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Health-care overhaul's costs to Virginia and Maryland unclear
That means state cost estimates rely heavily on assumptions about how many new residents will sign up for the program -- no easy task. Officials must predict population growth, estimate how much money residents will make, and guess how successful Medicaid will be at identifying and signing up the newly qualified.
Starting in 2014, anyone making up to 133 percent of the federal poverty line -- now $14,400 for a single person and $29,300 for a family of four -- will qualify for Medicaid under the new law.
The requirement will affect states differently depending on the generosity of their existing Medicaid program.
Virginia enrolls only the blind, disabled, some needy children and deeply indigent parents who make up to 24 percent of the poverty line. State officials have estimated that boosting coverage to the required level means as many as 426,000 people might become part of the program, which includes about 837,000 Virginians.
The change will result in fewer new Medicaid patients in Maryland, which extends some form of coverage to most residents making up to 116 percent of the poverty level. It will have to provide more robust benefits to about 112,000 residents, but state officials estimate that Maryland will have to extend entirely new benefits to only 21,000 -- less than one-twelfth the number Virginia faces.
But both states might be engaged in wishful thinking when it comes to residents who are newly eligible for Medicaid. Maryland's estimate assumes that far fewer than the number eligible will join the program -- which matches experience. Virginia's estimate assumes about 270,000 newcomers to Medicaid, the most conservative of several enrollment models.
"This is likely to be something that will be a moving target as we go forward," said Bill Hazel, Virginia's health and human resources secretary. "We're not trying to be alarmist and panicky. We're trying to be realistic."
Under the new law, the federal government will at first pay all of the costs for new enrollees. Then the states will gradually have to chip in up to 10 percent by 2020. It's a better deal than the 50-50 split that Maryland and Virginia have typically had to pay but means that cost estimates for states look better in the near term.
Virginia's widely cited $1.5 billion cost estimate includes expenses through 2022, meaning it accounts for two full years when the state will be paying 10 percent. Nearly 40 percent of Virginia's total 12-year cost estimate comes in those two years. In Maryland, published estimates of cost savings extend to 2019, a year before the state would feel the full cost of paying its 10 percent share.
If the costs of the law are uncertain, the possible savings are even fuzzier.
Maryland's estimate of $1 billion in savings is based largely on the state assuming it could do away with some big-ticket programs it funds, such as about $100 million it sets aside each year to provide insurance for those denied coverage because of preexisting or high-risk conditions. The federal law will soon require insurers to cover such patients.
Maryland also banks on decreasing payments to hospitals for treating the uninsured because, theoretically, far more of those should be covered by Medicaid or insurance.
"We will see savings, and they will be substantial," predicted John M. Colmers, the state's secretary of health and mental hygiene, who is co-chairman of a council O'Malley established to implement the overhaul.
Virginia estimates that far less of its costs will disappear.
Without the overhaul, for example, the state expects to pay about $1.3 billion over the next 10 years to help cover the costs of caring for the uninsured at the hospitals at the University of Virginia and Virginia Commonwealth University.
With the law, the state assumes it will recoup less than 10 percent of those costs.
Darrell Gaskin, an associate professor of health economics at the University of Maryland, said the biggest unknown for states is that all of their models hinge on a larger question of whether the overhaul will succeed in bringing down the costs of care. "The real question is: Can everything together really bend that cost curve of care?" he said. "Without that, none of this will be sustainable."