Printed on: March 24, 2013

Idaho must act

Mike Ferguson
Guest columnist

The Idaho Legislature has one huge decision to make before it adjourns this session, writes Mike Ferguson.

As Idaho's 2013 legislative session winds down, an important piece of unfinished business sits on the backburner.

Medicaid expansion will impact how many people in Idaho die over the next year. It will impact Idaho's ability to fund essential public services. And it will impact Idaho's economic performance.

Medicaid expansion is an increase in the number of Idahoans that qualify for this joint state/federal health care program. It has two main components: a mandatory expansion component and an optional expansion component.

Idaho has no choice with the mandatory component. This part covers people currently eligible but not enrolled in Medicaid. It will cost Idaho up to $394 million over the next 11 years.

Idaho does have a choice with the optional component. This part raises Medicaid income eligibility to 138 percent of the federal poverty line and extends coverage to about 104,000 low income adults. It comes with 100 percent federal funding of claims in the first three years, a gradual phase-down to 90 percent federal match over the next five years, then holds at 90 percent thereafter.

The optional component saves Idaho money in the form of both general fund dollars and local property tax dollars and does so in perpetuity.

Two factors yield this result: First, the federal government has agreed to pay a much higher share of the claims associated with these additional people covered by Medicaid. Second, that Medicaid coverage will displace costs associated with the counties' indigent funds and the state's Catastrophic Health Care Fund.

The savings from the optional expansion are immediate, enduring and significant. In FY 2014, optional expansion will save $37.6 million. In FY 2015, the total savings grows to $77.1 million. Over time, the savings to Idaho taxpayers diminish as the federal match rate is gradually reduced to 90 percent, but even when that permanent match rate is reached, the savings continue, year after year.

But there's a catch. In order to realize these savings, Idaho must enact legislation to permit the optional expansion to take place. Without immediate legislation, Idaho will effectively say no to saving $37.6 million in FY 2014. And the next legislative session, in 2014, will be too late.

Also, a recent study published in the New England Journal of Medicine found that for every 176 new adult Medicaid enrollees, one life is saved per year. With 104,000 additional adults covered, that equals 590 fewer deaths.

Then there's the economy to consider. Optional expansion will bring an additional $365 million into Idaho's economy in the form of federal payments to health care providers between July 1, 2013, and June 30, 2014. A 2012 study by University of Idaho economist Steven Peterson found that optional expansion in FY 2014 would add about 6,000 jobs and about $200 million in compensation to Idaho's economy in FY 2014.

But there's a catch. Idaho must act.

Ferguson is the director of the Idaho Center for Fiscal Policy. He previously served as Idaho's chief economist for the past six governors.