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June 30, 2015

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MEMO FROM CARSON CITY:

Nevada must confront decision of whether to expand Medicaid

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Gov. Brian Sandoval

Gov. Brian Sandoval threw cold water on the celebration of health care advocates for the poor last week by casting doubt on whether Nevada will expand its Medicaid program.

Sandoval cited the costs, which he said could eat into other budgets, like education.

But health care advocates said not expanding the system would save the state few dollars, compared with the money it would be giving up from the federal government. More importantly, they said, it would leave thousands of Nevadans without insurance.

So here’s the central question: Is expanding Medicaid a fiscally sound policy?

Before breaking down the numbers, here’s the background.

Under the Affordable Care Act, a central strategy for putting more people on health insurance was to force states to expand their Medicaid systems. Technically, the expansion was voluntary, but the federal government wielded a pretty mighty stick. If states didn’t expand their systems, their existing Medicaid money would be taken away — about $700 million for Nevada this year. That provision made the expansion voluntary in name only.

The U.S. Supreme Court ruled this approach unconstitutional. That sent the decision on whether to expand Medicaid back to the states.

Some states (led by Democratic governors) have said they’d accept the money and expand the program. Other states (led by Republicans) are hedging or expressing grave concerns about the expansion. Nevada falls in that latter category.

To be clear, no Nevada member of the Democratic leadership has come out explicitly for the expansion yet. Nor has Sandoval drawn a line in the sand.

Instead, both sides say they want more analysis.

“The governor does not intend to automatically accept the Medicaid expansion,” said spokeswoman Mary Sarah Kinner. She said the state, already under severe financial pressure because of the Affordable Care Act, must look at the costs and understand potential penalties.

No financial analysis has been done yet on what it would mean if Nevada opted not to expand.

But in 2010, the state’s Department of Health and Human Services did project how much the Affordable Care Act would cost Nevada: $574 million from 2014 to 2019. Most of that cost will be incurred regardless of whether Medicaid is expanded.

In 30,000-foot view terms, the Medicaid expansion would:

• Offer Medicaid coverage to about 100,000 additional Nevadans a month at its peak, in 2016.

• Cost the federal government about $1.18 billion in Nevada between 2014 and 2019.

• Cost the state about $63 million in matching funds and $133 million from the general fund for administrative costs.

But the Affordable Care Act would require much of that administrative cost regardless of the Medicaid expansion, according to health care advocates.

“We have to carefully analyze the situation for Nevada,” said Jon Sasser, an advocate for health care in Nevada. “I think when they do, we’ll find it’s a very, very good deal for Nevada.”

Geoffrey Lawrence, deputy policy director with the libertarian think tank Nevada Policy Research Institute, said the governor should not expand the program.

“Every dollar we spend on the Affordable Care Act is a dollar that can’t be spent anywhere else,” he said. “After several years of negative revenue growth, it’s pretty tough to say we should expand an entitlement program.”

The federal government would pay 100 percent of the medical costs for those newly eligible for Medicaid in the first three years. By 2020, however, federal funding would drop to 90 percent. It’s uncertain where the federal and state cost-sharing would go from there, Lawrence said.

“You have to ask whether the state can afford the burden in the long-term without knowing what that burden will be,” Lawrence said.

Making Medicaid more generous may not be up to the governor.

Kinner said it’s a budgetary decision. Expansion “requires legislation.”

That means the debate will continue through 2013.

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