The Medicaid budget came under scrutiny in the Joint Finance-Appropriat ions Committee today, as part of a series of budget hearings this week on the Idaho Department of Health & Welfare. For next year, Gov. Butch Otter is recommending a 13 percent increase in state general funds for Medicaid, and 11.2 percent in total funds; the federal government picks up about 70 percent of the cost, matching state expenditures on a roughly 70-30 basis. Much of the increase proposed for next year is due to two items: a $38 million increase in the state’s costs for “non-discretionary adjustments,” which include caseload increases and mandatory pricing increases; and the Otter Administration’s proposal to launch the Idaho Health Care Plan next year, at a cost of $17.8 million to the state general fund.

The proposal calls for seeking waivers from the federal government to allow about 35,000 Idahoans who now fall into a coverage gap to qualify for subsidized health insurance through the state insurance exchange, plus allow about 2,500 to 3,500 Idahoans with specific complex and serious health conditions to transfer into Medicaid, to lower costs for the exchange plans.

In addition to the $17.8 million in state general tax funds, the plan calls for spending $11.4 million next year from the Millennium Fund, an endowment fund for health-related expenses that the state set up with its proceeds from a nationwide tobacco settlement; and $71.5 million in federal matching funds, for a total of $100,786,600.

Sen. Shawn Keough, R-Sandpoint, JFAC co-chair, noted that the bill authorizing the Idaho Health Care Plan would have to pass before the budget committee could approve funding. “Obviously it’s got a huge price tag,” she said, “but the policy piece has just now started into its adventure in the process.”

The first version of the bill was introduced last week; a second version was introduced yesterday, with changes, and a hearing is scheduled for Feb. 7 in the House Health & Welfare Committee.

Matt Wimmer, administrator of the Division of Medicaid for the Department of Health & Welfare, told Keough, “Madam Chair, you are correct – this is a big ask. … And we wouldn’t be bringing this kind of big ask if we didn’t think there would be big rewards as well.”

Wimmer said the hope is to provide better coverage for those with certain very serious medical conditions, such as metastatic cancer and cystic fibrosis, by moving them into Medicaid. Because those patients, who now have private insurance coverage, have huge costs that drive up rates for everyone, the move would lower costs for everyone else buying private insurance on the state exchange – thereby creating enough savings to cover more people there with subsidies. “So we’re basically getting two benefits there,” Wimmer said.

He said the department is preparing to submit the 1115 waiver to federal authorities very soon – “this week, next week – as soon as we can get all the boxes checked.”

“This is something innovative, this is something exciting – this is something that could only happen in Idaho,” Wimmer said, “and I do think that it has really big benefits for numerous groups of individuals in Idaho.”

The governor’s recommended Medicaid budget for next year also includes rate increases for two categories of providers: Supported living rates for residential habilitation providers; and community-based personal care services for Medicaid clients. Wimmer said large providers were closing down for lack of adequate reimbursement, and the department implemented those increases on an emergency basis as of Jan. 1 with existing funding, but will run out before the end of the year, and is seeking authorization for both a supplemental appropriation in the current year and covering the increase next year.

However, Otter didn’t recommend funding rate increases for two other categories of providers: Children’s community-based developmental disability habilitative intervention and habilitative support services; and personal care services delivered in assisted living facilities. JFAC members said they’re being besieged by emails and visits from providers pleading for those increases. “How come the governor did not recommend those two line items?” asked Sen. Steve Bair, R-Blackfoot.

Sara Stover, budget analyst for Otter’s Division of Financial Management, said, “The governor’s commitment for his 2019 budget was really to continue his commitment to education as well as the Idaho Health Care Plan.” She said Otter’s recommendation shows a $70 million general fund increase for Medicaid next year without those line items. “Those were not the agency’s highest priorities,” Stover said.

Bair asked Wimmer why not. Wimmer said, “We had a lot of competition this year for different priorities,” including “things that were really important just to keep things running on an even keel in Medicaid,” including IT upgrades. “If they do break, it’s bad,” he said.

Wimmer said the department is “in development on those rates,” and that increasing rates involves a time-consuming process including rate surveys and following requirements laid out in both state statutes and administrative rules.