MY TURN: Medicaid expansion isn’t broken

The Legislature is back in session and putting the Medicaid expansion back on the chopping block. We know the voters approved it, many of our legislators don’t, so what’s the problem? For years, Idaho lawmakers have said the rising budget for Idaho’s largest government program, Medicaid, needs to be controlled. The Medicaid expansion is one piece of that budget. Idahoans covered under the Medicaid expansion are generally adults earning up to 138% of the poverty level, which means $43,056 for a family of four. In a state where only 43% of Idaho businesses provide health insurance benefits to their employees, being uninsured was quite common prior to the Medicaid expansion. Many of the people who use the Medicaid expansion work in the service industry, agriculture or are young professionals just getting their careers started. Contrary to a popular misconception, a 2021 analysis found that of working-age adults on Medicaid, 67% were either in school or working full or part time. An additional 13% were caregivers.

When initially passed, the Idaho Center for Fiscal Policy projected the the Medicaid expansion would:

• Require Idaho State investment of $44.6 million. Saving the state from paying increased health care coverage for existing programs for uninsured Idahoans $31.2 million.    

• Expanded health care coverage will create 5,600 jobs. These will be higher paying, resulting in incomes of $50,000/year.

• Statewide economic activity will increase, resulting in $16.9 million. The State’s initial investment resulting in annual savings of $3.5 million.

"We understand that Medicaid has costs and increasing costs. The federal government pays up to 90% of the costs today. How long that will last, we have no way of knowing. If the Medicaid expansion was revoked, it would cost Idaho $74 million, state officials told the Legislature. A 2023 report by Idaho’s Department of Health and Welfare found that Medicaid expansion generated $78 million in annual savings for Idaho taxpayers by reducing state costs for behavioral health, drug courts, corrections and the state catastrophic fund. The total cost to the state for Medicaid expansion that year was $68 million. The report found that eliminating Medicaid expansion would not save the state money. It will cost the state $10 million. We know that it alleviates the burden on the state and counties to support the indigent population, allows the state to remove the catastrophic medical bill fund and we are now able to claim a federal match for behavioral health services that were previously provided through state general funds. It also supports a healthier workforce, supports reduced health care costs and increased productivity,” said Juliet Charron, administrator of Idaho Medicaid, to the Health and Welfare Committees of the Idaho House and Senate.

However, the largest costs for Idaho Medicaid, and for the expansion group, has been pharmacy costs. That includes diabetes care, psoriasis and psychiatric medications, seizure drugs and cancer treatments. As Health and Welfare Director Dave Jeppesen explained to the Legislature’s appropriations panel, that is mainly because of new higher-cost drugs. This is the problem we all confront, the cost of medicine.

The Medicaid expansion costs represent the “sticker price” of expansion. However, the actual fiscal impact differs from the sticker price for three reasons. First, expanding eligibility allows states to cut spending in other parts of their Medicaid programs. Second, it allows states to cut spending outside from Medicaid particularly on state-funded health services for the uninsured. Finally, expansion may increase state revenues based on taxes paid due the increased economic activity it triggers. Healthier people work more and pay more on sales and income taxes. Further, the state receives certain revenue, money, due to the Medicaid expansion that was not there previously? The Medicaid expansion increased the number of jobs, which increased economic activity, which increased tax revenue. Numerous studies have documented the fiscal effects in expansion states. While the studies do not account for every possible impact, all find that the net cost of Medicaid expansion is well below the sticker price. In many cases, researchers have found that Medicaid expansion generates enough savings and/or new revenue to more than offset a state’s share of the cost. The net impact on their general funds is much smaller than the expansion’s costs. 

Are there actions by our Legislature that harm our efforts to address the cost of the Medicaid Expansion? Idaho has cut its personal income tax rate multiple times since 2021. Nevertheless, some legislators pushed for cuts to Medicaid even while enacting income and property tax cuts tilted toward the wealthy, which are far more expensive than the state’s cost of Medicaid expansion coverage. Idaho policymakers have cut the state’s personal income tax rate four times since 2021, at an estimated combined cost of about $600 million per year in lost revenue. Meanwhile, the state spent just under $119 million on its Medicaid expansion program in 2023. Because lower-income households spend a greater share of their income than higher-income households, the burden of a retail sales tax is regressive. The tax burden as a share of income is highest for low-income households and falls as household income rises.

Idaho also finished issuing the third round of rebates that the governor and Legislature authorized with nearly $10.5 million going to taxpayers in 2023. Overall, Idaho finished the 2024 fiscal year June 30 with a $52.5 million revenue surplus, Idaho Division of Financial Management Administrator Lori Wolff said. Rather than giving money to people, larger amounts to wealthier people, perhaps there is a better use for it. My question to our legislators; is your Medicaid expansion concern really about the costs or is it about money and who gets it?

Most people on the Medicaid expansion are working, caregivers or disabled. Over 60% of Idahoans voted to approve the Medicaid expansion and 73% currently support it. We, Idahoans, voted to approve the Medicaid expansion. What gives our legislators the right to take it away? It is an essential and most beneficial program for lower-income people. It provides cost savings and increases revenue to the state. Our legislators don’t need to fix it, it isn’t broken. How to make it even better should be their priority.

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Phil Ward is a Coeur d’Alene resident.