Colorado Moves Forward with Obamacare by Expanding Medicaid

January 7, 2013

WALLER: “[T]he governor’s plan doesn’t address concerns that this expansion could potentially cost upwards of $800 million”

DENVER—Whether Obamacare represents a much-needed revolution in health coverage or a fiscal disaster waiting to happen, it appears that Colorado will be one of the first states to find out.

Gov. John Hickenlooper announced last week plans to expand Medicaid coverage in keeping with President Obama’s Affordable Care Act, making Colorado one of 15 states so far to signal its participation in the effort.

The proposed expansion, authorized under President Obama’s Affordable Care Act, would extend coverage to an additional 160,000 adults at a cost the governor estimated at $128 million over the next 10 years.

At a news conference, the governor emphasized that the state had identified $280 million in cuts and savings that would more than cover the additional costs. They include reducing waste, improving technology for Medicaid-funded doctors, and emphasizing preventive health measures such as weight loss that reduce health-care costs in the long run.

“We worked diligently over the past several months to find savings in order to expand coverage,” said Hickenlooper. “Not one dollar from the state’s general fund will be used for this expansion, even in 2017, when the federal government begins to reduce its share.”

Under the Affordable Care Act, the federal government is slated to cover the costs of newly eligible Medicaid patients through 2016. After that, the costs to the states gradually increase before topping out in 2020, when Colorado will be required to cover 10 percent of the tab.

Critics argue that the federal government’s promise to cover nearly all the costs of the expansion is likely too good to be true. Linda Gorman, health-care analyst at the Independence Institute, called the governor’s move “reckless” and his cost estimates “the pie in the sky they always feed us” on her website.

In a Sunday column in the Pueblo Chieftain, Gorman said the states will be responsible for picking up the administrative costs associated with Medicaid expansion, which she said average $2.48 for each additional $100 of state spending.

“Plus, the Obama administration’s FY 2013 budget has already proposed making states pay more,” said Gorman.

Republicans were equally leery about whether the Medicaid rolls could be expanded so dramatically without risking the state’s financial future.

“We cannot improve the well-being of Colorado if we bankrupt ourselves in the process,” said House Minority Leader-elect Mark Waller.

He referred to a report from the Kaiser Family Foundation and the Urban Institute estimating that expanding Medicaid would cost Colorado up to $858 million over the next decade.

“I’m disappointed the governor’s plan doesn’t address concerns that this expansion could potentially cost upwards of $800 million,” said Waller. “We’ve already scaled back Medicaid once because of costly and inaccurate forecasting, let us make sure we’re not repeating those mistakes under the governor’s plan.”

The governor challenge that estimate Thursday, saying it failed to take into account the state’s tobacco settlement and other revenue.

House Speaker-elect Mark Ferrandino praised the governor’s plan, saying it would result in “a healthier Colorado” without sending health-care costs soaring.

“If we combine cost controls and smarter, outcomes-oriented payment systems, we can expand Medicaid and not break the bank,” said Ferrandino.

The Democratic leader said he plans to sponsor legislation with Sen. Irene Aguilar to enable portions of the governor’s proposal.

But Republican state Rep. Cheri Gerou warned against depending too heavily on promises of federal funding.

“As the governor mentioned during his press conference today, ‘nothing is certain’ regarding federal funding,” said Gerou. “Details on how the governor plans to contain costs and cover the funding gap once federal funds diminish remain to be seen.”

Expanding Medicaid is a critical piece of Obamacare, but last year’s Supreme Court ruling said the expansion is voluntary for states, not mandatory. Fifteen states and the District of Columbia have indicated they will proceed with the expansion, while governors in nine states have said they will decline to do so, according to the Advisory Board Company.

The other states that have moved to participate in the Medicaid expansion are Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Massachusetts, Maryland, Minnesota, Missouri, Nevada, Rhode Island, Vermont and Washington, according to the ABC.

In Colorado, the Department of Health Care Policy and Financing is in charge of implementing the Affordable Care Act.

“We are focusing on transforming our health system to ensure all Medicaid recipients have access to the right services, at the right time, in the right setting and at the right price,” said department executive director Susan E. Birch.

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