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The Health 202: States scramble to head off future Medicaid shortfalls

with Paulina Firozi


States that expanded their Medicaid health insurance programs are hunting for ways to fund the new enrollees in 2020 as they face a final drop in federal contributions.

The federal government will still cover the bulk of the costs of care for the roughly 13 million Americans newly eligible for Medicaid under the Affordable Care Act, which allowed states to expand the program to people earning somewhat above the federal poverty level. But the gradually decreasing federal contribution — originally set at 100 percent but reduced to 90 percent starting next year — has left some states with budget holes to fill.

Yesterday, the Oregon House approved a measure backed by Gov. Kate Brown (D) to help fund the state’s Medicaid program, which faces a $950 million shortfall. The bill would extend new taxes on hospitals and insurance plans for an additional six years, which some lawmakers say will give them more time to come up with long-term health-care dollars.

New Hampshire Gov. Chris Sununu (R) signed legislation over the summer earmarking 5 percent of new profits from the sale of liquor for Medicaid expansion, so no direct taxpayer dollars would need to be redirected. Around the same time, Virginia Gov. Ralph Northam (D) approved two new taxes paid by hospitals to fund that state’s new expanded Medicaid program.

California, Louisiana, Arizona, Colorado, Indiana and Minnesota have also implemented higher taxes either on health providers or insurers, or on the sale of alcohol or cigarettes, according to a tally by Governing Magazine. North Dakota cut payment rates to Medicaid providers. Several states, including Kentucky and Arkansas, have pursued charging premiums and implementing work requirements to make up shortfalls. Many other states are paying for expansion out of their general fund revenue.

"We kinda had several groups," said John Hicks, executive director of the National Association of State Budget Officers. "States who didn’t do anything special on the revenue side, states who combined their regular funds with some new funds and some states — I think of Indiana — where no state general funds are devoted to Medicaid expansion." 

Republican governors in the 14 holdout states that have refused to expand Medicaid have faced criticism for leaving so much federal money on the table — an offer so generous that writers of the ACA never considered states would want to opt out.

And some policy experts have found that a number of states actually experienced a reduction in overall state expenditures because having more residents able to access timely, affordable care eases the need for other social safety net programs.

“The strong balance of objective evidence indicates that actual costs to states so far from expanding Medicaid are negligible or minor, and that states across the political spectrum do not regret their decisions to expand Medicaid,” wrote Mark Hall, a senior fellow at the Brookings Institution.

Yet the Medicaid program overall consumes the single largest portion of state budgets, accounting for 29 percent of their total spending on average, according to NASBO. States spent $10.3 billion on expansion in the 2018 fiscal year, up from $6.7 billion the year prior.

Hicks told me the budget outlook for many states improved significantly last year with the economic recovery. He stressed that states are keeping their eyes “wide open” on potential future fiscal pressures of adding more people to the health insurance program.

“It’s a higher [Medicaid] population than previously,” he said. “Just like having more schoolchildren in the future, you’ve got that same risk as to if a recession or an economic downturn hits.”

Underscoring future concerns around Medicaid spending, officials for the Centers for Medicare and Medicaid Services released projections yesterday that Medicaid spending growth will average 6 percent annually over the next seven years as more aged and disabled enrollees enter the program.

They also predicted Medicaid spending growth will accelerate this year — the first time since major parts of the ACA went into effect in 2014. That’s due to steps by Idaho, Maine, Nebraska, Utah and Virginia to expand Medicaid for the first time.


AHH: National projections from CMS’s Office of the Actuary also predict health-care expenditures nationwide will increase by an average of 5.5 percent annually between 2018 and 2027, as our Post colleague Amy Goldstein writes.

By 2027, the United States is expected to spend $5.96 trillion on health care, totaling 19.4 percent of the nation’s gross domestic product. By that year, federal, state and local governments will be paying 47 percent of the nation's health-care costs, up from 45 percent currently. Without changes to federal health policy, the nation's uninsured rate is expected to remain steady at around 10 percent.

"Aging baby boomers will consume an ever-larger share of the nation’s health-care spending over the coming decade, regardless of the success of Democrats running for president with ambitious plans to broaden Medicare," Amy writes.

"The number of people covered through Medicare — and spending on the federal insurance program for older and disabled Americans — is expected to grow more rapidly than private insurance or Medicaid, eating up a larger chunk of health spending, according to a yearly forecast of U.S. health-care expenditures released Wednesday," she explains.

OOF: More than two dozen veterans' advocacy groups want Veterans Affairs Secretary Robert Wilkie to stop GI Bill benefits from going to predatory colleges. They point to an audit that found negligent oversight could mean $2.3 billion in tuition benefits end up going to predatory schools in the next five years, our Post colleague Danielle Douglas-Gabriel reports.

“Education funding earned by men and women who serve in the U.S. military has become a stable source of revenue for many colleges,” Danielle writes. “But advocates say that some schools — especially for-profit colleges — have failed to provide high-quality education and that the federal government has shirked its responsibility to act.”

The VA can cut off these benefits to schools that employ deceptive marketing. The December audit from VA’s inspector general “found millions of dollars going to for-profit colleges that violated VA standards by making misleading claims about their accreditation status or student outcomes.”

"The aggressive recruiting practices of some for-profit colleges have been well-documented," Danielle writes. "A 2012 Senate investigation found evidence of schools deploying teams at veterans hospitals and wounded-warrior centers to enroll students. Some recruiters misled or lied to veterans in telling them that their military benefits cover the full cost of tuition."

OUCH: Food and Drug Administration Commissioner Scott Gottlieb said the federal government may need to intervene if states continue to allow vaccine exemptions.

Referring to a recent measles outbreak in the United States, Gottlieb told CNN that “some states are engaging in such wide exemptions that they're creating the opportunity for outbreaks on a scale that is going to have national implications.”

He added that if “certain states continue down the path that they're on, I think they're going to force the hand of the federal health agencies.”

“The commissioner was vague on when he thought the federal government should take action and what exactly that action should be,” CNN’s Elizabeth Cohen and John Bonifield write. “He said he hoped that the measles outbreak would make state officials realize that they needed to get stricter on exemptions.”


—  The United States of Care, a group founded by Andy Slavitt, CMS acting administrator under President Obama, launched a website and blueprint for implementing a Medicaid buy-in program.

Such a Medicaid-style plan has been touted by Sen. Brian Schatz (D-Hawaii), who reintroduced a measure last week to let states sell government-backed Medicaid plans on their individual insurance marketplaces. Sen. Amy Klobuchar (D-Minn.), who has emerged as a centrist candidate among the growing list of Democratic presidential hopefuls, said during a CNN town hall this week that she prefers a Medicaid-type plan to the more ambitious Medicare-for-all program touted by some of her 2020 rivals.

“Health care costs are reaching a crisis point, and today too many Americans still don’t have an affordable option for health insurance,” Schatz said in a statement about the group’s new playbook. “A Medicaid public option will let states unlock the program for anyone who wants it, giving more people a high-quality, low-cost choice when purchasing health insurance. By providing a roadmap to success, United States of Care is empowering states to take bold action on health care.”

The group said the new site,, can provide a resource for policymakers and industry leaders who want to better understand the approach.  


— Rep. Peter Welch (D-Vt.) introduced a bill that would allow patients to import insulin from Canada and other countries as a way to address skyrocketing costs of the life-saving diabetes treatment.

“Prices for insulin have gone through the roof and are hammering diabetes patients who cannot live without this life-saving medicine yet cannot afford to pay for it," Welch said while introducing the bill. "This commonsense legislation bypasses Big Pharma's pricing monopoly by making available to patients safe, lower-cost insulin.”

Patients would still need a prescription to acquire the medication and could still be eligible for insurance coverage.

The bill would allow patients, pharmacists and wholesalers to import cheaper insulin from Canada for two years and then would expand to other countries after that, mandating that the Food and Drug Administration certify and inspect all foreign exporters of insulin.

— Meanwhile, Florida Gov. Ron DeSantis (R) announced he wants to allow the state to import cheaper medications from Canada as a way to lower health-care costs. 

He said during a news conference at a retirement community that Trump supports the idea. The governor plans to ask state lawmakers to pass a bill to authorize such imports, the Miami Herald's Emily L. Mahoney and Elizabeth Koh report. After that, the federal government will still need to give approval, which hasn't happened since a law mandating the process passed in 2003. 

"Once we get this in place, U.S. citizens will be able to have access to more affordable drugs," DeSantis said. He added: "I want you to know I spoke personally to President Trump both Sunday and Monday about this...He’s not only supportive, he’s enthusiastic.”

"DeSantis said this program would make Florida the first state to take advantage of a provision of the federal Medicare Modernization Act," they write. "Until now, the U.S. Department of Health and Human Services has 'continually refused' to authorize states to bring in drugs from Canada, but President Donald Trump has assured him that will change, DeSantis said."


— AIDS United has launched a six-figure ad campaign that calls on the Trump administration to follow through on Trump's State of the Union pledge to end HIV transmissions by 2030 by withdrawing the proposed Medicare Part D rule.

The organization argues the rule would limit patient access to life-saving HIV treatment. The proposed change to Medicare’s prescription drug benefit could allow Part D insurance plans to refuse to cover some drugs that are in six "protected classes" that until now were required to be covered comprehensively. The categories include HIV/AIDS patients.

“We are encouraged by the President's call to end HIV transmissions by 2030; however, this goal is achievable only with hard work and the appropriate investment of resources,” Jesse Milan Jr., AIDS United president and chief executive, said in a statement. “We urge Secretary Azar and President Trump to honor their new commitment by addressing all issues related to HIV prevention, care, and treatment. They can start by withdrawing the proposed rule change to Part D’s protected classes.”

— And here are a few more good reads: 

Bernie Sanders’s second campaign: Strong start, big challenges ahead (Sean Sullivan)


Some anti-vaccination parents cite religious exemptions. Measles outbreaks could change that. (Sarah Pulliam Bailey)

Ebola vaccine will be given to pregnant women, marking reversal in policy (Stat)

Teenagers Say Depression and Anxiety Are Major Issues Among Their Peers (New York Times)

I was hospitalized for depression. Faith helped me remember how to live. (Michael Gerson)


U.S. Investigating Johnson & Johnson Over Baby Powder’s Safety (New York Times)

Pinterest Blocks Vaccination Searches in Move to Control the Conversation (Wall Street Journal )

Behind the Scenes, Health Insurers Use Cash and Gifts to Sway Which Benefits Employers Choose — ProPublica (ProPublica)


Canadian shelves ‘would run dry’ if U.S. imports drugs (Politico )


Coming Up

  • Johns Hopkins Bloomberg School of Public Health is scheduled to host a guest lecture on the health risks of incarceration on Friday.
  • The Senate Finance Committee is scheduled to hold a hearing on drug pricing on Feb. 26. 
  • The Senate Health, Education, Labor and Pensions Committee is scheduled to hold a hearing on vaccines on March 5. 

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