ATLANTA — More than a dozen states that opted to expand Medicaid under the Affordable Care Act have seen enrollments surge way beyond projections, raising concerns that the added costs will strain their budgets when federal aid is scaled back starting in two years.
Some lawmakers warn the price of expanding the health care program for poor and lower-income Americans could mean less money available for other state services, including education.
In Kentucky, for example, enrollments during the 2014 fiscal year were more than double the number projected, with almost 311,000 newly eligible residents signing up. That’s greater than what initially was predicted through 2021. As a result, the state revised its Medicaid cost estimate from $33 million to $74 million for the 2017 fiscal year. By 2021, those costs could climb to a projected $363 million.
“That is a monstrous hole that we have got to figure out how to plug, and we don’t know how to do it,” said Kentucky state Sen. Chris McDaniel, a Republican who leads the Senate budget committee and opposed expansion. “The two biggest things that keep me up at night are state pensions and the cost of expanded Medicaid.”
For patients who have only recently gained access to health care, the program is about far more than dollars and cents. And supporters downplay the budget concerns, pointing to studies that indicate the economic benefits of expanding health care will result in significant savings over time.
Several expansion states have revised their budget estimates because of the larger-than-expected enrollments, according to an Associated Press review.
Supporters of the expansion, including Kentucky Gov. Steve Beshear, predict their states will save money in the long run because Medicaid will allow some state-run services to be eliminated and will stimulate the economy through new revenues and job creation. Beshear, a Democrat, released a study this year touting the creation of 12,000 jobs and nearly $1.2 billion of new revenue to health care providers as a result of expansion.
Thirty states and the District of Columbia have expanded Medicaid, or plan to do so, to include all adults with incomes at or below 138 percent of the federal poverty level, currently $16,243 for an individual.
The federal government agreed to pay all costs for the new enrollees through 2016, but it will begin lowering its share in 2017. States will pay 10 percent of the costs by 2020.
In the expansion states, enrollment for Medicaid and a related program for children have increased an overall 28.2 percent compared with a three-month period before the law’s implementation, according to the federal government. In a recent report, economic experts at the U.S. Department of Health and Human Services said they expect estimated enrollment and per-person cost increases to level off and even decline over the long run.
At least 14 states have seen new enrollments exceed their original projections, causing at least seven to increase their cost estimates for 2017, according to an Associated Press analysis of state budget projections, Medicaid enrollments and cost details in the expansion states. A few states said they could not provide original projections.
California has enrolled nearly 2.3 million people so far — almost three times more than the 800,257 the state had anticipated. Enrollment in neighboring Washington more than doubled. Oregon’s new enrollments have exceeded estimates by 73 percent.
Some states that expanded their Medicaid programs prior to the federal health care law are also seeing enrollment increases based on people signing up because of increased publicity and outreach efforts.
In states where ongoing discussions over Medicaid expansion have yet to be resolved, opponents are quick to cite the surging enrollments and costs. Last month, Republicans in the Florida House repeatedly warned about the costs before soundly defeating an expansion bill.
The very nature of Medicaid — that enrollments typically increase in tough economic times — means states must be strong enough financially to continue supporting the expanded program even in future downturns.
An Associated Press review this year found at least 22 states were dealing with budget shortfalls for the 2016 fiscal year.
“In those states that do have budgetary balance, it’s somewhat tenuous,” said credit analyst Gabriel Petek with Standard & Poor’s Ratings Services. Add the cost of rising Medicaid enrollments and “something has to give. Most likely, it means they have to spend less in other areas or they have to increase their tax revenues.”
Supporters of expanding Medicaid say states eventually will save money by doing away with some of their own services for the uninsured, such as mental and behavioral health programs, and by reducing payments to hospitals and other providers for treatment of the uninsured.
Kentucky saved $9 million in 2014 as enrollees in behavioral and mental health programs were fully covered by Medicaid, according to a report by the State Health Reform Assistance Network, a program of the Robert Wood Johnson Foundation. Some states, including West Virginia and Arkansas, are reporting costs are lower than expected.
