Medicaid Spending Projections Fall, Easing Budget Worries

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CHARLESTON, W.Va. – As West Virginia considers extending health care to the working poor by expanding Medicaid, one worry has been widening a program that some have said has an unsustainable budget. However, recent figures show that the threat is subsiding. The Congressional Budget Office has sharply cut its estimate of Medicaid costs for the 10 years ending in 2020.

Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, said analysts disagree why, but some of it is clearly the cost-containment written into “Obamacare.” He said the savings is more than $200 billion.

“What they project federal Medicaid spending will be has fallen substantially, just between what we saw in 2010 versus what we are seeing in February 2013,” he said.

Gov. Earl Ray Tomblin is expected to announce soon if Medicaid will be expanded to cover another 130,000 West Virginians. The federal government would cover the full cost of expansion for the first few years, and almost all after that.

Critics have said the program should not be growing here when the state faces a big shortfall in its share of the budget, as it does this year. In response, Sean O’Leary, policy analyst with the West Virginia Center on Budget and Policy, pointed out that the overall state spending on Medicaid is actually less this year than last. He said the shortfall is because a state trust fund that had paid part of the cost has been emptied.

“We’re actually proposed to spend less overall on Medicaid, but more from the base budget, because some of these other sources are starting to dry up,” he said.

Park pointed out that Medicaid is an extremely lean program – maybe the cheapest of its kind.

“To cover the same person, Medicaid costs 27 percent less for kids and 20 percent less for adults than covering them through private insurance,” he stated.

The lower cost projections for Medicaid match similar new predictions for Medicare. Together, Park said, this could mark a turning point toward long-term federal budget health and help assure states that the federal government will uphold its commitment to the programs.

More information is available from the Center on Budget and Policy Priorities at http://www.goo.gl/bdKC0.

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