BISMARCK – North Dakota will spend millions more than originally projected for Medicaid expansion under the Affordable Care Act, a tab that could top $30 million per year by 2020 based on current projections.
Gov. Jack Dalrymple, who pushed for the state to pursue Medicaid expansion in 2013, stands by the decision to expand the health program for low-income residents.
“Rising health care costs are certainly a concern, but we still feel that the expansion is fiscally manageable and that it was the right thing to do for North Dakota,” he said Thursday through spokesman Jeff Zent.
Sanford Health Plan, the only private insurer involved in Medicaid expansion in North Dakota, reports that the cost of claims among the Medicaid expansion group in its first year was 3½ times that of the company’s commercial group – “a significant indicator that we still have a lot of health issues going on,” said Lisa Carlson, executive director of planning and regulation.
The cost of claims averaged $1,215 per member, per month among the Medicaid expansion group, compared with $352 in the commercial group, she said.
The federal government is covering the cost of Medicaid expansion through 2016 for North Dakota, one of 30 states that decided to participate.
North Dakota will begin paying 5 percent of the cost starting Jan. 1, 2017, a share that will gradually increase to 10 percent by 2020.
When state lawmakers were considering in 2013 whether to expand Medicaid, the North Dakota Department of Human Services projected it would cost $2.9 million from the state’s general fund during the last six months of the biennium ending June 30, 2017.
That projection has increased to $8.2 million because of several factors, DHS Executive Director Maggie Anderson said.
“When we built the estimate in 2013, we knew that’s what it was,” she said. “This is a group that we had not covered before. There was no exact science to what their health care costs would be.”
Carlson agreed, saying Sanford and the state used different actuaries but came up with similar projections. Enrollment in Medicaid expansion has been higher than projected and currently stands at about 18,600, double what was projected at this point, she said.
“We both underestimated how quickly it would grow in such a short period of time,” she said.
Anderson said the $2.9 million estimate assumed, based on claims data at the time, that low-income parents with dependent children who would be newly eligible for Medicaid would have pent-up health care needs because they likely hadn’t been insured before, Anderson said.
Officials thought they’d see most of those pent-up costs during the first six months after enrollment.
“What we’ve actually seen is that higher utilization of services has remained fairly consistent,” she said. “We haven’t really seen that drop off.”
In its first year, the Medicaid expansion group logged 1,021 inpatient days per 1,000 people, quadruple the 251 inpatient days in the commercial group, Carlson said.
“They go to the hospital more, and then their average length of stay is longer,” she said.
The gap in emergency room visits was even greater per 1,000 people: 1,201 in the Medicaid expansion group compared with 175 in the commercial group, Carlson said, adding “we know we have some work to do” in educating patients about urgent care services.
Sanford Health Plan is using the benchmarks to create an action plan for nurse care managers who work with patients, with the goal of improving health and controlling costs, Carlson said.
“We’re optimistic. We feel like we’re making a difference,” she said.
The state hasn’t projected what Medicaid expansion will cost in the 2017-19 biennium and beyond, Anderson said. Simply using the projection for the first half of 2017, it would cost $16.4 million for the entire calendar year and more than $32 million annually by 2020 when the state’s share jumps to 10 percent.
Anderson said other factors contributing to the higher cost projection for 2017 include inflation, additional costs for mandated behavioral health services and an increase in reimbursement rates for pharmacists who complained that they were too low.
The Affordable Care Act required states to expand Medicaid coverage to eligible residents with incomes below 138 percent of the federal poverty line, which is currently $33,465 for a four-person household. A U.S. Supreme Court ruling in June 2012 allowed states to opt out of Medicaid expansion.
Dalrymple, a Republican, supported Medicaid expansion, including it in his budget recommendation to lawmakers in 2013. The GOP-controlled Legislature approved it that spring, and Dalrymple told Forum News Service that December, “There really is no good reason to stand in the way of 20,000 North Dakotans having the opportunity to get health insurance coverage at no cost to themselves.”
At the time, the state expected to receive an additional $154 million to $171 million in federal funding for the 18 months of the 2013-15 biennium that Medicaid expansion would be in effect.
But by the end of the biennium on June 30, the state had spent $268 million on Medicaid expansion – all of it federal money – due to increased use and costs, Anderson said.
The $8.2 million projection, which was approved by lawmakers in the agency’s 2015-17 budget, assumes enrollment will reach 20,500 as originally projected. But Anderson said that dollar figure may fluctuate if utilization costs increase.