Medicaid expansion has been more popular than expected, but that raises a question of whether it will really pay for itself

Kentucky officials say the state’s Medicaid expansion under the federal health-reform law has enrolled more residents and created more jobs than expected, but a study will see whether the expansion will pay for itself, as an earlier study and Gov. Steve Beshear predicted.

Eric Friedlander, deputy secretary of the Cabinet for Health and Family Services, reported both a larger-than-expected Medicaid enrollment in every county and an increase of 17,000 jobs in Kentucky from Medicaid expansion at Monday’s meeting of the legislature’s Interim Joint Committee on Appropriations and Revenue.

Friedlander also discussed other benefits of Medicaid expansion, saying Kentucky health-care providers had received $892,973,500 in reimbursements from January to October of 2014, reports Brad Bowman of The State Journal in Frankfort.

Cabinet Secretary Audrey Haynes told Kentucky Health News on Tuesday that on the previous Friday, the cabinet had passed $1 billion in payments of federal money to health-care providers for treatment of people newly eligible for Medicaid: those with household incomes between 69 percent and 138 percent of the federal poverty level. About half the money has gone to hospitals, she said.

Still, many providers, particularly in rural areas, have reported cash-flow problems caused by delays in payment from Medicaid managed-care companies, lower-than-cost reimbursements and increased administrative burdens.

Also, some legislators have expressed concern about the cost of expanding Medicaid rolls, which grew more than predicted by a study that Beshear cited in his expansion decision. As the law outlines, the federal government will pay 100 percent of the costs until Jan. 1, 2017, when the state will begin paying a small share rising to the law’s limit of 10 percent in 2020.

Republican Sen. Chris McDaniel of Taylor Mill, who is running for lieutenant governor on the gubernatorial slate headed by Agriculture Commissioner James Comer, asked Friedlander what Kentucky’s financial obligations would be because of the expansion in the next few years. He said that is uncertain.

Under initial estimates, based on the study by PriceWaterhouse Coopers, expansion was expected to cost the state only about $150 million a year when it was paying 10 percent of the cost. But the study only forecast that fewer than 300,000 newly eligible Kentuckians would sign up for Medicaid in the first year, but about 337,419 did.

To get updated cost projections, Beshear has contracted for a second analysis by an independent agency, which Friedlander said should be completed by mid-January, reports Ronnie Ellis of CNHI News Service.

The governor said the new study will speak for itself, reports Tom Loftus of The Courier-Journal. “I was confident after that initial report that we could certainly afford down the road over the next eight years to expand Medicaid and stay within our budget. I’m still confident,” Beshear said.

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2 Replies to “Medicaid expansion has been more popular than expected, but that raises a question of whether it will really pay for itself”

  1. Justin Tapp

    Where, exactly, are you getting the $50 million/year cost after 2021?
    The PriceWaterhouse Coopers report says (Pg. 7): "In state Fiscal Year 2021 (July 1, 2020‐June 30, 2021) Kentucky’s share of the direct Medicaid cost of serving the newly eligible population is $151 million."

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