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January 4, 2013

Medicaid expansion will save Colorado more than $280 million over 10 years

By Susan L. Smith JD, MA

The expansion of Medicaid coverage in Colorado will result in a savings of more than $280 million in Medicaid spending over a period of ten years, according an announcement issued by Governor John Hickenlooper. "Projections show the savings, existing provider fee structure and other health-related revenues will more than cover the cost of the expansion," Hickenlooper explained adding that not one dollar from the state's general fund will be used for the expansion even after the federal government begins to reduce its share.

According to Susan E. Birch, Executive Director of the Department of Health Care Policy and Financing (HCPF), "by expanding Medicaid, Colorado can leverage existing state and federal resources to improve Coloradans' health coverage at a lower cost. To move forward with the Medicaid expansion HCPF will file a State Plan Amendment with the U.S. Department of Health and Human Services. A state law change is needed to give HCPF the spending authority for the coming changes.

HCPF estimates that pursuing the Medicaid expansion will allow more than 160,000 Coloradans to gain access to health coverage beginning January 1, 2014, according to a fact sheet put out by HCPF. The new coverage levels are authorized by the federal Patient Protection and Affordable Care Act (PPACA) and will expand Medicaid coverage to Coloradans earning up to 133 percent of the Federal Poverty Level (FPL). The new coverage would impact parents with Medicaid eligible children and other adults without dependent children. Average salaries for construction workers, maids, home health aides, and child care workers fit into this new category and could gain access to health insurance through the Medicaid expansion. Currently, 133 percent of the FPL is $14,856 for an individual and $30,657 for a family of four. It is estimated that not everyone who is eligible will enroll immediately. Instead there will be a phase in rate in which caseloads increase over time. HCPF caseload and cost projections have taken this into account, according to HCPF's report, "Caseload and Cost Projections Frequently Asked Questions."

Initiatives HPFC has identified to modernize Medicaid while controlling costs and enhancing value include:

  • Enhancing value-based services by boosting efforts to ensure clinically appropriate services, prevent unnecessary or duplicative services and ensure use of the most effective care at the lowest cost, which is projected to save $22 million.
  • Increasing effectiveness in care delivery by rewarding organizations and providers in the Accountable Care Collaborative for coordinating care and meeting performance benchmarks, which, so far, has resulted in reducing health costs by $20 million and returning $3 million to taxpayers and is expected to save $86 million.
  • Reforming payment systems to reward value instead of volume by providing payments through its Accountable Care Collaborative to coordinate client care and improve outcomes, projected to save $86 million.
  • Leveraging health information technology to improve quality and efficiency of care by upgrading computer systems allowing the state to reduce fraud by enhancing the ability to track claims and payments, which is projected to save $43 million.
  • Redesigning administrative infrastructure and reducing fraud, waste and abuse by passing legislation last year giving incentives for counties to find and prevent client fraud, which is projected to save $43 million.

See "Caseload and Cost Projections Frequently Asked Questions" for a more detailed explanation of Colorado's expansion program.

MainStory: TopStory StateLegislationNews HealthReformNews MedicaidNews Colorado News

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