Spiking Medicaid Costs Stump Vermont Lawmakers

Oct 15, 2015

Lawmakers are slowly coming to grips with significant cost overruns in the state’s Medicaid program. But elected officials still aren’t sure what’s causing the budget problems, much less how to pay for them. 

The House Committee on Health Care convened in a Statehouse conference room this week for an update on the state’s $1.5 billion-a-year Medicaid program. 

The state is only three months into the fiscal year, but its Medicaid budget looks to be running $105 million over projections. And while the federal government will pick up a good chunk of the overrun, state taxpayers could be on the hook for a $40 million than was budgeted for in May.

It’s a significant amount of money in a state with a relatively small tax base. And since lawmakers don’t yet know why the costs are exceeding projections, they’re having a tough time figuring out what to do about them.  

“To not know the dynamics of what’s pushing the trend upward on Medicaid expenditures, it’s hard for us to be thinking about what are the policy decisions to address this,” says Hinesburg Rep. Bill Lippert, the Democratic chairman of the House Committee on Health Care.

Administration officials and legislative analysts are busy trying to pinpoint the source of the overruns. In the meantime, elected officials are going to have to decide how to re-balance a budget plunged in the red by the unexpected price spike.

“The debate will be between people who want to trim back services and those who want to push forward with new revenue and new strategies to bend the cost curve,” says Burlington Rep. Chris Pearson, head of the House Progressive Caucus. “And it’s going to be a very difficult debate. But it’s a healthy debate.”

"Vermont’s longstanding commitment to having more affordable health care and accessible health care for all Vermonters ... is going to require us to wrestle particularly hard with the trends we have financially." - Rep. Bill Lippert, House Committee on Health Care chairman

Pearson says he’ll be on the side pushing for increased revenues. 

Jim Reardon is the outgoing Commissioner of Finance for the Shumlin administration. He told lawmakers that there are a number of scenarios they could consider.

“You could serve the same amount of people, but do less. So the only options on the table are not just raising revenue or cuts such as deleting people from the caseload,” Reardon says.

About 200,000 Vermonters now receive some form of Medicaid coverage, a number that has increased significantly since the passage of the federal Affordable Care Act. But Lippert says the state’s commitment to providing subsidized health insurance to people who wouldn’t otherwise be able to afford it predates the recent Medicaid expansion. And he says the upward pressures in Medicaid only serve to magnify the focus on policy decisions that have helped give the state the lowest rate of uninsured residents in the nation.

“Vermont’s longstanding commitment to having more affordable health care and accessible health care for all Vermonters is a major policy commitment that is going to require us to wrestle particularly hard with the trends we have financially,” Lippert says.

The Shumlin administration will present its plan for addressing the Medicaid overrun in December.