Enrollment surge shows no sign of slowing down
How much will Medicaid enrollment increase, and how will this ultimately compare to previous downturns? The answers to these two questions still are unknown, according to Edwin Park, a senior fellow at the Center on Budget and Policy Priorities, but both depend on unemployment rates, as well as other economic factors.
Unemployment increases are linked to Medicaid enrollment increases, according to an analysis done by the Urban Institute. For every one-point increase in the unemployment rate, Medicaid enrollment is expected to increase by more than 1 million.
According to Mr. Park, between 2001 and 2004, Medicaid enrollment among adults and children rose 10.2% annually, while unemployment only increased 2.1% during the recession then. In contrast, during the early '90s recession, there was even higher enrollment-though there also were Medicaid expansions at the time, but unemployment only increased 2.6%.
"During this recession, which the National Bureau of Economic Research determined started at the end of 2007, unemployment is likely to increase by more than four percentage points," says Mr. Park.
The Congressional Budget Office assumed, before enactment of the stimulus, that unemployment would rise to 9.2% by early 2010, from a rate of 5% at the end of 2007. "The stimulus would likely bring that down, at least by some degree and possibly by a substantial amount. But the rate increase would still likely be greater than in the previous two recessions, so it is likely that enrollment increases will also be larger," says Mr. Park.
Cuts made, but access preserved
Colorado Medicaid has been experiencing an increase in enrollment of 3,000 more clients a month since January 2008. "The current enrollment-over 430,000 clients-is the highest enrollment since the inception of the Colorado program in 1969," says Sandeep Wadhwa, MD, state Medicaid director.
The state's FY 2008-2009 projection for Medicaid is currently $2.6 billion. "This is an increase of $204 million from the FY 2007-2008 expenditures. This number is expected to grow with the next economic forecast," he says.
"Unfortunately, the state of Colorado is not immune from the global economic crisis," says Dr. Wadhwa. "Colorado's state budget faces a projected $1 billion shortfall in FY 2008-09 and FY 2009-10 because of sharp revenue declines. Most states are in the same boat."
During a time of rising Medicaid enrollment, Dr. Wadhwa says much of the progress Colorado has made in health care reform will be affected by this shortfall.
For example, Gov. Bill Ritter's Building Blocks to Health Care Reform plan included significant provider rate increases, which are important for ensuring access to care for Medicaid clients.
"Provider rates have been included in Colorado's balanced budget initiative for FY 2009-2010," says Dr. Wadhwa.
However, instead of doing across-the-board reductions as it has done in the past, Colorado is working to target the reductions and approach them in a "thoughtful way," says Dr. Wadhwa, that would preserve access to primary care. This is being done by asking providers to identify areas for volume reduction that would achieve the same dollar savings as a rate cut.
"We know that there are areas where there is avoidable and preventable utilization of services. However, it's difficult for us to identify and rectify those areas," says Dr. Wadhwa. "We are asking our providers to identify those areas instead of a rate cut, and they are taking us up on that approach. I believe they recognize that restoring rate cuts can take years. Providers' ideas have been pouring in."
In the midst of a lot of bad news in the state's budget, there is one proposal that Dr. Wadhwa says provides a great opportunity to make substantive progress on health care reform: The Hospital Provider Fee proposal.
"This will allow Colorado to secure a new and dedicated revenue stream for health care without expending state fund dollars," says Dr. Wadhwa.
The proposal generates new revenue through an assessment on hospitals. That new revenue can be used to draw down a dollar-for-dollar federal match. Anticipated funding is expected to cover an additional 100,000 to 200,000 uninsured Coloradans through the expansion of income eligibility for Medicaid and the state's Child Health Plan Plus program, and increase Medicaid and indigent care reimbursement rates for hospitals.
"By covering a significant portion of the uninsured and increasing hospital reimbursement rates, we will reduce uncompensated care and cost shifting in the health care system," says Dr. Wadhwa. "These advances will help make our health care system more sustainable and increase access to care."
Potential cuts of $1.1 billion
Toby Douglas , chief deputy director of the California Department of Health Care Services and the state's Medicaid director, says that his state has not yet seen increases in Medi-Cal enrollment, which is currently at 6.7 million. However, he adds that he is hearing anecdotally from counties that they have seen an increase of applications, though this hasn't yet been seen at the state level.
However, the state is bracing itself for an increase, due to people losing their jobs and private health coverage and turning to the state's Medi-Cal and Healthy Families programs.
As the federal stimulus package is currently written, the Medi-Cal program would receive about $10 billion over 27 months to help out. However, Mr. Douglas notes that the final amount the state would receive is not yet clear, nor are the exact conditions for receiving those funds.
The state's budget has not yet been passed, but the current proposal includes $1.1 billion in cuts to the MediCal program in state and federal funds, including elimination of some optional benefits for adults and changes in eligibility for some programs.
Some reimbursement rate reductions for providers also are going into effect. "We have a $41 billion deficit that we are trying to close," says Mr. Douglas. "Reductions to the Medicaid program are very difficult, painful decisions, but in light of the fiscal condition of the state, Medicaid is the second-largest state funded program with a total budget of $38.5 billion dollars. And it's going to play a part in the budget reduction scenario. Whether or not the stimulus can mitigate some of the reductions remains to be seen."
Contact Mr. Douglas at [email protected], and Dr. Wadhwa at (303) 866-3058 or [email protected].
How much will Medicaid enrollment increase, and how will this ultimately compare to previous downturns? The answers to these two questions still are unknown, according to Edwin Park, a senior fellow at the Center on Budget and Policy Priorities, but both depend on unemployment rates, as well as other economic factors.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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