5 things to know about Medicaid spending in CT

There are many reasons why everyone in Connecticut should care about Medicaid. It’s responsible for the health care coverage of more than one in five state residents. It’s the main source of payment for nursing home care in Connecticut. It accounts for one of the largest chunks of state spending, and it’s been blamed for contributing to the state’s budget deficit.

It’s a key way the state has expanded coverage under the federal health law, and it’s likely to be part of the upcoming debate over the state’s next budget, when lawmakers try to keep their pledges to eliminate a massive deficit without raising taxes.

Here are a few things to know about Medicaid spending.

1. Medicaid covers more than 750,000 Connecticut residents

In December, 750,869 people in the state were covered by Medicaid – more than 20 percent of the population. Four of every 10 children born in Connecticut are covered by Medicaid at birth, and among all children, one in four is in the program, according to the state Department of Social Services.

Children and their parents make up nearly two-thirds of the state’s Medicaid clients – 477,184 as of December. They’re covered by a portion of the program known as HUSKY A, which has the highest income limit for eligibility – up to $39,777 for a family of three and $47,938 for a family of four.

Who are the rest of the Medicaid clients? They fall into two major categories.

One is for adults who don’t have minor children. As of December, there were 177,068 people receiving coverage though this category, known as HUSKY D, which is available to single people earning below $16,104 per year or couples earning below $21,707. This group became eligible because of the Affordable Care Act, although a portion of people covered by this program previously received state-funded medical coverage.

The remaining 96,617 clients are seniors and people who are blind or have disabilities. This part of the program, called HUSKY C, has the fewest members and the lowest income limit, but it represents the largest chunk of Medicaid costs.

2. Just under 13 percent of Medicaid clients account for nearly half of the spending

Providing coverage for the nearly 97,000 people in HUSKY C – seniors and people who are blind or have disabilities – costs significantly more than covering the other Medicaid clients.

During the final quarter of 2014, it cost an average of $2,467 per month to cover each person in HUSKY C.

By contrast, the average monthly cost during that time was $349 for parents and children in HUSKY A and $650 for the adults covered by HUSKY D.

Another way to look at it: It cost $2.74 billion to provide health care to people in HUSKY C during the 2014 fiscal year, nearly $1 billion more than covering more than 475,000 children and parents.

What accounts for the difference? Many people in HUSKY C have significantly more health care needs than other Medicaid clients. That coverage group includes people living in nursing homes and people on disability. Of the nearly $207 million Medicaid paid in claims for HUSKY C clients in December 2014, more than $98.2 million went to nursing homes and more than $33.8 million paid for home health care services. (Medicaid, not Medicare, is the major payment source for long-term care; it covers about 70 percent of nursing home residents in Connecticut.)

3. The monthly cost per person for Medicaid clients has been declining…

Overall, it cost an average of $686.76 per month to cover each Medicaid client during the quarter ending in December 2014. That’s down from $779 during the same period in 2013 and $758 in 2012, according to figures from the state Department of Social Services.

Per-person spending dropped the most in HUSKY D, the portion of the program that expanded Jan. 1, 2014 as part of the federal health law. Average monthly spending per member dropped to $650 in the quarter ending in December 2014, down from $804 during the same period in 2013 — a 19 percent decrease. Per capita spending among children and families decreased slightly during that period, while costs for people in HUSKY C rose by 4.6 percent.

4. …but total spending has been going up and Medicaid spending is forecasted to exceed what was budgeted this year.

That’s not necessarily contradictory: Enrollment has increased, and covering more people costs more, even if the per-person cost goes down.

This fiscal year, the Medicaid budget is on pace to run a $120 million shortfall. Budget director Benjamin Barnes has attributed it to increased enrollment, difficulties meeting savings built into the budget, payments to hospitals and receiving lower-than-expected federal reimbursement for the costs of certain clients.

5. Medicaid costs more than $6 billion per year in Connecticut, but you won’t see that much in the state budget.

That’s because two years ago, state lawmakers changed the way Connecticut accounts for Medicaid costs.

The federal government reimburses states for a portion of their Medicaid spending. Connecticut gets 50 percent of its costs reimbursed for most clients. But for those in HUSKY D, the federal government covers the full cost as part of Obamacare. (That share will start to drop in 2017 until it reaches 90 percent in 2020.)

In the past, Connecticut counted all its Medicaid costs as expenses in the budget and accounted for the federal reimbursement as revenue. But in 2013, legislators essentially moved the federally reimbursed portion of most Medicaid costs off the books, counting only the state’s share of Medicaid expenses in the budget. This had no effect on the total amount spent, but provided more room under the state’s spending cap. (This approach to handling Medicaid spending is consistent with what most other states do.)