Medicaid law trade-off

By Karen Augé
Denver Post
Feb. 11, 2007

New federal rules requiring proof of U.S. citizenship for Medicaid coverage will save Colorado $300,000, but cost $2.9 million to implement, according to state estimates.

The state Department of Health Care Policy and Financing, which administers Medicaid, has asked for an additional $2.8 million in the coming year to help counties cover most of the additional cost.

The state estimates that the new rules will result in 200 people losing Medicaid coverage in 2007 - and about 170 of them would be children.

The state's figure is based on U.S. census data and a report by the nonprofit Kaiser Family Foundation, a health care think tank.

More than 400,000 Coloradans are enrolled in Medicaid, at a cost to the state and federal governments of about $2.3 billion in the last fiscal year.

The average cost of Medicaid care for a child is about $1,500 a year, according to state data.

"How does it make sense to spend millions of dollars to keep an estimated 200 people, most of them children, off of Medicaid?" said Elisabeth Arenales, an attorney with the Colorado Center on Law and Policy - a nonprofit advocacy group.

Lisa Esgar, of the state Health Care Policy and Financing Department, said Colorado has no choice but to do what the federal government requires.

The department's estimate of the cost to do that is based on an average of five additional minutes for a county employee to process Medicaid applications.

"We really didn't know what to base an estimate on, but the federal government has done some research," Esgar said.

The $2.9 million includes $67,000 of the estimated $170,000 cost of updating the computer system that processes applications for Medicaid and other benefits for the indigent, disabled and elderly.

The remaining $103,000 for the computer system has been requested by the state human services department.

Congress' Deficit Reduction Act of 2005 made numerous changes to Medicaid, including requiring that anyone applying for coverage provide proof of citizenship.

Medicaid is a joint federal and state program to provide health coverage for the disabled, elderly and very poor.

In 2006, the Congressional Budget Office estimated that the new rules would slice 35,000 people from Medicaid roles nationwide, and save taxpayers $220 million over five years.

Estimates of how many undocumented residents are receiving Medicaid have been hard to come by, said Donna Cohen Ross of the nonprofit Center for Budget and Policy Priorities.

The Washington-based group last week released a report on how states are complying with the new rules.

Esgar said the state has no estimate of how many people have been purged from Medicaid in Colorado since the rules took effect July 1.

A state law passed last year requires Colorado residents to show proof of citizenship when applying for a variety of benefits in addition to Medicaid.

Nichole Paramelly, spokeswoman for Arapahoe County, said she had no estimate of how many people had been denied Medicaid or other benefits because of the new rules.

"Illegal immigrants weren't eligible for any of these services before, so we're not really turning away any new people," Paramelly said.

Arenales said the greater concern is people - such as the homeless - who are eligible for Medicaid but cannot get the documents to prove it.

Esgar said county officials worry about that too.

"Definitely, people are concerned that the barriers are preventing some people who would otherwise be eligible from getting benefits," Esgar said.

Cohen Ross said it is difficult to guess how many fall into that category.

"Those people still exist, those people still get sick, and they still seek care," she said.

Medicaid may not pay for that care, but someone will have to, she said.