States Set on Medicaid Reforms
Whatever states ultimately decide to do, rising health care costs are a reality, and finding solutions is a priority.
Medicaid is one of the fastest-growing areas of federal expenditures and makes up close to a third of most state budgets. With Medicaid expansion costs ballooning past expectations, many states are looking for ways to rein in costs and implement reforms. These reforms are essential as the possibility of Washington lowering federal contributions to expansion financing is increasingly likely.
The House budget resolution passed earlier this month called for $880 billion in cuts to non-Medicare spending over the next ten years. This would necessarily involve cuts to Medicaid spending. As we have discussed previously, reductions in federal financing of Medicaid expansion could have a dire effect on state budgets. States that refused to expand their Medicaid programs are likely breathing a sigh of relief.
Idaho has one of the strongest reform bills in HB 345, recently signed by Governor Brad Little. The Idaho law aims to control costs, enhance oversight, and adjust eligibility and coverage parameters. It requires Idaho’s Department of Health and Welfare (IDHW) to get legislative approval for any state plan amendments or waivers that expand Medicaid coverage, benefits, or eligibility. The law also shifts Idaho’s Medicaid program administration to a managed care organization—a move aimed at controlling costs and avoiding duplicative treatments.
HB 345 also addresses some key financial concerns. It authorizes IDHW to cut Medicaid expansion if federal funding decreases, including new work requirements, and expand cost-sharing provisions to some enrollees to ensure the long-term financial sustainability of Idaho’s Medicaid program.
Indiana is also tackling Medicaid reform to address cost concerns as the state’s Healthy Indiana Plan (HIP) is growing faster than its revenue increases. SB 2 would overhaul HIP and increase legislative oversight by requiring regular eligibility evaluations and for the Indiana Family and Social Services Administration to regularly submit data related to improper payments, fraud, and fund recovery. SB2 also contains work requirements to maintain eligibility. The legislation passed Indiana’s Senate and is in the House Public Health Committee.
These are just two examples of states that are looking for ways to control costs and increase oversight. Medicaid expansion states face enrollment and costs that far exceed initial predictions, and the possibility of cuts in federal funding could put significant strain on state budgets. There are other solutions like “trigger laws” that some states already have in place. These laws roll back coverage of the Medicaid expansion population if federal funding drops below a set limit. South Dakota is looking to join the states that have already passed these laws.
Rising health care costs are a concern for all states. Whatever solution they decide to implement, the challenges to state budgets are going to be significant. States are learning that Medicaid expansion isn’t the free lunch, or the panacea proponents promised.
Whatever states ultimately decide to do, rising health care costs are a reality, and finding solutions is a priority.