Deal healthcare prediction seems close, but needs more details

Georgia Gov. Nathan Deal, like many conservatives, is sickened by the federal health care legislation that passed last year.

"When you start talking about the financial obligation this bill will place on this state and every state, it's huge," Deal said in a December interview with The Atlanta Journal-Constitution.

Deal said earlier this week to the Georgia Healthcare Association that the bill will cost the state government an additional $250 million a year in Medicaid costs, beginning in 2014.

We're well aware of the ongoing debate about whether the bill is a good piece of legislation. Most Democrats and progressives praise the legislation, saying it expands health care to more Americans. They also note that the nonpartisan Congressional Budget Office said the health care legislation will reduce the deficit by $124 billion over 10 years. Most Republicans and conservatives argue the bill is a classic example of government overreach, dispute the deficit estimates and say it will hurt small businesses.

We're not here to argue the merits of the bill. Our curiosity was piqued by Deal's claim about the legislation's impact on the Peach State. Will it, as Deal said, have a "huge" impact on Georgia? Or is he scaring us?

"When you expand eligibility for a program, you enlarge costs," said Stephanie Mayfield, a spokeswoman for the governor. "Under new regulations, a family of four earning $30,000 a year can join the Medicaid rolls. You multiply how many new recipients will come on the state rolls by the amount the average recipient costs the state and you're talking about a huge cost. There's no debate on this issue."

So how much will this cost Georgia taxpayers?
There will be many health cost reductions and cost increases as a result of the bill. Many of those will be determined by regulations yet to be written. But one of the biggest costs will be for Medicaid, the health program for low-income Americans. And those costs have already been widely calculated.

In 2014, anyone with an income below 133 percent of the federal poverty level, currently about $30,000, will be Medicaid eligible. There were about 1.4 million Georgians on Medicaid in 2010, according to the state Department of Community Health. One widely used estimate, by the Urban Institute for the Henry F. Kaiser Family Foundation, suggests an additional 774,000 Georgians will be eligible under the new plan. Deal estimates an additional 650,000 Georgians would be eligible.

The Kaiser Foundation estimates Georgia will spend an additional $714 million to $1.2 billion on Medicaid between 2014 and 2019 as a result of the legislation. The conservative-leaning Heritage Foundation estimates the Peach State will spend $1.3 billion during federal fiscal years 2014 to 2020. The Heritage Foundation based its estimate on data from the federal Centers for Medicare and Medicaid Services. The annual average of both projections is about $200 million a year.

The state Department of Community Health's budget says its budget for Medicaid and Peachcare, the state's program for uninsured children, is about $1.4 billion. An additional $200 million in spending would result in about a 14 percent increase.

Karen Minyard, executive director of the Georgia Health Policy Center, said including Medicaid, there are about 10 changes involving the federal legislation that may have an impact on state finances. They include the health insurance exchange, where people can buy insurance policies that meet minimum standards for coverage. An estimated 1.7 million Georgians who do not have health insurance and 387,000 residents with nongroup insurance will be able to buy coverage through the health insurance exchange, according to the U.S. Department of Health and Human Services.

Minyard also said the state may have to spend more money to cover its own employees, hire people to implement the program, provide additional immunization and oral care, and cover other costs.

Minyard, whose center is based in Georgia State University's Andrew Young School of Policy Studies, said many of the costs will not be known until additional details are worked out by state and federal lawmakers.

"When I think of the magnitude of this change, it is going to be a very big change," she said. "There is no way to get around it."

The state's Department of Community Health estimated the additional cost in 2013 could be anywhere from $100 million to $200 million, according to one state report. It could rise to $500 million a year between 2014 and 2019, according to a September 2010 report put together by the Georgia Senate's research office. Most of the cost to care for new Medicaid recipients will come from the federal government, experts say. The state's costs do not accurately reflect the state's costs under the final version of the bill, the Senate report said.

Georgia's current fiscal year budget is about $18 billion. The highest annual projections of the impact of the health care legislation, $500 million, would be approximately a 2.8 percent increase to the state budget. Deal's projected increase in Medicaid costs amounts to an average of $250 million a year, which is a 1.4 percent budget increase. The governor's number does not include other projected costs.

The percentages may seem small, but considering the state's grim financial state, an additional $500 million to the budget would be significant. However, those projections are not as solid as the studies by Kaiser and the Heritage Foundation.

Considering that the precise impact of the legislation on Georgia is yet to be determined, we think it's somewhat early for Deal to say exactly how big the impact will be on state finances. But every indication is that it will be significant. The governor's statement is largely correct but needs clarification.

Still, in a financially struggling state where the budget, by law, must be balanced and where Medicaid consumes a significant portion of that budget, the governor makes a valid point. We rate Deal's claim as Mostly True.

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