Report: Economic Slump Could Increase Oregon’s Medicaid Bill By Half A Billion Dollars

The swelling ranks of unemployed Oregonians could cost Oregon more than a half a billion dollars in Medicaid spending, a PDF iconnew study says.

Depending on the level of unemployment created by the virus-induced economic crisis, Oregon would need to spend between $75 million and $516 million in state money to cover the additional Medicaid enrollees for the period January 2020-December 2022, according to the report by Michigan-based Health Management Associates.

The federal government, for its part, would need to spend between $243 million and $1.6 billion over that three-year period to cover the new Oregon Medicaid members, the report said.

That state and federal money would be on top of the roughly $6 billion a year that the governments already spend funding Medicaid for Oregonians enrolled before the COVID-19 crisis.

The states and the federal government share the cost of covering low-income people under Medicaid, with the federal government covering about three-quarters of the expense.

The dollar numbers in the Health Management Associates report underscore the vice that may squeeze the Oregon Health Authority, which runs Medicaid in Oregon as the Oregon Health Plan.

Even as more unemployed people sign up for Medicaid in Oregon, Gov. Kate Brown is warning OHA and other state agencies that they may have to sharply reduce their spending. That’s because the economic contraction caused by the pandemic is expected to shrink state income tax and other revenues. Responding to Brown’s request for how it would cope with reduced funding, the health agency listed a range of possible cuts, including to Medicaid spending.

The state has not released its own estimates of how much it expects Medicaid enrollment to grow and how much that would cost. The state, using state and federal money, spends about $6,000 a year providing health insurance for each of the roughly 1 million Medicaid members. The state hasn’t said whether it might ultimately have to spend less per member and further ration care as membership balloons.

Since the onset of the pandemic, about 400,000 people in Oregon have applied for unemployment pay after losing their jobs. Typically, when workers lose their jobs, they also lose their employer-paid health insurance. In a report it published last month, Health Management Associates projected that high joblessness could boost Oregon Medicaid enrollment by up to 320,000 members.

Lori Coyner, the Oregon Health Authority’s Medicaid director, told The Lund Report that Oregon Medicaid enrollment is growing “but not at the same pace as unemployment claims.”

She added: “We expect enrollment in OHP to grow as the crisis continues - both from new enrollments and because members are not being dis-enrolled except for very limited reasons. We are preparing for a continual increase in enrollment that may reach the numbers projected by the (Health Management Associates) report, depending on economic trends.”

 As of April, 1,021,000 Oregonians were on Medicaid, up from 1,009,000 in January. Numbers for May have not yet been released.

Health Management Associates’ April report focused on how Medicaid membership might swell state by state.

The latest report estimates what that might cost each state based on three scenarios: unemployment reaching 20% in the second quarter of 2020, with 70% of the jobs recovered by the third quarter of 2020 and the rest within another 24 months; unemployment reaching 24% in the second quarter of 2020, with 60% of the jobs recovered by the second quarter of 2021, and the rest within another four years; and unemployment reaching 28% in the second quarter of 2020, with 50% of jobs recovered by the fourth quarter of 2021, and the remainder within another 60 months.

In the most benign scenario, the federal government would spend an extra $13 billion covering the new Medicaid enrollees, and the states cumulatively would spend $5 billion; in the most dire scenario, the federal government would spend $92 billion on the coverage, and the states cumulatively $35 billion.

You can reach Christian Wihtol at [email protected].

 

 

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