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Report says Medicaid expansion would spur state's economy

State House Bureau

January 11. 2013 1:29PM

CONCORD – Expanding the Medicaid health care program for the poor and disabled under the Affordable Care Act would help the state'?s economy, but have minimal effect on state government'?s bottom line according to a report released Friday.

If lawmakers decide to expand Medicaid, the number of uninsured residents will decline from about 170,000 to 71,000, while health care providers could see an additional $3.5 billion in public and private dollars under the federal act.

The report by the Lewin Group explores the pros and cons for the Department of Health and Human Services and the state of expanding the Medicaid program to all adults earning 138 percent of the federal poverty level or less.

The first phase of the report released late last year estimated expanding Medicaid would cost HHS $85 million, would provide approximately $2.5 billion in federal revenue for health care providers and cover about 58,000 people currently uninsured.

The second phase of the report released Friday explores the effects of expansion on individuals and families, health care providers, state government finances, the state'?s economy and health insurers.

Under the second phase, the group projects that all but $18 million of the state?s $85 million cost to expand Medicaid for the next seven years will be offset through reductions in health care costs for state employees and prisoners and increases in state revenue.

There is a lot to like in the Lewin report, said Lisabritt Solsky, Deputy Medicaid Director, noting the question of expansion is complex with wide-ranging changes for those impacted. ?There are winners and losers,? she said. ?You have to look across the silos to see the greater good for the state as a whole.?

She noted department commissioner Nicholas Toumpas wants the agency to remain neutral on the issue leaving the decision to lawmakers.

?The governor and legislature have signaled a lot more traction exists for expansion than a few months ago,? Solsky noted. Former House Speaker William O?Brien opposed expanding the program and has a bill this session that would prohibit the state from expanding Medicaid.

The report indicates that large hospital health systems? bottom lines will not improve under expansion although revenues will increase, while federally subsidized health clinics and community mental health centers will see financial benefits.

Solsky explained, the relatively low state reimbursement rates for Medicaid services versus the relatively higher reimbursement rates paid by private insurers is the reason the large hospital health systems do not fair as well under expansion.

The greater the number of people insured through private companies the greater the revenue for the hospital health systems she explained.

Expansion will add about 700 jobs (mostly in the health care field), reduce out-of-pocket health care spending for individuals and families, and increase state revenue, particularly the insurance premium tax, according to the report.

Insurance premium tax revenues fund the Insurance Department, and Solsky noted, there are policy options to explore such as whether returns from the three private managed care companies the state hired to administer the Medicaid program should go back into the health insurance program.

Over the seven-year period from 2014 to 2020, the Insurance Premium Tax is projected to produce about $50 million.

Private health insurers will see significant changes in the market, mostly in the individual market as the insurance mandate becomes law, but there will be little affect on the large and small business sectors, according to the report,

Without expansion, the report says, private insurers will see a greater number of customers in the individual market.

Whether Medicaid is expanding or not, the number of uninsured in New Hampshire would be reduced significantly under the ACA, but 22,000 more residents would be insured if program eligibility is expanded according the report.

?Under Medicaid expansion, the reduction in number of uninsured will vary by geographic area. Hillsborough and Rockingham Counties will see the largest absolute reductions in the uninsured under Medicaid expansion,? according to the report.

Without expansion, the report says, the uninsured will continue to financially strain existing public health programs and safety net providers.

Expansion will increase state revenues, mostly from the Medicaid Enhancement Tax by $127.3 million over the seven years, while revenues are projected to increase $114.1 million without expansion for a difference of $13.2 million according to the report.

The US Supreme Court ruled in June that the ACA's proposed Medicaid expansion is optional for states. Some states have already decided to opt out of the expanding the program.

State lawmakers will have to decide over the next few months if New Hampshire will expand eligibility for Medicaid.

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