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Medicaid enrollment gains stir state budget worries

Christina A. Cassidy
Associated Press

More than a dozen states, including Michigan, that opted to expand Medicaid under the Affordable Care Act have seen enrollments surge way beyond projections, raising concerns that the added costs will strain their budgets when federal aid is scaled back starting in two years.

Some lawmakers warn the price of expanding the health care program for poor and lower-income Americans could mean less money available for other state services, including education.

In Kentucky, for example, enrollments during the 2014 fiscal year were more than double the number projected, with almost 311,000 newly eligible residents signing up. That’s greater than what was initially predicted through 2021. As a result, the state revised its Medicaid cost estimate from $33 million to $74 million for the 2017 fiscal year. By 2021, those costs could climb to $363 million.

“That is a monstrous hole that we have got to figure out how to plug, and we don’t know how to do it,” said Kentucky state Sen. Chris McDaniel, a Republican who leads the Senate budget committee and opposed expansion.

Ohio’s projected costs more than doubled. In Michigan, estimated costs have shot up 50 percent due to soaring enrollment.

Enrollment is a quarter higher today than what Michigan officials thought it would be five years from now, which will squeeze the budget when the state starts paying in 2017.

Initially, Gov. Rick Snyder’s administration projected 323,000 enrollees in the first year and 477,000 by 2020. But more than 15 months after the launch of “Healthy Michigan,” 600,000 have signed up — 25 percent above the peak estimate in 2020.

The U.S. government is covering the cost of expanded Medicaid for the first three years under the federal health care law. Michigan, like it already does with regular Medicaid coverage, must start contributing in 2017. It will pay 5 percent that year, phasing up to 10 percent in 2020 and each year after.

The Snyder administration originally estimated the state would pay $718 million for Medicaid expansion through the 2019-20 budget year, a range of $100 million in year one to $270 million in the fourth year. Now the estimate is $840 million, between $150 million the first year and $300 million in year four.

Michigan today spends more than a quarter of the $9.9 billion general fund — its second-largest account besides education — on Medicaid. Officials expect the ratio to hold flat in coming years despite the program’s expansion. But earmarking an extra $300 million a year for the expansion by decade’s end will squeeze the budget.