Is Medicaid eating the state budget?

Plus: A medical ethics expert on the UnitedHealthcare shooting

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Dec 18, 2024 - 18:00
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Is Medicaid eating the state budget?

A festive good mid-day to you, readers, and welcome to the last Temperature of the year!

Mike and I are taking next week off, which means we won’t see you in your inboxes until 2025. So let us take this opportunity to say THANK YOU to all of our Temp readers, who make this work possible but also make it meaningful.

I may not be the best at responding to emails — OK, I’m actually probably closer to the worst. But we read your messages, every one, and it means the world to us that you take the time to read, to write in, to offer tips or suggestions or food for thought or fact checks to hold us accountable or even grammatical corrections (really!).

In life, we don’t have to agree — it’s better that we don’t all the time. But sharing in an informed community that listens to one another and cares passionately about the place we call home is a wonderful gift we can give to each other.

So happy holidays to you and yours, and let’s dig into this week’s news.

The Colorado State Capitol building viewed through a tilt-shift lens on June 21. (William Woody, Special to The Colorado Sun)

About an hour into a meeting last week to go over the budget for the state’s Medicaid department, lawmakers on the Joint Budget Committee settled into a sobering realization.

Rep. Shannon Bird, a Westminster Democrat who serves as the committee’s vice chair, pointed committee members to a chart in a briefing document that she said “anybody who cares about the state’s fiscal position or fiscal health” needed to understand. This is that chart:

A chart produced by the staff of the Colorado Joint Budget Committee shows how general fund spending on Medicaid has grown rapidly. (Colorado JBC)

Here’s the summary: Colorado’s Medicaid department, which receives billions in federal funds each year, is also gobbling up bigger chunks of the state’s general fund, the discretionary pot of money that lawmakers use to pay for all kinds of state services.

The causes of the consumption are not necessarily what you might think. Even worse, there’s no easy or painless way to fix it.

“This is just going to be an ongoing increase as a percentage of our budget, more and more that is just going to eat other things that we can’t spend money on,” said Sen. Jeff Bridges, a Greenwood Village Democrat and the committee’s chair.

Medicaid is most commonly known as a government program to provide health coverage to people who are impoverished or who have low income. That perception is why, in times of fiscal constraint, discussion nationally often turns to imposing work requirements on Medicaid recipients.

But Medicaid covers a lot more than low-income adults. It covers a huge number of children — approximately a third of children in Colorado are covered by Medicaid or a companion program called CHP+. Medicaid pays for services for people with disabilities. And it covers nursing home care for older individuals.

Those last two groups are where to focus when thinking about Medicaid’s ballooning costs.

Most working-age adults on Medicaid are covered under what is known as the Medicaid expansion of the Affordable Care Act. The state spends no general fund dollars paying for their care — the federal government picks up 90% of the cost, while a fee on hospitals that attracts another heaping pile of federal dollars pays for the rest.

Children, meanwhile, are pretty cheap to insure, at least on a per-person basis. That leaves people who are ages 65 or older or who are disabled, whose coverage costs a lot. (Medicare, the federal program most commonly associated with coverage for older Americans, does not pay for long-term nursing at home or institutions.)

To give one example, the state in the next fiscal year expects to add 4,000 older individuals to its Medicaid rolls. That’s it — 4,000 people out of a state of 5.8 million, a 5% increase from the current enrollment of people 65+.

But that modest increase is expected to add $121 million to Medicaid’s spending. A 6% increase in the number of people with disabilities is expected to add $305 million.

Together, people who are disabled or who are older make up 14% of Medicaid’s enrollment in Colorado but account for 52% of total spending — and 70% of general fund spending.

This explains how Medicaid enrollment has fallen, as the state has hemorrhaged enrollees post-pandemic and to the detriment of a large number of community clinics and mental health care providers, but Medicaid spending continues to rise.

“We had this precipitous drop in adults and children,” Eric Kurtz, a chief legislative budget and policy analyst with the JBC, told committee members last week. “But it just didn’t decrease our expenses enough to offset the increase for the elderly and people with disabilities.”

The reason is that the amount charged for services provided to those individuals — be it in a nursing home, or through at-home care or some other specialty service — is going up. And the amount of services people on Medicaid are using is also going up. A double-whammy of cost and utilization.

And that leads us to the current, daunting predicament: How do you save money when your biggest expenses are in caring for the state’s most vulnerable people?

“When you’re talking about trying to change that trend line, you’re talking about cutting off or reducing eligibility and benefits for the elderly and people with disabilities,” Kurtz said. “And then the next category would be kids. Not categories the legislature has traditionally wanted to reduce for Medicaid.”

That is something lawmakers will struggle with in this tight budget year, and for years to come, too.

In this file photo, Gov. Jared Polis presents his fiscal year 2022-23 budget proposal to members of the Joint Budget Committee on Dec. 3, 2021, at the Legislative Services Building in Denver. (Olivia Sun, The Colorado Sun)

One area of the Medicaid budget where lawmakers could look to cut is a program that hasn’t even started yet.

The Cover All Coloradans program is set to kick off Jan. 1. The program extends Medicaid coverage to immigrants who are children or who are pregnant, regardless of their legal status.

Generally, noncitizens aren’t eligible for Medicaid unless they have permanent legal status. But Medicaid does cover emergency care for immigrants regardless of legal status. One argument in favor of the Cover All Coloradans program is that providing preventive care up front will save the state money down the road in not having to pay for more costly emergency procedures.

But, in looking for ways to save money this year, what caught the eye of some Joint Budget Committee members last week is this: The program is going to cost a lot more than originally expected.

The Department of Health Care Policy and Financing, which administers Medicaid in Colorado, had originally estimated the program would cost $34 million in its first year, with $15 million coming from the general fund.

But the department and health care advocates have had tons of success in signing up enrollees early. That, plus the experience of Oregon, which launched a similar program last year, has led the department to increase its estimate for how much Cover All Coloradans will cost. The new figure is $51 million, including $39 million from the general fund.

Eric Kurtz, the JBC budget analyst, zeroed in specifically on the program’s coverage for children. The state expects to receive federal approval to enroll pregnant individuals into the full CHP+ program, meaning the feds will pick up some of the costs for their care. Kids on Cover All Coloradans, however, will need to be paid for entirely out of state dollars.

The state originally estimated covering children in the program would cost about $4 million in the first year. That has now risen to $32 million.

That’s an enormous increase, but it is also a small portion of the entire Medicaid budget. The state has requested $17.4 billion to fund the Department of Health Care Policy and Financing in the next fiscal year, meaning its budget takes up roughly a third of the entire state budget.

But, in a year where lawmakers will be looking to trim anywhere they can, the program could get cut, as discussion at the JBC indicated.

Sen. Barbara Kirkmeyer, a Brighton Republican, said it was “totally irresponsible” for the state to allow the budget projection to grow so much.

“This is a huge increase,” she said. “They could have paused this program sooner.”

But others said it would be morally wrong to deny kids health coverage and also unwise because it could lead to higher bills for emergency care in the future.

“We’re talking about shutting off a program that is weeks away from turning on?” Rep. Emily Sirota, D-Denver, said. “It’s not on my list.”

The killing of UnitedHealthcare CEO Brian Thompson is a tragedy. But the weeks since have also shined a light on something people working in patient advocacy know all too well: The everyday tragedy of patients struggling to get their health insurers to cover things like medicines or medical devices that they need to live and to thrive.

In this framing of the issue, these delays or denials are also a form of violence — structural and institutional, instead of vigilante. And that has led in some corners to thinking of this killing as akin to the whacking of a mob boss: Head up a violent business, expect a violent end.

As a mild-mannered local reporter covering the health care system and its many complexities and failings, this has been quite astonishing to see. And bewildering.

So to help make sense of it, I reached out to Dr. Matthew Wynia, an internal medicine specialist who is the director of the Center for Bioethics and Humanities at the University of Colorado Anschutz Medical Campus. He’s also one of the most thoughtful people I’ve ever met.

This Q&A has been edited for clarity and brevity.

The Temp: Obviously we don’t know everything about what happened. But when you first heard about the UnitedHealthcare shooting and then as you followed the story, what did you think?

Dr. Matthew Wynia: Probably, like everyone, it was really apparent off the bat that this was a targeted assassination. Just within a day, I think it was clear that this was not a random act of violence. It was an act of political violence.

The idea, of course, that acts of assassination would be a chosen response to frustrations with the health care system is, on the one hand, it’s something doctors have been aware of for a while because we are occasionally targeted. We haven’t seen it where someone targets the entity sort of above the clinician in the health care hierarchy.

It’s terribly disconcerting because, from my perspective, what we know about assassinations is that they rarely end up producing the good effect that people think they’re going to produce. They end up producing more assassinations and more violence.

Temp: I know you’re familiar with some of the frustrations when it comes to dealing with health insurance corporations. I saw you once speak on a panel where you detailed ways that insurers can use artificial intelligence to make their systems even more opaque and challenging to navigate. Given this understanding, was it surprising at all to you that these frustrations could apparently provoke violence?

Wynia: It’s disappointing, but maybe not surprising. The emotions around health care are so intense and often reasonably so, right? We are sometimes talking about life and death issues so they warrant high emotion sometimes.

But anytime you’re talking about things where life is at stake, or you think that life is at stake, that’s a place where it’s possible for people to start thinking, “This is so important that it warrants me doing something really outside what would normally be acceptable.”

Temp: I guess another way to ask this question is: Do you see this as a rational response to injustice in the health care system? Not an acceptable response, but a rational response?

Wynia: I don’t think it is a rational response. It can be justified in ways that make it sound like it’s a rational response. But you don’t have to think very far ahead to realize that assassinating the CEO of a health insurance company is not going to accomplish anything good.

They’re not going to change the way they manage and process claims. They’re not going to change their coverage criteria. They’re not going to change their relationships with employers who largely set the coverage criteria, which they then implement. There’s no conceivable way in which murdering an executive at a health insurance company is going to make the health care system work better.

Temp: So, murder is obviously a shocking form of violence. But in the wake of this killing, there’s been a lot of critiques of the health insurance system as perpetrating a kind of violence, itself, in how it manages claims and denies coverage. Is that a form of institutional violence?

Wynia: It is because the definition of structural violence, or institutional violence, is quite broad. By the definitions that people now use to describe harms that are attributable to policies and structures that make it hard to get things, then, yes, this meets that definition.

Of course, there’s a reason why people in public health have developed those terms to describe policies that are harmful. It’s to try and create more of a sense of crisis and more of a sense that this is an injustice that needs to be remedied.

It’s a successful rhetorical strategy to call something structural violence, so I understand why people want to do it. They want to ramp up the pressure to change a system they see as fundamentally unjust.

Temp: Am I getting the sense that you don’t necessarily agree with that approach?

Wynia: Well, I think it has some potential downsides, including that it makes a policy dispute into a moral dispute. And moral disputes tend to have higher emotional valence, right? They tend to gin people up and make them willing to do things that they might not normally do.

To the extent that they cause people to write letters and show up in Congress and, you know, go to protests and make their voices heard, then those are all productive. To the extent that they make someone feel like, “Well, I’ve been the victim of violence, so I get to exact violence in return,” that’s counterproductive.

Watch ColoradoSun.com in the coming days for a full version of this Q&A including discussion of a person’s individual ethical responsibilities in an unethical system.

A poster for The Tea on THC public health campaign. (Colorado School of Public Health/Initium Health)

Way back in 2021, the state legislature tasked the Colorado School of Public Health with studying the effects of high-potency cannabis. On Tuesday, the school launched the latest product of that work: a large-scale messaging campaign to advise teens, new moms and moms-to-be on the potential downsides of using potent pot.

The campaign is called The Tea on THC, and its hook is that the cautionary messages aren’t just there for scares; they’re backed by research.

A team of researchers at the School of Public Health combed through tens of thousands of studies to analyze the evidence in more than a dozen topic areas.

Does using high-THC cannabis lead to poor mental health? Does it cause more car accidents? Does it impact memory or cause poor lung function? Does it hurt babies’ neurologic development if passed on in utero or via breast milk?

A report to the legislature in 2023 summarized the findings to that point, while a complex data dashboard continues to add new studies to the analysis.

The research team admits here that the data on these questions isn’t always robust or clear.

“Not surprisingly, we learned that there are holes to fill in what we know,” said Dr. Jonathan Samet, the former dean of the School of Public Health who worked on the project. “We’ve been transparent when there is not enough high-quality data to draw conclusions.”

So, while the research team is confident in the validity of the messages being put forth — for instance, that use of high-potency cannabis by youth is associated with a risk of developing psychosis — there’s a wariness to be too heavy-handed in delivering that message.

“We’re not here for a definitive answer just yet, but doing nothing isn’t an option,” Cathy Bradley, the School of Public Health’s current dean, said. “We have to inform. We have to use the best evidence we have and go forward.”

You can learn more about the campaign at TeaOnTHC.org.

Watch ColoradoSun.com in the coming days for a full story on how to build a public health campaign during a time of heightened scrutiny of public health authorities.

Every week is the week where I think, “I’m going to keep the newsletter short this time.” And then every week there is just too much interesting stuff happening to actually do that. A New Year’s resolution, perhaps?

We’ll be back in two weeks with a preview of the year ahead. Until then, may your window panes be frosted and your candles be gleaming.

— John & Michael

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