Study: Colorado's Medicaid covers more services than private insurance

Colorado's Medicaid program is covering more medical services than the average private health insurance plan, which helps to explain why the state's healthcare costs have soared in the last several years, crowding out other priorities, according to a new report.

The report from the Common Sense Institute said "Health First Colorado" — the state's Medicaid — offers a "more expansive, and generous, range of services for its enrollees than do other types of health insurance in the state."

The report tied the expansive coverage to Colorado's funding woes, noting that, since 2019, new healthcare laws added some $858 million in ongoing yearly costs to the state budget. Of that, 88% resulted from changes to state-covered services, the report said.

The report compared coverage across 88 medical service categories under Health First Colorado, individual marketplace insurance, and large-group employer-sponsored insurance plans. While Health First Colorado covered up to 80 of the 88 services, individual marketplace plans covered an average of 65. Employer-sponsored plans, on the other hand, covered 62.

Services offered by Health First Colorado that aren't typically covered by individual or employer-sponsored insurance plans include non-emergency medical transportation, long-term or custodial nursing facility care, equine therapy, personal care, attendant and homemaker services, and massage therapy.

The report said that some differences in coverage, such as long-term support services for older and infirm residents, are "more appropriate to the scope of Medicaid than others."

The report added that differences in coverage — not just the fact that Medicaid populations are among the most expensive and risk-prone — also explain why Medicaid spending per enrollee exceeds statewide health-care spending per capita, even when its reimbursement rates are three times less than private insurance.

The report noted that a legislative Commission on Medicaid is now looking into whether cutting Medicaid benefits is needed to control costs, given the sharp rise in spending and losses in federal funding.

Sen. Judy Amabile, D-Boulder, who chairs the commission, said the fastest-growing spending areas are long-term services and supports, pharmacy benefits, behavioral health, and administrative costs.

"Kids with very serious and complicated disabilities, kids who are in wheelchairs and need trach tubes, kids who are on oxygen, kids who need 24/7 care, as well as older people who need nursing home-level of care," she told Colorado Politics news partner 9News.

If the state's Medicaid spending keeps rising, policymakers will be forced to cut funds for other critical services like K-12 and higher education, Rep. Emily Sirota, D-Denver, who chairs the General Assembly's Joint Budget Committee, earlier told Colorado Politics.

Those sectors have already dealt with budget cuts, including an $82 million reduction for the Department of Education and a $2 million cut to the Department of Agriculture.

Indeed, Medicaid spending has overtaken K-12 education as the largest line item in the state budget.

"What's even more alarming, over the past five years, Medicaid expenses have averaged 19%," state Rep. Rick Taggart, a Grand Junction Republican, earlier said. "This is not sustainable under any stretch of the imagination."

Jointly funded by the state and federal government, Medicaid provides health coverage to low-income residents, including children, pregnant women, seniors and people with disabilities. For some, the program provides services that can be difficult to replace — from in-home care to therapies that help people with disabilities maintain their independence.

The program is overseen in Colorado by the Department of Health Care Policy and Financing or HCPF.

Twenty years ago, it covered about 560,900 Coloradans — or roughly 12% of the state's population, according to a federal report. Today, Colorado Medicaid covers about 1.3 million people.

Over that time, the agency's staffing more than tripled — from about 257 full-time employees to roughly 841 — far outpacing enrollment growth.

A recent analysis by The Denver Gazette shows Medicaid spending in the state has grown every year over the past two decades, except fiscal year 2016-17, when HCPF's budget decreased by $34.7 million.

Rising pharmacy, behavioral health and long-term care costs are among the drivers — despite enrollment dropping after the "unwind," when pandemic-era coverage protections ended.

And while Medicaid costs are rising nationwide, Colorado stands out for how much of its budget is devoted to the program.

Nationwide, Medicaid accounts for about 19% of state expenditures, according to KFF, formerly the Kaiser Family Foundation, a source for health policy research. Only New Hampshire's share is higher than Colorado.

The state's Medicaid program has nabbed headlines in recent months with allegations of a fraudulent billing ring, improper payments for autism therapy and exploding cost in a relatively new program meant to provide health care to pregnant women and children illegally staying in the U.S.

Federal prosecutors have charged two Medicaid transportation providers with fraud and bilking taxpayers of more than $500,000 in proceeds used for luxury vehicles, jewelry and cosmetic surgery. State officials also said they detected $25 million in abnormal billing — a surge that prompted a new state law and the suspension of dozens of providers.

Medicaid's non-emergent medical transportation program covers rides for beneficiaries who lack other means of transportation to medically necessary, non-emergency services. Providers are typically reimbursed based on mileage and level of service.

The CSI report said that aging populations and worsening public health, among other factors, likely mean that soaring healthcare costs is a "fundamentally intractable" problem.

Still, the report said, reducing overspending and cutting "nonessential coverage" can offer relief to the state's funding woes.

"This means that the right policy recommendations can still repair, for at least the near future, the state's public health-insurance system and buy more time for its rescue from the brink of failure," the report said.

Nico Brambila contributed to this article.

Distributed by Newsbank, inc.