Repeal of Medicaid expansion could worsen Pennsylvania budget, state officials say

Jan. 24--Eliminating Pennsylvania's Medicaid expansion would impact many more people than the nearly 700,000 who have signed up for the program in the past two years, state officials said Monday in Harrisburg.

Reverting to a pre-Affordable Care Act version of Medicaid could increase Pennsylvania's state budget deficit by hundreds of millions of dollars and threaten tens of thousands of jobs, Auditor General Eugene DePasquale and Treasurer Joe Torsella said during a news conference.

"It will exacerbate an already difficult and troubled budget situation," Torsella said.

Pennsylvania faces an estimated budget deficit for the current fiscal year of about $600 million, a number that the state's Independent Fiscal Office has estimated will grow to about $1.7 billion for the next fiscal year.

DePasquale and Torsella, both Democrats, cited a new report from the left-leaning Pennsylvania Budget and Policy Center that estimates repealing the ACA without replacing it would add $1.4 billion per year to the state's structural deficit.

As President Trump and a Republican-led Congress advance plans to repeal the federal health care law, Pennsylvania and other states that expanded Medicaid under the law are fighting to preserve the federal funds that the expansions bring into states.

Gov. Tom Wolf sent letters to Congress in December outlining the health law's benefits. State Rep. Dan Frankel, D-Pittsburgh, said he plans to launch a study in the next week or two that would gather facts about the state impacts of repeal.

"When you take a look at the folks who have an interest in this, who will be impacted by it, it's quite literally every Pennsylvanian," Frankel said. "What will happen if a million Pennsylvanians lose their health insurance -- somebody somewhere ends up paying for that. It's not just in dollars and cents, but it's also in human capital."

Sen. Lisa Baker, R-Lehman Township, chairwoman of the Senate's health and human services committee, provided a prepared statement saying health care reform is needed while saying it is too early to discuss particulars.

DePasquale and Torsella cited recent studies as well as some from before the expansion to underscore the potentially far-ranging impacts of eliminating the expansion without some kind of substitute.

The $1.4 billion deficit figure they cited included in its estimate a projected loss of $300 million in tax revenues that would go away with the lost jobs. The organization estimates 137,000 people would lose jobs as the result of an ACA repeal. DePasquale and Torsella said other reports had estimated closer to 30,000 job losses.

The report includes spending and savings from a long list of other changes associated with the federal health law.

DePasquale and Torsella said the federal government has paid about $3 billion toward the cost of treating people who have signed up for Medicaid since the expansion. Under the terms of the expansion, the federal government paid 100 percent of costs for the expansion population through 2016.

Starting in 2017, the state has to contribute 5 percent of costs. The Independent Fiscal Office has estimated the state's share for fiscal year 2017-18 at about $240 million.

The state's portion increases gradually to 10 percent by 2020. The IFO estimates the state's share will increase to about $680 million for fiscal year 2021-22.

The office pointed out that the state spent about $600 million per year before the Medicaid expansion to insure about 80,000 people in a program called General Assistance. The program, which the state eliminated when it expanded Medicaid, had stricter eligibility criteria than Medicaid.

When the state's spending on the Medicaid expansion is compared to its savings from the General Assistance program, the expansion is more or less a wash, according to the IFO's projections.

The officials said Medicaid paid for treatment related to opioid abuse for about 63,000 people in 2015 and needed care for hundreds of thousands of others.

"We believe it would be a serious mistake to alter the Medicaid expansion that's brought predictability and a sense of confidence to so many about their health care needs," Torsella said.

Carly Atchison, a spokeswoman for Rep. Tim Murphy, R-Upper St. Clair, sent a prepared statement critical of the Medicaid expansion's opioid treatment efforts.

"Pennsylvania's experiment in Medicaid expansion hasn't delivered on its promise for substance use disorders," according to the statement. "Instead this ineffective, inefficient system has been a failure, leaving families in addiction crisis crying out for help and real treatment, such as inpatient services. As has always been his goal, Congressman Murphy will continue working for real reforms to deliver real treatment to those who need it most."

Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676 or wventeicher@tribweb.com.

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