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The expansion would cost Colorado some $128 million over the next 10 years, the governor said, far less than the $858 million estimate calculated by the Kaiser Family Foundation and Urban Institute last year.
The Department of Health Care Policy and Financing is working to control costs in Medicaid in a number of areas, including increasing effectiveness in care delivery, reforming payment systems, leveraging health information technology and redesigning administrative infrastructure.
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Combined, these efforts are projected to save the state $280 million. These savings are expected to help cover the cost of an expansion of Medicaid, as authorized by the federal Affordable Care Act, according to a release from Hickenlooper’s office.
“We worked diligently over the past several months to find savings in order to expand coverage,” Hickenlooper said. “Not one dollar from the state’s general fund will be used for this expansion, even in 2017 when the federal government begins to reduce its share.”
The Affordable Care Act authorizes new coverage levels beginning Jan 1, 2014 that will allow Coloradans earning up to 133 percent of the federal poverty level to enroll in Medicaid.
Right now, this amounts to $14,856 for an individual and $30,657 for a family of four. Colorado law already allows Medicaid to cover children and some adults in this income bracket. The new eligibility standards will enable the state to cover an additional 160,000 adults. Medicaid currently covers about 620,000 people in Colorado.
The federal government will cover 100 percent of the costs for the newly eligible Medicaid population through 2016. In 2017, the federal match rates will begin to phase out, and in 2020, Colorado will be responsible for 10 percent of the costs.
State law will have to be changed in order to give the Department of Health Care Policy and Financing the spending authority for the coming changes. This legislation should be introduced to the General Assembly soon, according to the governor’s office.
The agency projected it can save $22 million by preventing unnecessary or duplicative services. Another $86 million in savings, it said, can be expected by pushing for higher levels of coordinated care and imposed new performance benchmarks on health care providers. Yet another $86 million in savings are anticipated by basing payments to providers on value instead of volume.
Savings of $86 million more will be sought by using better technology and by doing more to crack down on fraud.
The Colorado Center on Law and Policy welcomed Thursday’s announcement.
“We’re pleased Gov. Hickenlooper is taking the lead on collaborating with the legislature to ensure more Coloradans have access to health care,´ said Elisabeth Arenales, the health program director at the nonprofit. “Expanding Medicaid means more Coloradans, including 122,000 who currently work but can’t afford insurance, will soon be able to afford to see a doctor when they’re sick.”
More information about the Medicaid expansion can be found here.