Iowa Health and Wellness Plan costs could top $1 billion

New program will offer subsidized care to needy Iowans

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March 28, 2014 | 8:25 pm

DES MOINES — The cost of providing expanded, government-subsidized health-care coverage to needy Iowans is projected to top $1 billion when the Iowa Health and Wellness Plan is largely implemented by July 2015, according to budget documents prepared by the state Department of Human Services.

The entire cost of the health-care expansion will be covered by the federal government until 2017, when the state begins to pick up 5 percent of the cost and then pays a 10 percent yearly match beginning in 2020 and beyond, DHS officials say. Initially, the agency estimates the total federal program cost for the expanded health care will be $324.8 million through next June 30 and nearly $1.021 billion in fiscal 2015.

“It’s a large number,” said Sen. Amanda Ragan, D-Mason City, one of the architects of the bipartisan compromise approved by the split-control Legislature last session and signed by Gov. Terry Branstad. She noted the figure is similar to the uncompensated charity care that hospitals and others currently provide, which get factored into private insurance rates that consumers pay, so ultimately the hope is to contain or lower costs by getting Iowans to take more responsibility for their health decisions.

“I think this is just truly a very rough estimate,” said Sen. Jack Whitver, R-Ankeny, ranking member of the Senate Appropriations Committee and an ex officio member of the Iowa Council on Human Services, who noted the question remains whether federal and state governments can afford the expansion.

“There are so many unknowns. Obamacare’s been delayed or amended 19 times. It’s changing so much that, as people come in, we really have no idea what it’s going to look like in the end,” Whitver said. “I can’t say I’m surprised by that number,” he added. “I’m hopeful that it goes down, but I think there’s a real possibility that it will go up.”

DHS Director Charles Palmer said up to 150,000 Iowans could be enrolled in the new program — which is awaiting federal waiver approval — by the end of the current fiscal year, and DHS projections indicate the number of enrollees could build to more than 191,000 by fiscal 2017.

Enrollment of the eligible population is expected to occur over several years with 60 percent signing up in the first year and 30 percent in the second year, agency officials told members of the Iowa Council on Human Services this week. Enrollment will begin Oct. 1 and, starting Jan. 1, the plan will cover all Iowans aged 19-64 with incomes up to and including 133 percent of the federal poverty level.

The plan is intended to expand access to health-care coverage for low-income, uninsured and underinsured adults. The new approach will cover adults who are not otherwise eligible for comprehensive Medicaid, Medicare or cost-effective employer sponsored insurance coverage.

Under the compromise legislation, Iowans with income up to 100 percent of the federal poverty guideline ($11,490 for a family of one and $15,510 for a family of two) would receive the same benefits as state employees with their insurance premiums being paid for entirely by federal Medicaid money.

Iowans who have yearly income between 101 percent and 133 percent of the federal poverty standards (up to $15,281 for a family of one and up to $20,268 for a family of two) will seek private coverage via the state-federal insurance exchange being established under provisions of the federal Affordable Care Act.

The addition of the Iowa Health and Wellness Plan boosted the DHS’ projected budget for federal and state spending on social services in fiscal 2015 to about $6.3 billion — nearly $1.8 billion from the state general fund and $4.5 billion from federal and other sources. Current-year funding is $5.2 billion, with federal and other sources accounting for about $3.4 billion.

The department’s overall budget request — which Palmer said could touch nearly 1 million Iowans in the 12-month period beginning next July 1 — was for about 1.1 percent above Branstad’s fiscal 2015 recommendation, with factors such as a projected $35.1 million decline in federal funding and the need for a $38.2 million supplemental appropriations to cover a shortfall in Medicaid funding for the current budget year.

“It’s a budget that we think is very reasonable,” Palmer said, noting that about 85 cents of every dollar the department receives from federal, state and other sources go toward health-related programs and services.

Whitver said Iowa’s yearly Medicaid costs have been growing so adding another $100 million to the state’s cost when the 10 percent match requirement takes effect beginning in fiscal 2020 is “a very big number that we want to keep an eye on.”

Tim Albrecht, Branstad’s spokesman, said the DHS estimates are in line with the projections the administration submitted to federal Health & Human Services officials in seeking waivers to offer the new health and wellness approach. “We look forward to approval of the bipartisan Iowa Health and Wellness Plan by HHS in the near future,” he said.

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