Beacon Hill’s Budget MassHealth Mirage

Today the Legislature will vote on the final state budget.

I wanted to take one last opportunity to highlight the unrealistic assumptions that are being used for the MassHealth (Medicaid) program. If the state is unable to achieve these “savings” and instead follows historic spending trends, it could be looking at a $900 million gap, just for MassHealth.

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. See Pioneer’s work on this here.

The Legislature is hoping for 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.

First introduced in the Governor’s budget, both chambers followed his lead to include close to $1 billion in “savings” to decrease spending on the program. (The Senate didn’t reach the same level, because of additional spending on adult day health and children’s behavioral health, among a few others)

The most certain of the cuts–reductions in reimbursements rate to providers– may be in jeopardy given recent comments from the Obama Administration.(See my blog on the issue here) However, reducing reimbursements rates only exacerbates the access problem Medicaid patients face to find a doctor that will take their insurance.

Other sections of the final budget that pertain to MassHealth and should be noted are:

1) The inclusion of a forecasting office, because MassHealth has such a poor record in this area.

2) $1,000,000 for the expansion of auditing activities in MassHealth.

Before the Legislature and the Governor–assuming he signs the budget without amendment– can claim a balanced budget, they need to address the real issues in the MassHealth program.