[T]he Legislature’s budget managers say high caseload, growing pharmaceutical prices, and payments for shared savings programs are driving up the cost of Medicaid in Vermont.
Additionally, lawmakers say they built the current year’s budget around low projections that were made much earlier than the budget was written. The gap they’re facing in fiscal year 2016 will turn into a budget deficit if lawmakers don’t make adjustments.
On Friday, the Joint Fiscal Office estimated that Vermont’s Medicaid program has an additional $105.8 million in pressures for the current fiscal year and will have $121.4 million in additional pressures for fiscal year 2017, which starts in July 2016.
The federal government will pay for the majority of those costs. But it leaves Vermont with $36.7 million to come up with this year through the Budget Adjustment Act and $54.1 million to budget for in fiscal year 2017. (Those numbers are adjusted from $38.1 million and $58.2 million, respectively, estimated in October.)
Lawrence Miller, the chief of health care reform in Gov. Peter Shumlin’s cabinet, said the state made an estimate that was too low when it projected how many people would be on Medicaid and how much it would cost in 2016 and 2017.
“The forecasts just weren’t as good as they could’ve been,” Miller said. He said the state has accumulated more data and may be able to make better projections in the future.
The highest category of Vermont’s costs — $14.2 million this year and $29.3 million in fiscal year 2017 — come from caseload pressures, meaning paying the per-person cost for Vermonters who use Medicaid. Vermont has 205,000 people on Medicaid, or about one-third of the population. Enrolees include about 143,000 people in an income-based program, and the rest are in a program for people with certain disabilities.
Vermont must spend $2.2 million this year and $3.6 million in fiscal year 2017 to pay for a new cystic fibrosis drug called Orkambi. The state is expected to spend $1.3 million in both years for applied behavioral analysis, a method for improving behavior in people with autism.
The state also needs to pay $2.9 million each year to two accountable care organizations — OneCare and CHAC — for meeting requirements of a Medicaid shared savings program. The ACOs are being rewarded for avoiding $14.6 million in Medicaid costs and meeting data-driven targets to make patients healthier while saving money.
Officials have a host of other explanations for the gap, but most have to do with eligibility for Medicaid. Vermont hasn’t checked the income eligibility of people on Medicaid in more than a year, according to Miller, and plans to start checking again in January. And Miller says fewer people signed up for Vermont Health Connect plans than they expected, and many Vermonters instead went onto Medicaid.
Rep. Mitzi Johnson, D-South Hero, who chairs the House Appropriations Committee, said the Affordable Care Act didn’t just allow people with higher incomes to join Medicaid, but allowed them to calculate their incomes differently, allowing more farmers and small business owners to qualify.
Johnson said the projections were made as much as 18 months before lawmakers wrote the fiscal year 2016 budget. Around the end of the 2015 session, she said, lawmakers started to be clued in that they could face a Medicaid gap in the upcoming fiscal year.
“The good news is we have a record low number of uninsured,” Johnson said. “The tough part is we now have to pay for it.”
The Shumlin administration will outline their plan for the Budget Adjustment Act in December. At a meeting in October when staffers for the Joint Fiscal Office first outlined the Medicaid gap, the administration advised that their options were to cut services, cut eligibility, or come up with more money.
Trinka Kerr, the chief health care advocate at Vermont Legal Aid, said she’s concerned the low projections that created the gap could lead lawmakers to cut services for people on Medicaid.
“It is really unfortunate that the estimates were so off and now people could be hurt,” she said.
