The Medicaid program is projected to be over budget in fiscal year 2017, and the state’s portion of the cost will be roughly $60 million to $70 million, according to the Joint Fiscal Office.
The estimated Medicaid cost overrun in 2017 will put significant pressure on the General Fund next year and could push the budget gap over the $100 million mark.
Stephanie Barrett, a fiscal analyst for JFO, says there is also an anticipated Medicaid budget gap of $30 million in the current budget year that will be addressed in the mid-year budget adjustment process, which starts in December.
“We know it’s at least $30 million and probably a little higher,” Barrett said. “We built 16 [the fiscal year budget] thinking it would moderate.”
Officials from the Department of Finance and Management and the Joint Fiscal Office are expected to come to consensus on the Medicaid projections in the next few weeks. Members of the House Health Care Committee lawmakers will take up the issue in a hearing on Wednesday afternoon.
Jim Reardon, the outgoing commissioner of Finance and Management, said “the numbers are pretty significant.”
“The big question for me is once we do the work to come to consensus, after that, how do you solve the issue?” Reardon said.
The factors that are driving up the cost of the federal health care program for low-income people aren’t going away.
That’s because over the past five years, the Shumlin administration has dramatically increased the number of people who qualify for Medicaid under the Affordable Care Act. While more state residents than ever have coverage, the expansion of the program has come at a cost.
In 2011, roughly 169,000 Vermonters used the program; today more than 200,000 people, or one-third of the population is on Medicaid.
The total cost of the program, most of which is subsidized by the federal government, has gone from $1 billion to $1.56 billion over that same period.
Preliminary figures show that additional factors are driving up the cost of the program, including:
A change in the federal match rate. While the federal government is paying a much higher rate for young adults in the Medicaid program, the average match rate for patients is going down. On a $1.56 billion budget, every tenth of a percent change in the rate has an impact on the General Fund.
The Shumlin administration didn’t budget roughly $25 million gross or $11 million in state dollars for a 53rd week of Medicaid payments for health care, mental health and disability services. The extra week could be pushed into the following budget year.
Costly new cystic fibrosis treatments that cost $259,000 per year. JFO estimates the treatment will cost $10 million gross. The state portion would be $3 million to $4 million.
A 50 percent increase in Medicare premiums for people enrolled in Part B, which covers outpatient hospital services, home health and doctors. The state pays the premium for Vermonters over the age of 65 who are low income (138 percent of poverty) and qualify for Medicaid. If the state picks up the difference, the increase in cost would be $7.5 million. The New York Times reports that premium increases could affect about 30 percent of people enrolled in Part B of Medicare.
