, so in that sense it’s a success,’’ said state legislator Richard Pan, a Democrat who heads the California State Assembly’s health committee. ‘‘We are going to have to deal with how to support the success.’’

Online exchanges that offer subsidized private insurance are just one part of the health care law’s push to expand coverage. The other part is Medicaid, and it has two components.

First, the law allows states to expand Medicaid eligibility to people with incomes up to 138 percent of the federal poverty line, about $16,100 for an individual. Washington pays the entire cost for that group through 2016, gradually phasing down to a 90 percent share. About half the states have accepted the offer to expand coverage in this way.

But whether or not a state expands Medicaid, all states are on the hook for a significantly bigger share of costs when it comes to people who were Medicaid-eligible under previous law. The federal government’s share for this group averages about 60 percent nationally. In California, it’s about a 50-50 split, so for each previously eligible resident who signs up, the state has to pony up half the cost.

There could be many reasons why people didn’t sign up in the past.

They may have simply been unaware. Some may not have needed coverage. Others see a social stigma attached to the program. But now virtually everyone in the country is required to have coverage or risk fines.

Read the full article in the Boston Globe . . .

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