No easy answer for Medicaid costs

Schools, colleges, other programs suffer from spiraling expense

Gov. John Hickenlooper has told lawmakers that the majority of spending increases for next year are for Medicaid because enrollment has spiked during the economic downturn. Spending cuts to K-12 schools and higher education likely will feel the pinch because of it. Enlarge photo

ED ANDRIESKI/Associated Press

Gov. John Hickenlooper has told lawmakers that the majority of spending increases for next year are for Medicaid because enrollment has spiked during the economic downturn. Spending cuts to K-12 schools and higher education likely will feel the pinch because of it.

DENVER – The recession and achingly slow recovery has been a double whammy for state government: With more people out of work, fewer people are paying taxes and more are enrolling in state-sponsored health care.

Bean counters warn that the state is near a breaking point on its medical bills, and it’s easy to see why.

An extra 281,000 people will join the Medicaid rolls between 2007, when the downturn began, and next year, the state predicts. That’s an increase of 72 percent in just six years.

Although next year’s budget is growing slightly, higher Medicaid expenses will eat up all of the growth and more, putting the squeeze on schools, colleges and the rest of government.

“We have a convergence of expenses. Right now, we’re having a flat recovery,” said Rep. Cheri Gerou, R-Evergreen, chairwoman of the Joint Budget Committee. “We’re hitting that cliff very quickly.”

At the same time, new federal laws prohibit states from tightening their requirements to join Medicaid. States and the federal government share expenses for Medicaid, which provides health care to needy families and disabled people.

The rising costs are making Medicaid the big political issue of the year for the Legislature, which convenes in early January.

Republicans are calling for Gov. John Hickenlooper to look for a way out of federal health-care requirements, especially from the 2010 health insurance law they deride as “Obamacare.” The law forbids states from cutting eligibility for their health-care programs.

Twenty-six states have asked for a waiver from the law, Gerou said. She wants Hickenlooper to join the list, although she is not sure exactly what kind of waiver the governor should seek.

“I don’t know what it would do. I’m just trying to work the numbers out,” Gerou said.

There is no single waiver that would save Colorado $100 million or $200 million, said Lorez Meinhold, Hickenlooper’s senior policy director for health care.

“It hasn’t stopped states from asking, but no state has been granted it,” Meinhold said.

Rather than cutting eligibility, Colorado is expanding it. Under former Gov. Bill Ritter, the Democratic-led Legislature passed a fee on hospitals that will be used to offer Medicaid or Child Health Plus coverage to people who have low incomes but not low enough to qualify under the old rules.

Hospitals agreed to the fee, reasoning that they actually would save money by offering less charity care to uninsured people.

As of last December, more than 30,000 people had joined state-sponsored health insurance programs thanks to the hospital fee.

The expansion took effect after President Barack Obama signed the federal health law, so the state could reverse it. Even if the Legislature decided to repeal it, though, it would not save any money for the state budget because the hospital fee pays for the expanded coverage, Meinhold said.

Conservative critics question the drive to expand government insurance programs.

“They’re paying a bundle above and beyond what they would have to pay as opposed to private care,” said Linda Gorman, director of the Health Care Policy Center at the Independence Institute.

A child who needs a few doctor-office visits a year might be better off paying cash at a clinic than enrolling in a health-insurance plan, she said.

Also, the state can ask for specific waivers from federal Medicaid rules, Gorman said. In fact, Colorado already has 11 waivers, but they usually let the state expand coverage in a more cost-effective way than federal rules allow, not reduce coverage.

Gorman thinks the state needs to be more creative about asking for waivers that would let it run its programs more economically.

But mostly, she thinks the whole health-care system needs free-market reforms, like doctor-owned surgical hospitals that can compete with regular hospitals. Large hospitals typically oppose boutique competitors because they offer only high-profit services, while big hospitals have to provide expensive care to everyone.

“The real thing is how much it costs for health care. After that, the cost of everything comes down,” Gorman said.

Meinhold, Hickenlooper’s health-care adviser, says much the same thing.

The state might apply for waivers that would let it offer better, cheaper care, for example by letting patients get their care at home instead of checking in to the hospital.

“There’s not one thing we can do in health care that will all of a sudden lower costs. It’s going to be a combination of things,” Meinhold said.

jhanel@durangoherald.com

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