Thursday, July 2, 2009

Maryland Medicaid Expansion Exceeds Cost Estimates 

Who would have thought?

By Marc Kilmer

Filed As:  Health Care

Looks like Maryland's expanded Medicaid program is a little more popular than expected:

More than 44,000 additional state residents have enrolled as of this week, exceeding estimates that another 26,000 would enroll after income limits were relaxed. Officials say the economic downturn is the reason....

Tricia Roddy, director of Medicaid planning for the state health department, says the expansion is now expected to cost about another $144 million a year, $50 million more than originally estimated.

And who predicted as much back in 2007? Oh, that's right, I did:

Looking at the past 15 years of Medicaid spending, the General Assembly has yet to predict accurately how much money to allocate to pay for the next fiscal year's Medicaid spending. Given the fact that since 1999 the amounts budgeted for Medicaid spending have always been lower than actual expenses, it is likely that the new expansion in the program will cost more than lawmakers predict.

And if the economy slows down, it is likely to cost a lot more. The program's history shows that when the economy cools, Medicaid spending and enrollment increase. During the recession earlier this decade, spending increased from 10 percent to 14. At the same time, the recession weakened Maryland's general fund revenues, so that Medicaid was requiring an increasing amount of decreasing revenue....

Given the historic spending patterns of this program, expanding it in today's economic and fiscal climate makes little sense. Even with the recent tax increases, it is unclear if the state will have enough revenue to satisfy current spending trends. And it is likely that economic growth will not be very robust in the next few years, while Medicaid's growth will be substantial. New Medicaid spending will put even more strain on the state's taxpayers.

Anyone who looked at Medicaid spending over the past decade would have had a hard time coming to a different conclusion. Unfortunately, our state legislators did just that and expanded Medicaid during a special session that was called to close a budget deficit. The irresponsibility boggles the mind.

RSS feed