Medicaid coverage under Republican health plan could cost RI up to $70 million by 2021

March 18--Rhode Island may need to spend another $25 million to $30 million to keep 70,000 low-income adults from losing their Medicaid coverage under the House Republicans' plan to replace the Affordable Care Act in 2020, according a preliminary analysis performed by health experts for The Providence Journal.

And that's just in the first year. In 2021, the additional cost is projected to run between $65 million and $70 million -- an expense, some experts say, the state would likely be unable or unwilling to absorb.

The preliminary analysis, provided by former state Health Insurance Commissioner Christopher F. Koller and reviewed by several local health experts, is the first publicly released estimate of the impact of the proposed funding cuts on Rhode Island's Medicaid expansion program.

The Republican plan to replace Obamacare would dramatically reduce the amount of funding the federal government provides to help states pay for Medicaid, according to the Congressional Budget Office report released this week.

Medicaid insures close to 300,000 Rhode Islanders, or nearly one-third of the population. State health experts say the first hit from the proposed changes would be to the state's Medicaid expansion population -- roughly 70,000 adults who became newly eligible for coverage in 2014 under Obamacare.

Rhode Island is among 31 states, along with the District of Columbia, that adopted the federal law's expanded eligibility criteria for Medicaid. In Rhode Island, that meant low-income adults who are not disabled and have no dependent children. Their coverage currently costs $450 million -- or one-fifth of the state's $2.3-billion Medicaid program.

Even some observers who differ over the appropriateness of the growth of the state's Medicaid program agree about the impact of the GOP plan on the 70,000 residents in the expansion population.

"The American Health Care Act would for all practical purposes end ACA's Medicaid expansion in 2020," said Gary Sasse, founding director of the Hassenfeld Institute for Public Leadership at Bryant University.

Linda Katz, co-founder and policy director of the Economic Progress Institute in Providence, said the proposed cuts to the Medicaid expansion program would "eviscerate coverage for 70,000 adults ... threatening their access to primary care, medication and life-saving health care services."

Here's why. Rhode Island currently pays 5 percent -- $22.5 million -- of the program's $450-million cost. The other 95 percent is paid for by the federal government. The federal government's contribution is scheduled to incrementally drop to 90 percent by 2020. Under Obamacare, it would never fall below 90 percent.

But the GOP plan would cut the federal reimbursement rate for the Medicaid expansion population in 2020 to 50 percent for all new Medicaid beneficiaries and anyone who falls off the Medicaid rolls for 30 days or longer and then attempts to re-enroll.

Katz calls this a "stealth way" of eliminating their health coverage.

That's because in any 12-month period, anywhere from 23 percent to 27 percent of the people covered under the state's Medicaid expansion program will fall off the rolls, according to estimates from the state Executive Office of Health and Human Services.

They include low-wage earners who work multiple part-time or seasonal jobs whose income fluctuates, state officials say, causing them to fall off the Medicaid rolls when their income rises and re-enroll again when it drops. The fluctuations make for a high rate of "churn" in the Medicaid expansion rolls.

To get an idea of the potential costs of the GOP plan for Rhode Island's Medicaid expansion population, Koller -- the former state health insurance commissioner, now president of the Milbank Memorial Fund in New York City -- looked at what could happen if 25 percent of the roughly 70,000 beneficiaries fell off the rolls for 30 days or longer and then re-enrolled at the proposed lower federal cost-sharing rate of 50 percent.

The estimates are based on state projections for the number of Medicaid expansion beneficiaries and the costs of their benefits for fiscal 2018. (The state could not provide 2020 projections.) The analysis also assumed no changes in either enrollment, eligibility criteria or health care costs. As a result, these are conservative estimates of additional state costs under the Republican's reduced cost-sharing plan.

Predicting how much it might cost the state to cover the roughly 70,000 adults in the Medicaid expansion population under the Republican plan is especially difficult, health experts say, because people move on and off the rolls. If, for example, the job market weakened and people who had left the Medicaid rolls return, the lower federal cost-sharing rate means they'd be much more expensive to re-enroll.

"While certainly we'd support the state continuing to fund the Medicaid expansion population," Katz said, "the reality is ... it would be very difficult to replace with state dollars the federal dollars and keep people insured."

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