Repealing Medicaid Expansion Could Hit Colorado Budget Especially Hard, Study Finds

Dr. Reyna Ulibarri, a doctorate in sociology, talks about how the Affordable Care Act helped her enroll in Medicaid to get her health back on track during a health care rally at the west steps of the State Capitol on Feb. 7, 2017 in Denver.

Colorado could be on the hook for spending close to $700 million more per year by 2023 if the federal government does away with its enhanced contribution to the Medicaid expansion, according to a new report released Tuesday.

The report, from the left-leaning Center on Budget and Policy Priorities, found that Colorado could be one of the states most impacted by the repeal of Medicaid expansion that is proposed in the U.S. House of Representative’s version of the GOP health care bill. That’s because the federal government, which splits the cost for Medicaid with each state individually, contributes a below-average amount of money to pay for all other Medicaid patients in Colorado. Ending the feds’ enhanced contribution to the expansion would mean Colorado would have to pay more than others if it wants to maintain coverage for people who gained it through the expansion.

In a separate report, to be released Wednesday, researchers at Georgetown University’s Center for Children and Families found that cuts to Medicaid would hit rural areas hardest. Both nationally and in Colorado, the report found, higher percentages of people in small towns and rural communities are covered by Medicaid than in cities.

“Children and families in small towns and rural areas will be disproportionately harmed by cuts to Medicaid,” said Joan Alker, one of the authors of the Georgetown report.

The two studies highlight what’s at stake for Colorado in the ongoing federal health care debate, as Medicaid — the government’s health care program for those in poverty or close to it — is poised for a major overhaul.

House Republicans last month passed the American Health Care Act, which the Congressional Budget Office has estimated would cut $880 billion from federal Medicaid spending between 2017 and 2026. A big chunk of those savings would come from ending the Medicaid expansion.

The Affordable Care Act, also known as Obamacare, allowed states to expand Medicaid eligibility to people slightly above the poverty line. For those states that did — including Colorado — the feds paid all the costs of the expansion for the first few years and pledged to cover 90 percent of the costs going forward.

For traditional Medicaid enrollees, states and the federal government split the costs more equitably, with the feds picking up a greater share in states with lower incomes. On average, the federal government pays 57 percent of Medicaid costs across the country, but in Colorado, the split is 50-50.

That means, according to the new CBPP report, Colorado would lose out on relatively more money than most other states if the expansion ended but the state decided to keep providing coverage for people in that income range at the traditional 50-50 share. The report estimates Colorado would have to spend $873 million per year by 2023 to continue covering the expansion population, versus $196 million it would spend if the Affordable Care Act remains in place.

Republicans in the Senate — including Colorado’s Cory Gardner — are drafting their own health care bill, but Edwin Park, one of the CBPP report’s authors, said minor tweaks to the House’s Medicaid proposal wouldn’t change the dynamic much.

“The House bill’s provisions that relate to the expansion can’t be fixed in ways that preserve it,” he said.

The report’s findings closely mirror findings from the Colorado Health Institute on the costs to the state of ending the Medicaid expansion. Colorado Lt. Gov. Donna Lynne has questioned whether the state could continue the expansion with those kinds of cost increases.

And the Georgetown study suggests that the state’s rural areas would be hit hardest if the expansion goes away and other cuts are made to Medicaid. In 2015, 42 percent of kids and 20 percent of adults living in rural areas were enrolled in Medicaid, the study found. In urban areas, those percentages were 35 percent and 15 percent, respectively. The Georgetown study found that Colorado’s rural areas saw substantial decreases in the uninsured rate for both kids and adults in rural areas that coincided with Medicaid expansion.

Sarah Barnes, a senior policy analyst at the Colorado Children’s Campaign, said kids who receive health coverage are more likely to be successful adults.

“Kids in rural areas of the state are benefiting the most from Medicaid coverage,” she said. “And kids who are enrolled in Medicaid have better health outcomes.”

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