House Bill 277 Could Cost State $32.2 Million More Than Unmodified Expansion

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The clean form of Medicaid expansion enacted at the ballot is a net positive for Idaho’s budget, in part because of the enhanced federal match offered to states for the expansion population. New analysis from the Idaho Center for Fiscal Policy shows that House Bill 277 would put that federal match in jeopardy as well as erode savings that would accrue to Idaho from thousands of new people becoming insured. House Bill 277 could cost as much as $32 million compared to current law.
For every dollar Idaho puts into Medicaid expansion, we receive nine in federal dollars to match it due to the enhanced match offered for expansion populations. Idaho will also realize substantial savings to the state CAT Fund, behavioral health services, community-based substance use disorder treatment for offenders, and mental health services for the probation and parole population. Most of these services can be paid for with Medicaid expansion at the 90-10 federal-state match rather than the 100% state dollars we use today. That makes it cost-effective to cover the 91,000 Idahoans who will become eligible under clean expansion, up to 138% of the federal poverty level (FPL), which is about $17,000 annually for an individual.
House Bill 277 threatens this advantageous match by only partially expanding Medicaid. Previous states, such as Arkansas and Massachusetts, did not get approval from the Centers for Medicaid and Medicare Services (CMS) for their requests to receive an enhanced match for partial expansion. Utah submitted a waiver for a partial expansion up to 100% FPL and asked for its traditional match rate (68-32) in its initial request.
“House Bill 277 has no clear off-ramp that calls for the state to revert back to full Medicaid expansion if CMS approves a partial expansion, but not at the enhanced match rate,” said Lauren Necochea, director of the Idaho Center for Fiscal Policy. “In this case, Idaho’s match rate would be 70-30, with the state paying three times as much per person covered than under clean Medicaid expansion. It is a big gamble because the state would cover far fewer people and spend much more to do so,” Necochea concluded.
House Bill 277 would cost the state $42 million if CMS approves the waiver with a 70-30 match rate, while traditional Medicaid expansion costs less than $10 million, a difference of $32 million
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