‘Tough’ budget choices on agenda

CARSON CITY – Lost in all the pro and con discussions over Gov. Brian Sandoval’s decision to expand the state’s Medicaid program by 78,000 participants is the fact that the program will cost the taxpayers an additional $200 million even if he does nothing.

That increase is $50 million more than what the Economic Forum expects the state will receive in tax and fee revenue growth.

Under state law, the forum’s estimates must be used by the Sandoval and the Legislature in approving the 2013-15 budget. And Sandoval has vowed to veto any tax increases, other than continuing $620 million in sales and business tax hikes that otherwise would expire June 30.

But don’t those figures mean legislators have no choice but to raise taxes?

"We are going to have to make tough decisions," said Senate Majority Leader Mo Denis, D-Las Vegas. "If we work together, it will work out. Things are starting to pick up."

"Whatever the dollar amount, this is a serious problem," said Assembly Minority Leader Pat Hickey, R-Reno. "The Legislature is going to have to grapple with it."

But both legislative leaders declined to talk further about any need for new taxes to pay for the Medicaid cost surge.

Enrollment in Medicaid, the health care program for the poor, disabled and some seniors, has been growing steadily as the recession continues to linger in the state, climbing from 134,000 residents in 2002 to 313,000 today.

Enrollment is expected to reach 490,000 by the middle of 2015. That will mean that one of every 5½ Nevadans will receive their health care through Medicaid.

SECOND-HIGHEST EXPENSE FOR STATE

The federal-state Medicaid program already costs state government $1.05 billion a year, second only to public education in Nevada.

It will reach $1.25 billion in the 2013-15 budget, regardless of whether the state expands the program to include individuals and families earning up to 138 percent of the poverty level. To qualify for Medicaid, an individual will be able to earn no more than $15,415 a year and a family of four, $31,809.

In a Dec. 12 appearance before the Review-Journal editorial board, Sandoval outlined the additional costs state government must pay for Medicaid.

■ $130 million to cover "normal growth" in the Medicaid population. The state expects 31,000 additional poverty-level people will qualify over the next two years.

■ $67 million to cover costs of 68,000 people who now qualify for Medicaid but have not applied for the program. They must enroll or face penalties when the federal Patient Protection and Affordable Care Act, or Obamacare, goes into effect in 2014.

"Those are the hard numbers," said Sandoval on Dec. 12, numbers he first gave to the media on Oct. 15. "It is going to cost the state, regardless if the (Obamacare) law had passed."

And these are the costs Nevada faces even before it expands Medicaid as initially required by Obamacare.

States were given the option to decide against expanding Medicaid in June by the U.S. Supreme Court when it upheld the Affordable Care Act. Sixteen Democrat state governors and Republican Sandoval have announced their intentions to expand.

Still Sandoval emphasized that there will be just modest cost increases through his decision to expand the Medicaid population. That is because the federal government will pay almost all costs of Medicaid expansion for the first three years.

The governor has not yet given an estimate of the state cost of expansion, but its primary cost will be paying for half of the administrative costs of the expansion program. But the return rate from the federal government drops to 90 percent in 2020 and later years.

‘HUGE LIABILITY AHEAD FOR TAXPAYERS’

Geoff Lawrence, deputy director of policy for the Nevada Policy Research Institute, doubts that will happen. The institute, based in Las Vegas, is a conservative think tank.

"They (the federal government) have their own fiscal crisis and cannot have annual trillion-dollar deficits forever," he said. "There is a huge liability ahead for taxpayers."

He also thinks it will be difficult to offer quality medical care to all the new Medicaid enrollees because of the lack of doctors in Nevada.

In 2010, Nevada had 185 doctors per 100,000 people, second worst in the nation and far below the 267 national average.

But Jon Sasser, the legislative lobbyist for legal aid organizations in Washoe and Clark counties, said people forget that Medicaid expansion will help the Nevada economy.

"We have been hearing about how much it would cost us, but not how much money will come in (from the federal government)," Sasser said. "Every dollar is going to be spent in the state and create jobs. I am glad the governor recognized that."

According to the Nevada Department of Health and Human Services, Affordable Care Act expenditures in the state provide a $3.6 billion to $6.2 billion impact for Nevada in 2013-2015. That money will create 3,400 to 8,600 jobs, the agency has reported.

Contact Capital Bureau Chief Ed Vogel at evogel@rviewjournal.com or 775-687-3901.