CEDAR RAPIDS, Iowa | Iowa’s Medicaid expansion could cost more than $160 million a year within a decade, according to a Northwest Iowa economics professor.
The net number of Medicaid participants in Iowa could increase by 515,000 in 2014 and by 744,000 over the next 10 years, according Jeremy Horpedahl, an associate professor of economics at Buena Vista University in Storm Lake.
That’s more than the annual operating budget for the University of Northern Iowa, Horpedahl said as way to put it in perspective.
Based on his analysis from a U.S. Department of Health and Human Services-funded model, Horpedahl said the state’s cost of covering new Medicaid beneficiaries could reach $164 million every year by 2014.
“Medicaid is already one of Iowa's largest budget expenditures, and within a decade it could add $164 million to the Iowa state budget with the federal government kicking in about $1.5 billion to fund the expansion,” Horpedahl said.
A spokesman for Gov. Terry Branstad didn’t dispute numbers presented by Horpedahl and Stephen Parente, a University of Minnesota professor specializing in health economics, information technology and health insurance. However, Jimmy Centers argued Iowa’s “unique state-based alternative” to Obamacare – the Affordable Care Act – will save taxpayers money.
“The innovative Iowa plan -- designed to improve the health of low-income Iowans -- returns savings to Iowa taxpayers through lower property taxes,” Centers said.
He also pointed out that the Heritage Foundation estimates Iowans will save $547 million over 10 years through the enhanced federal match.
However, as an economist, Horpedahl thinks it’s a mistake to treat this as “free money” because it will be paid for by taxpayers in other states.
The Heritage Foundation also found that Iowa already has above-average enrollment in Medicaid per capita, and is one of only 10 states that will see those savings, “which means we are shifting costs to other states,” Horpedahl said.
“Iowa already receives more than $1 in federal benefits for every $1 in federal taxes we pay, so as an economist thinking about the country as a whole, those predicted tax savings are really tax shifting to taxpayers in other states,” he explained.
Under the Affordable Care Act, the federal government will pay all the costs of the expanded Medicaid program through 2016, after which reimbursement will gradually fall to 90 percent.
The Iowa Health and Wellness plan would extend Medicaid to eligible Iowans who make up to 100 percent of poverty, or about $11,500 per year for an individual.
