[O]ne-third of Vermonters are on Medicaid right now, and the high number of enrollees will lead to a budget deficit if legislators don’t make changes to the program soon.
At a presentation to the House Health Care Committee on Wednesday, officials from the Department of Finance reported that about 205,000 people are on Medicaid in Vermont, and 70,000 of those are children.
The number of enrollees and the cost to pay for their health care is higher than the Department of Finance expected — in the current year fiscal budget, the state needs to find another $38.1 million to cover Medicaid costs, and for the FY 2017 budget, it will need to find $58.2 million.
Lawmakers have begun planning to address the FY 2016 deficit, which they will deal with as part of the Budget Adjustment Act when they reconvene in January.
At the meeting Wednesday, committee members asked experts how the state came to have so many people on Medicaid costing the state so much money. There were no clear ideas for paying for the gap, and the Legislature did not pass Gov. Peter Shumlin’s recommended payroll tax in the previous session that would have gone toward Medicaid.
“In the scheme of a $1.5 or $1.6 billion program, to be off about $30 million in one way or another is pretty modest from a forecasting perspective,” said Jim Reardon, the outgoing commissioner of the Department of Finance.
The projection problems and increased costs come from many sources, including pharmaceutical prices, the cost of serving people with disabilities and changes to Medicaid under the Affordable Care Act.
In 2014, when Medicaid was expanded under the ACA, low-income Vermonters who were already being served by the state-created Vermont Health Access Plan moved over to Medicaid. The beneficiaries using the new insurance saw minimal changes, but the administrative change meant the department could no longer use VHAP data to calculate the best budget projections, according to Reardon.
“Changes have caused us to be in a situation where we don’t have the historical data to rely on,” Reardon said.
Additionally, the state received a waiver from the federal government to keep more people on Medicaid without confirming whether they were qualified, according to Stephanie Barrett, associate fiscal officer for the Legislature’s Joint Fiscal Office.
Because Vermont Health Connect was experiencing technical problems, the state has been automatically re-enrolling people in Medicaid instead of reassessing their financial situations in January of each year. Budget writers don’t know how many people are being covered by Medicaid who wouldn’t qualify for it if they had to go through the annual review.
“Medicaid has been auto-re-enrolling folks because of the difficulties of the exchange,” Barrett said. “It makes the forecasting really difficult.”
More than a dozen other factors contribute to the high number of enrollees, according to paperwork from the Department of Finance. The highest single increase is $8.8 million in fiscal year 2016 and $16.2 million in fiscal year 2017 for a group of elderly Vermonters who receive Medicare benefits and also qualify for Medicaid.
Childless adults will cost $4.9 million; many of those people moved over to Medicaid from VHAP, and the state gets a higher-than-usual match from the federal government to serve those people. Vermonters with developmental disabilities and some mental health issues will cost the state $8.2 million in fiscal year 2017.
A new drug to treat Medicaid patients with cystic fibrosis will cost the state $3.6 million. Costs associated with treating autism will be $2.4 million; payments to accountable care organizations for meeting certain cost-savings goals will be $2.9 million; and it will cost the state $7.4 million to continue paying Medicare Part B for low-income Vermonters.
Rep. Paul Poirier, I-Barre, said the House Appropriations Committee, which will discuss rescissions in December, can either figure out how to raise revenue or make cuts to Medicaid.
Reardon told the committee the Legislature’s options are more nuanced: “You could make changes in policy. You could serve the same amount of people but do less.”
