Corbett Administration Pushes Back Against Medicaid Expansion Savings

By Eric Boehm | PA Independent

HARRISBURG — The administration of Gov. Tom Corbett says a report on Medicaid expansion by the state’s Independent Fiscal Office improperly claims as much as $515 million as savings, revenue or underestimated costs to the state.

The IFO report, published in April and updated last week to reflect new information, showed expanding Medicaid in Pennsylvania would produce $180 million in savings for the next during the next budget year – mostly due to shifting state-level costs to the federally funded Medicaid program.

The expansion of Medicaid is a part of the federal health-care reform law, but states must voluntarily opt-in to the program, something Corbett has so far been unwilling to do.

In a letter sent to the IFO on Monday, Bev Mackereth, acting secretary of the Department of Public Welfare, said the department has “serious concerns” about some of the assumptions contained in the IFO report.

“The IFO report on Medicaid expansion should not be considered a budgetary estimate on the impact of Medicaid expansion,” Mackereth wrote.

The department claims the IFO underestimated staff and salary costs of the implementation by $59 million, failing to account for the estimated 2,000 new staff if Pennsylvania decided to expand Medicaid. The report also overestimated by $122 million the savings that could be achieved by shifting those covered by the state’s General Assistance program into Medicaid, according to Mackereth.

The IFO analysis also expects $78 million in new state revenue through the so-called “Gross Receipts Tax,” a tax paid by hospitals. But it is unclear if that tax would be allowed to continue if the state adopts the Medicaid expansion.

The department believes the federal government may require changes to the tax, so the IFO should not include the estimated $878 million over the next eight years that would flow into state coffers.

In a response, IFO executive director Matt Knittel stood behind the conclusions of the agency’s report, though he agreed the report should not be viewed as a statement of expected revenues.

The report is based on a “broad analysis” for policymakers, and the actual costs may differ from the estimates provided by the IFO, he wrote.

“It was necessary to provide expenditure and revenue figures on a fiscal year basis so that policymakers would have some guidance regarding the relative magnitude of any costs or savings,” Knittel wrote.

The Medicaid expansion will be a major part of budget negotiations in Harrisburg for the next month.

Corbett has maintained he is waiting for more information and seeking more flexibility from the federal government before agreeing to move ahead with the Medicaid expansion. The letter from Mackereth is the first time the administration has publicly pushed back against claims the expansion would benefit the state financially.

Other opponents of the expansion have said any savings the state can achieve by moving poor Pennsylvanians into Medicaid will simply end up costing taxpayers at the federal level instead.

On Monday, Senate Minority Leader Jay Costa, D-Allegheny, continued the Democratic call for Corbett to accept the Medicaid expansion – pointing to the benefits identified by the IFO report and other independent studies.

His colleague, Senate Appropriations chairman Vince Hughes, D-Philadelphia, has introduced a resolution that would force the full Senate to vote on the expansion.

Costa predicted Monday — should such a vote happen — it would pass despite a 27-23 Republican majority in the chamber.

Senate Majority Leader Dominic Pileggi, R-Chester, said last week it was time for Corbett to decide on Medicaid.

Boehm can be reached at Eric@PAIndependent.com