New DHHR estimates of the impact of health-care reform

CHARLESTON, W.Va. -- West Virginia will pay far less for health-care reform than the Manchin administration originally estimated, according to revised estimates state officials gave legislators Wednesday.

In January, Department of Health and Human Resources officials said health reform will cost Medicaid an extra $25 million to $150 million a year, on average, between fiscal 2014 and 2019.

Now they have revised their estimate to an average of $4.5 million a year.

"That's quite a difference," said Delegate Don Perdue, D-Wayne, chairman of the House Health and Human Resources Committee.

In January, after legislators repeatedly questioned the numbers, DHHR officials agreed to take a second look.

"This is the second look," said John Law, DHHR spokesman. "We are pleased with these numbers."

DHHR staff members corrected mistakes and included savings this time, he said.

"It's been four months since we asked them to revisit these numbers," Perdue said. "They gave us this mistaken information while the Legislature was meeting. So, for three months while we were most active, that same mistaken information has colored the opinion of legislators.

The numbers made legislators more leery than they needed to be, he said.

"When you put that kind of dye in the water, you can't see the bottom," he said. "Now they [DHHR] say they were mistaken, and they give us more solid figures -- but those bad numbers had an impact."

Law said that, in January, DHHR officials mistakenly included all uninsured West Virginians in their estimates, including those who are not eligible for Medicaid. He said the new numbers include only people who are Medicaid-eligible.

The new numbers also factor in cost savings. Medicaid will save $110 million under health reform because hospitals and other health facilities will not have to provide as much free or low-cost service, according to the revised report.

"I'm glad we are finally seeing figures that make sense," said Sen. Dan Foster, D-Kanawha. "This is only a 2.4 percent increase in state Medicaid spending. It's a small, affordable increase for what we're getting."

About 121,000 West Virginians will be insured for that money, according to a report issued Thursday by the Kaiser Commission on Medicaid and the Uninsured. Law said the DHHR agrees with that figure.

The reform law will cut the number of uninsured West Virginia adults by 57 percent by 2019, according to Kaiser.

"That will be good for everybody," said Perry Bryant, director of West Virginians for Affordable Health Care. "Hospitals will have a far lower level of unpaid bills, so they will have far less incentive to raise their rates on paying patients.

"The average person doesn't realize how much people with insurance pay for the uninsured," he said. "About $1,000 of the average yearly insurance premium is caused by unpaid medical bills."

According to the new DHHR numbers, West Virginia actually will save $43 million during the first three years after 2014, when Medicaid changes kick in, because the federal government will pay 100 percent of the cost of new enrollees during those three years.

The rate drops to 95 percent in 2017, then to 93 percent. "After that, the reimbursement rate stays at 90 percent," Bryant said. West Virginia's rate has normally been between 75 percent and 78 percent.

Perdue said the new numbers also raise questions about $350 million in Medicaid dollars the Manchin administration has held in reserve. "They say we have to save this money because of what is going to happen in 2014. Now, we see that we are not going to fall off a cliff.

"I don't know where that assumption came from," he said, "but I can't help but think that the mistaken estimates had something to do with it."

In January, commenting on the original estimates, Congresswoman Shelley Moore Capito, R-W.Va., said, "I simply don't know how our state can absorb such a massive new liability."

Thursday, Ashlee Strong, Capito's press secretary, said: "The congresswoman is not prepared to comment on the new estimates. We're still studying them."

By the new DHHR numbers, between 2014 and 2019, West Virginia Medicaid will pay an extra $143 million and will save $116 million, for a net cost of $27 million, or an average of $4.5 million per year.

Kaiser said the new law will cost West Virginia $164 million between 2014 and 2019, but they did not estimate the savings.

"As our population becomes more healthy, we will see many savings in the future," Foster said. "I'm glad we all have numbers we can agree on now."

Reach Kate Long at 304-348-1798 or katel...@wvgazette.com.