Do You Believe in Medicaid Miracles?

By Steve Poftak
April 28th, 2011

The 1980 Miracle on Ice actually happened. For all our sake, the Medicaid Miracle that is embedded in both the Governor’s Budget and the House Budget better come true as well.

For years, Medicaid costs have advanced robustly, at roughly 7% per year which is a big number given that it’s building on a base of billions.

So, what do the budget forecasters in the Governor’s office and the House project for next year? Growth of only $100m in Medicaid — growth of 1% or less.

That will require the state to drive down its per Medicaid enrollee costs by 3.5% next year. How have we done at that recently? On average, per enroll costs have gone up by 5% per year and it has never been negative over the past seven years.

To provide some context for the per enrollee cost reduction projection, take a look at the assumption for cost increases in our health insurance program for retired state employees — +8% this calendar year and +7.5% next year. (see pg. 28) Big difference.

So what is the current trend holds and we can’t reverse the trend of Medicaid cost increases? The result is $912 million deficit. Here’s hoping for a miracle.