RI taxpayers face $52M tab for soaring Medicaid enrollment

PROVIDENCE, R.I. (WPRI) – It will cost Rhode Island taxpayers tens of millions of dollars more than originally projected to provide low-income residents with medical coverage as enrollment soars amid the launch of President Obama’s health overhaul.

State officials projected Monday that Medicaid – the 49-year-old government health insurance program for low-income Americans being expanded under Obamacare – will cost state taxpayers $52 million more than previously projected during the current and upcoming state budget years.

It’s the first time an official price tag has been put on Rhode Island’s rapidly climbing Medicaid rolls, which have grown much faster than the state expected. Medicaid enrollment through HealthSource RI, the state’s new Obamacare marketplace, stood at 64,590 as of March 31; the original estimate was that only 28,000 would sign up by September.

The extra Medicaid spending poses a significant challenge to newly elected House Speaker Nicholas Mattiello, D-Cranston, who is in the process of crafting a state budget for the upcoming fiscal year that starts July 1. He took over in March after the resignation of Gordon Fox.

The new speaker has repeatedly promised to push for immediate reductions in Rhode Island’s corporate and estate taxes. But the unexpected jump in Medicaid spending – along with pay raises Gov. Lincoln Chafee recently agreed to provide state workers – could add tens of millions of dollars in red ink to the budget the governor proposed in January.

“Obviously I am very concerned about any increased pressure on an already difficult budget,” House Finance Committee Chairman Raymond Gallison, who was appointed by Mattiello last month, told WPRI.com in a statement.

Gallison said the final estimate for Medicaid spending will be made official on Monday, and a revised estimate of how much revenue the state will take in will follow on May 9. “These results will weigh heavily on our budget deliberations,” Gallison 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.

Usually states split the tab for Medicaid roughly 50/50 with the federal government. 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 the group who became newly eligible for Medicaid specifically because of the health law: adults ages 18 to 64 without dependent children. That means state taxpayers must pick up about half the tab for anyone who was already eligible for Medicaid under the old rules but for whatever reason didn’t sign up until HealthSource RI launched.

The headline-grabbing Medicaid numbers were issued Monday by the R.I. Executive Office of Health and Human Services (EOHHS) at the semiannual Revenue Estimating Conference, where number-crunchers come up with the numbers the governor and lawmakers use to craft the budget.

EOHHS officials upped their forecast for Rhode Island’s total Medicaid spending in the 2013-14 and 2014-15 budget years by a combined $378 million in their presentation on Monday. The federal government will cover about $326 million of the tab, with state taxpayers responsible for the remainder, they said.

Under the new projections, Rhode Island’s total annual spending on Medicaid will rise from $1.6 billion in the 2012-13 budget year to $2.3 billion in 2014-15, an increase of $729 million in just two years. The number of people on Medicaid totaled 246,193 last month, up from 198,085 a year earlier.

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.

President Obama’s expansion of Medicaid was made optional for states by a 2012 U.S. Supreme Court ruling. In states such as Rhode Island that have gone along with it, 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.

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.

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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