Abeler: MA expansion’s cost ‘a wash’ for state

Jim Abeler

Weighing in on a debate that has pitted Gov. Tim Pawlenty’s budget department against the Department of Human Services when it comes to how much a proposed Medicaid expansion will cost the state, GOP Rep. Jim Abeler, the incoming chairman of the health and human services finance committee, told the St. Cloud Times Friday the total cost would end up being “about a wash.”

At a legislative hearing last week, Department of Human Services officials said the cost of the proposed Medicaid expansion, which incoming Gov. Mark Dayton is expected to order upon taking office, would be negligible. That prompted rebuke the following day from Steve Sviggum, Pawlenty’s Minnesota Management and Budget commissioner, who said that was false and that it would cost the state $384 million.

According to the St. Cloud Times, Abeler agreed with the former interpretation, which takes into consideration all of the state’s funds, as opposed to solely the general fund.

Here’s how the math works, as we reported in Capitol Report last week: Sviggum was correct if you’re looking at the general fund alone. But if you include other dedicated funds that the state is statutorily obliged to maintain, Abeler, DHS and many DFLers are correct.

As it stands, the state is slated to spend $1.07 billion on the Medical Assistance expansion in the next biennium. Nearly $235 million of that will come from terminating the state’s General Assistance Medical Care program and shifting those people into Medicaid.

Another $475 million will come via transfers from the state’s Health Care Access Fund, a dedicated pool of dollars created to pay for the state’s MinnesotaCare insurance program. That leaves $384 million unaccounted for, the number cited by Sviggum.

But the expansion also removes costs from the dedicated Health Care Access Fund and adds them to the state’s general fund, Under the new system, the federal government will foot half that bill. Almost $890 million of the $1.07 billion in Medical Assistance expansion is money the state would have spent on MinnesotaCare through HCAF in the next biennium regardless.

Without the expansion, HCAF would be facing a $615 million deficit in fiscal year 2013. The expansion reduces that to $151 million, ultimately saving $464 million. Once all the fund interactions are accounted for the final net cost of the expansion for the next biennium is expected to be around $119 million under current law and projections.

Still, Abeler’s break with Pawlenty’s budget math, while significant, shouldn’t be seen as a sign the Anoka Republican is warming to a wholesale expansion of Medicaid, even if it is a fiscal wash for the state.

“Medicaid as a program is absolutely sick,” he told Capitol Report last week. “It’s not doing the good you want to do. To put more people into a program that is as terminally ill as this one does not seem prudent.”