Cost of soaring Medicaid enrollment in RI still a mystery

HealthSource RI is Rhode Island's Obamacare insurance marketplace.
HealthSource RI is Rhode Island's Obamacare insurance marketplace.

PROVIDENCE, R.I. (WPRI) – Obamacare will likely cost Rhode Island more money than state leaders expected. But nobody knows exactly how much yet.

Figures obtained from the Chafee administration by WPRI.com show that out of the 64,590 Rhode Islanders who signed up for Medicaid from October through March using the state’s new HealthSource RI marketplace, 34% were eligible before the new law expanded the rules for who could sign up.

That means state taxpayers will have to help pay for the cost of those individuals’ care immediately – and the cost could be significant, since new Medicaid enrollment has already blown through Rhode Island’s initial projection for Obamacare’s first year.

Beryl Kenyon, a spokeswoman for the R.I. Executive Office of Health and Human Services, said Rhode Island officials have yet to put together an estimate of how much money the higher-than-projected Medicaid enrollment will cost Rhode Island taxpayers during the state’s current budget year, which ends June 30, or in the next budget year.

“We don’t have a projection yet,” Kenyon told WPRI.com. An estimate will be published later this month during the twice-yearly caseload estimating conference, she said.

President Obama’s 2010 health law expands insurance coverage mainly in two ways: by getting Americans to sign up for subsidized private insurance plans on marketplaces such as HealthSource RI, and by expanding eligibility for Medicaid, the government insurance program for low-income Americans.

Officials originally forecast that only 28,000 people would use HealthSource RI to sign up for Medicaid by Sept. 30, 2014, but actual enrollment is already more than double that projection. At this point it’s even surpassed the state’s 18-month enrollment forecast, which was for only 51,000 new Medicaid sign-ups by next March.

Usually states and the federal government split the tab for Medicaid roughly 50/50. But in an effort to make the program’s Obamacare expansion less expensive for states, the Affordable Care Act called for the federal government to pick up 100% of the cost of the Medicaid expansion from 2014 through 2017, and at least 90% of the cost permanently.

That more generous federal subsidy, however, is only for adults ages 18 to 64 without dependent children, a group who became newly eligible for Medicaid under the health law – so state taxpayers must pick up about half the tab for the more than 22,000 people who were already eligible for Medicaid under the old rules but didn’t sign up until HealthSource RI launched.

Medicaid spending already makes up nearly 30% of Rhode Island’s entire $8.2-billion state budget. The state spends significantly more on elderly and blind or disabled Medicaid patients than the national average, according to the House Fiscal Office.

The unexpectedly high Medicaid enrollment in recent months isn’t the only unplanned cost new House Speaker Nicholas Mattiello and new House Finance Committee Chairman Ray Gallison will have to grapple with as they cobble together a state budget for the new fiscal year that starts July 1. Just last week, the Chafee administration reached a tentative deal with state unions on a new four-year contract that includes millions of dollars in raises for employees.

House spokesman Larry Berman told WPRI.com Mattiello and Gallison will be looking at all 64,590 new Medicaid enrollees “to determine who these people are and what category they fall into to determine revised cost projections.”

The most recent official forecast, from November, projects Rhode Island’s total spending on Medicaid and related programs will rise from $1.73 billion in the current 2013-14 budget year to $2.03 billion in the 2014-15 budget year. Rhode Island’s state revenue share was projected to increase by $46 million, with the federal government covering the rest.

Berman said that “some growth … from increased enrollment of those that are not newly eligible” is already built into those projections.

“The new speaker and the new chairman are aware that thousands of Rhode Islanders have recently been able to get affordable health care through the Medicaid expansion and the implementation of the Affordable Care Act,” Berman said. “The specific numbers and impacts are still under careful review.”

David Burnett, chief of government and public affairs at the Executive Office of Health and Human Services, said the roughly 22,000 new Medicaid enrollees who weren’t part of the expansion group fall into three categories: “additional membership, normal accretion, and administrative account transfers.”

“Some of this number is the normal enrollment that we see on a daily basis,” Burnett told WPRI.com. “So it is very difficult to tease out who came in because of the Affordable Care Act efforts and who would have come in regardless.”

“We are continuing to work through the impact of the higher-than-expected enrollment across all these categories and will be presenting updated information at the Caseload Estimating Conference later this month,” he said.

House Minority Leader Brian Newberry, R-North Smithfield, argued the rising costs and soaring enrollment show Gov. Lincoln Chafee and General Assembly Democrats made a mistake last year when they went along with President Obama’s push to expand Medicaid, which was made optional for the states in a 2012 U.S. Supreme Court decision.

“I think that Rhode Island’s decision, the governor’s decision, to move forward with the state health-care exchange and particularly the expansion of the Medicaid program was a huge mistake, and it’s going to turn into a fiscal disaster for the state,” Newberry told WPRI.com.

“The fact that they can’t even put an estimate on the number when we’re in budget time is just incredible,” he added. Medicaid and pension contributions have been the two fastest-growing parts of the state budget in recent years, and the Chafee administration projects expanding deficits in the coming years as spending growth outpaces revenue.

Linda Katz, policy director at the nonprofit Economic Progress Institute, said Rhode Island’s decision to expand Medicaid and get as many eligible residents as possible to sign up for it fits with the state’s history of robust support for the 49-year-old program.

“Providing the Medicaid health-insurance card to people who are very low-income and don’t have access to affordable coverage through their employer is the fair thing to do and it’s the right thing to do, because it gives people entrée into the health-care system,” Katz told WPRI.com.

In states such as Rhode Island that have gone along with President Obama’s expansion of Medicaid, anyone who makes up to 138% of the federal poverty level – about $16,000 for an individual or $32,500 for a family of four – is eligible to enroll in Medicaid. Pregnant women and young people up to age 19 are eligible at higher income levels.

“The mantra since last October has been ‘get health insurance coverage,’ and as that has been heard by the community and people have started to come through the HealthSource RI system some of the individuals who previously were eligible for [Medicaid] but never knew they were eligible have now gained coverage,” Katz said.

While the official deadline for Americans to sign up for subsidized private insurance plans in 2014 was March 31, there is no deadline to sign up for Medicaid; those who are eligible can enroll at any time of the year. The Affordable Care Act requires almost all Americans to sign up for health insurance or pay a penalty starting this year.

Starting in the 2016-17 fiscal year, state taxpayers will also need to pick up part of the tab for the Medicaid enrollees who are in fact newly eligible because of Obamacare.

The state’s share of Medicaid costs for those individuals is projected to rise from $14 million in 2016-17 to $72 million in 2020-21, though the federal government’s share of the cost will remain far higher, at $719 million by 2020-21, unless Congress changes the law, according to the House Fiscal Office.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

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