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for a Healthy Idaho
With Healthy Idaho Plan, Idaho Can See Budget Savings Like Other States
December 2014
Twenty-eight states (including Washington, DC) have freed up revenue for important services like public educa- tion and provided access to a ordable health care for nearly all their residents by closing their health coverage gaps. is move is saving them critical funds at the state and county levels. e same could be true in Idaho, with potential savings of $173 million over the next ten years.
For the third time since 2012, the Governor’s Medicaid Redesign Workgroup recommended that Idaho ap- prove a Medicaid redesign that would provide a ordable health care coverage to all Idahoans in the form of the “Healthy Idaho Plan.” Rather than expand the current Medicaid program, the Workgroup recommended that Idaho redesign the state’s Medicaid system and inte- grate it with the state’s Your Health Idaho insurance exchange, where people buy private policies.
Under this public/private or ‘‘hybrid’’ option, Idahoans earning 100-138 percent of the Federal Poverty Level (for example a family of four that earns up to $32,913 per year) would be able to access private insurance in the state health exchange. ose below 100 percent of the Federal Poverty Level (for example, a family of four mak- ing $23,850 per year) — could access coverage through state-run managed care contracts. e vast majority of these costs would be covered by tapping federal funds and would ultimately save Idahoans millions of dollars.
It is now up to our legislature to close the gap during the 2015 legislative session. Until they do, Idaho taxpayers will continue to pay for the health care costs of those without insurance through county indigent funds and the state’s catastrophic health insurance fund. Indepen- dent estimates solicited by the Workgroup show $173 million in savings over the next ten years if the legislature implements the Workgroup recommendation.
is brief looks at how four states—Arkansas, Kentucky, Michigan and New Mexico—are saving of millions of dol- lars as a result of closing the coverage gap. e same would
be true for Idaho if state lawmakers implement the recom- mendation of the Governor’s Workgroup, which has been dubbed the Healthy Idaho Plan.
Other States Are Already Saving
While the majority of states have taken advantage of the cost savings and health bene ts of redesigning Medicaid, they have done so in a variety of ways. e Center for Medicaid and Medicare Services (CMS) has given states considerable exibility in designing plans to close their coverage gaps.
States such as Kentucky and New Mexico took a direct approach by extending Medicaid eligibility to more people. Others such as Michigan and Arkansas have designed al- ternatives that include combinations of private and public approaches. However, the one thing all four states have in common is they are now seeing signi cant budget savings as a direct result of redesigning Medicaid.
Idaho
e Governor’s Workgroup on Medicaid Redesign recommended a private/public plan to serve the unique needs of Idahoans and support Idaho’s new health care exchange.
e Healthy Idaho Plan will have other bene ts, including $700 million in new economic activity an- nually and nearly 15,000 new jobs, not only in health care but throughout the local economies, by the rst year.1 While Idaho weathered the Great Recession in many respects, the state has still not returned invest- ments in public education, public employees or higher education to pre-recession levels. e cost savings avail- able to Idaho from closing the coverage gap could help strengthen Idaho’s economy and provide new revenue for investments in areas like public education. Local economies would bene t greatly from being able to eliminate county funds that cover care for the indigent, and those savings could be invested in local priorities.
During the 2015 Legislature, Idaho lawmakers have the opportunity to extend quality, a ordable coverage to 78,000 Idahoans for a total savings in the rst year of $65 million. Over 10 years, the total direct savings from the elimination of the counties’ indigent funds, the catastrophic fund, and other health programs will be $173 million. e state will likely reap additional savings that are di cult to estimate, including re- duced costs for corrections, law enforcement, and the courts. e economic boost will also generate new tax revenues above and beyond the calculated savings.
Idaho
It is now up to our legislature to close the gap during the 2015 legisla-
tive session. Until they do, Idaho taxpayers will continue to pay for the health care costs of those without insurance through
county indigent funds and the
state’s catastrophic health insurance
fund.
Lessons from Four States that Have Closed the Coverage Gap
Kentucky
By enrolling 267,000 peo- ple who were previously ineligible for
coverage,
Kentucky
has re-
duced state spending on a variety of health care programs by $80 million in the current budget year and $87 million in the next budget year. Kentucky has been able to use federal funds rather than state dollars for mental health, local health departments and other services.
New Mexico
New Mexico projects that en- rollment among the newly eligible residents will top 163,000 this year. Last year, New Mexico saved $23 million by transfer- ring 37,000 people who were getting
state-funded insurance to the federally funded expansion category. New Mexico forecasts its savings to rise to $60 million in the current budget year, in addition to another $18 million in savings from state- funded mental health programs.
$80 M
$78 M
Arkansas
Key Sources for Savings in the First Year
If Idaho were to close the coverage gap during the 2015 legislative session, we would realize the following savings in state fiscal year 2016
Savings at the County Level
Savings and Offsets at the State Level
$89 M
kansas received permission from the Cen- ter on Medicaid and Medicare Services to purchase coverage for uninsured residents through the state’s health insurance market- place. Some 205,000 people are now en- rolled in Arkansas’ “private option.” Private coverage replaced $20 million in state-fund- ed limited medical bene ts for low-income Arkansans and $22 million in state-funded care for those without insurance last budget year. ese savings are expected to grow to $89 million in the current budget year.
Michigan
Michigan be-
gan a new cover-
age program, through
an alternative approach to
closing the coverage gap, on
April 1, 2014. It has en-
rolled 425,000 people who
are newly eligible for cover-
age. Michigan lawmakers
projected savings of $100 million for the state budget year that just ended. e sav- ings come from replacing state funds for community mental health and prisoner- related medical care.
Closing the coverage gap has resulted in proven savings in other states, including the four states highlighted here. e longer Idaho waits, the more we miss out on these savings, while also sending our tax dollars out of Idaho to fund expanded health care coverage in other states. Closing the coverage gap will help working Idahoans, families, and veterans, and it will support our local and state economies. Idaho lawmakers should implement a common-sense ap- proach to health care for Idaho by integrating Medicaid redesign with Idaho’s health insurance exchange and clos- ing the coverage gap during the 2015 legislative session.
End Notes
1. University of Idaho College of Business and Economics, Peterson, Steven, “ e Economic Impacts of Medicaid and Proposed Medic- aid Expansion,” http://www.healthandwelfare.idaho.gov/Portals/0/ AboutUs/From eNewsroom/0814_PetersonMedicaidExp.pdf (August 14, 2014).
2. Milliman, Diederich, Ben, “Idaho Medicaid Expansion Popu- lation and Cost Forecast Including Option 3.5,” http://www. healthandwelfare.idaho.gov/Portals/0/AboutUs/Newsroom/Milli- man%20Actuarial%20Analysis.pdf (November 14, 2014).
Acknowledgement
Special thanks to e Commonwealth Institute for Fiscal Analysis (www.thecommonwealthinstitute.org) for their assistance with this report. While we acknowledge their support, the ndings and conclu- sions presented in this report are those of the authors alone.
Arkansas was the rst state to take an alter- native route
to closing the coverage gap. Instead of using the state’s exist- ing Medicaid program, Ar-
www.Close eGapIdaho.org