Each year at renewal time, Idaho’s businesses face the ever-increasing costs of providing health insurance for their employees. However, many businesses fail to realize that a portion of each health insurance premium reflects the costs associated with health care provided to Idaho residents who have no insurance. Idaho’s health care providers write off millions of dollars of uncompensated care each year for services provided to patients with no insurance. Those very real costs are then passed on to the health insurance companies who have no choice but to include these costs in their insurance premiums. The much-maligned Patient Protection and Affordable Care Act (ACA) includes specific provisions intended to reduce some of the costs for uncompensated care that now falls on Idaho’s businesses and their employees.
Beginning in 2014, the ACA will require individuals and families to obtain health insurance coverage, or face ACA-mandated penalties. As initially passed by Congress, the ACA was intended to provide access to health insurance for low-income individuals and families by requiring the states to expand Medicaid coverage to those individuals and families who make less than 138 percent of the federal poverty level ($31,810 for a family of four). States that failed to expand Medicaid faced the penalty of losing all federal Medicaid funding (approximately 70 percent of all Medicaid funding). However, the ACA’s mandatory expansion of Medicaid was short-lived. In June 2012, the U.S. Supreme Court concluded that the federal government could not penalize states for not expanding Medicaid programs. As a result, expanding Medicaid is now optional for states.
In response to the Supreme Court’s decision, Governor C.L. “Butch” Otter established the Idaho Workgroup on Medicaid Expansion. On December 3, 2012, the workgroup recommended that Otter expand Idaho’s Medicaid program. The workgroup conditioned its recommendation on an overhaul of Idaho’s Medicaid program which would increase personal accountability of Medicaid plan participants and motivate those plan participants to utilize prevention and behavioral strategies that would improve their health care outcomes.
The workgroup also conditioned its recommendation on the redesign of Idaho’s health care delivery system that would provide payment incentives to health care providers, encouraging them to keep people healthy. The 2013 Legislature briefly considered the expansion of Medicaid at the end of the 2013 session, but chose to further review the issue and revisit it in 2014.
The decision to expand requires a basic understanding of how many of Idaho’s working poor currently receive health insurance coverage and health care. As it now stands, Idaho’s children are eligible for Medicaid if they are disabled or are from families with incomes below 185 percent of the federal poverty level ($42,650 for a family of four). However, for the parents of these children to be eligible for Medicaid, the family’s annual income must be less than $4,600 for a family of four. Medicaid expansion in Idaho would add approximately 80,000 individuals to Medicaid.
Currently, Medicaid does not, and was not intended to, provide health care coverage for many of Idaho’s working poor. As a result, many go without health care or belatedly access the health care system at a time when treatment is much more costly and often more difficult. For some indigent individuals, health care is paid for by county indigency funds and by the state’s catastrophic care program − two programs that cost state and local taxpayers almost $70 million each year.
Under the ACA, the federal government pays 100 percent of the Medicaid expansion costs for the first three years of the program. Beginning in 2017, the federal government will pay 90 percent of the costs of Medicaid expansion, with states paying the remaining 10 percent. In Idaho, Medicaid expansion legislation will likely include legislation eliminating the state and county indigency programs, saving almost $70 million each year. With that savings, the current estimates are that Medicaid expansion would actually save the state $84.6 million over ten years.
While the opponents of the ACA are many, as a practical matter, it is hard to argue against a federal program that will actually save the state money and that may very well provide businesses with relief from ever-escalating health insurance premiums. Many Idaho businesses and business groups realize the benefits that Medicaid expansion will bring to Idaho’s business community and are supportive of such legislation. It certainly remains to be seen whether Idaho’s Legislature has the stomach to hold its nose and take another dose of Obamacare in 2014.
Mr. Mortell is a partner at Hawley Troxell and chairs the firm’s health law practice group. He can be reached at [email protected].