Office of Sen.

Mike Johnston
Colorado General Assembly | 200 E. Colfax Avenue | Denver, CO 80203 | 303.866.4864

SB 13-006 No Reduction in K-12 Education to Expand Medicaid Sen. Balmer Staff Name: Gideon Irving What the Bill Does: Historically, Medicaid has been a federal program that matches federal dollars with states dollars in exchange for their compliance with federal guidelines and stipulations. The federal Patient Protection and Affordable Care Act (ACA) expands traditional Medicaid eligibility to certain people who live on incomes up to 138% of the federal poverty level.1 The U.S. Supreme Courts decision on June 28, 2012 upheld ACA as constitutional but declared that states have the choice to opt in or out of the Medicaid expansions. If a state chooses not to participate in the Medicaid expansions stipulated by ACA, the U.S. Dept. of Health & Human Services cannot withhold existing Medicaid funds paid to that state.2 If a state government does receive new federal funds for expanded Medicaid under ACA, they must spend those funds on expanded ACA Medicaid.3 For states who choose to adopt ACA Medicaid (beginning 2014), 100% of the cost will be paid by the federal government through 2016, at which time the federal share will drop annually until it reaches 90% in 2020.4 SB 13-006 prohibits the Colorado General Assembly from spending state money to participate in ACA if the effect of that spending decreases funding for Colorados public schools. Colorado Context: The most recent statistics on the Medicaid website are for FY 2009 and list Colorado as having 702,239 Medicaid enrollees at a total cost of $3.53 billion. This figure is comprised of about 60% federal funds ($2.1 billion) and 40% state funds ($1.4 billion).5 The text of SB 13-006 states that the Kaiser Family Foundation has estimated that the Medicaid expansion could cost Colorado $850 million over the next 10 years. Joan Henneberry, executive director of the Colorado Department of Health Care Policy and Financing and former senior health policy advisor to Gov.
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FACT SHEET MEMORANDUM

O'Connor, Megan C., and William O. Jackson. "Analysis: U.S. Supreme Court Upholds the Affordable Care Act: Roberts Rules?" The National Law Review. National Law Forum LLC, 29 June 2012. Web. 24 Jan. 2013. 2 Id. 3 Id. 4 Id. 5 "Colorado Medicaid Statistics." Medicaid.gov. Centers for Medicare & Medicaid Services. Web. 24 Jan. 2013.

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Ritter, estimates the ACA Medicaid expansion to cover an additional 130,000 Coloradans by 2017 at an estimated cost of $625 million with no General Fund costs to the state.6 Colorado's Medicaid program has several eligibility groups, two of which already align with the upper income levels set in ACA (children and pregnant women). Expansions for other eligibility groups have occurred in recent years, notably with the adoption of House Bill 09-1293. This bill authorized the state to collect hospital provider fees (cash funds) to, in part, increase the income eligibility limit for parents with dependent children from 60 to 100 percent of FPL [Federal Poverty Level] and, to the extent money is available, provide coverage to adults without dependent children with incomes of up to 100 percent of FPL. Expanding Medicaid further under ACA is expected to primarily affect adults and disabled persons. Governor Hickenlooper recently announced plans to expand Medicaid in accordance with ACA and pledged to pay the state's future costs without the use of General Fund dollars, although this policy will be decided jointly by the Governor and the legislature.7 National Context: Many states are still trying to decide whether or not they will adopt the ACA expansion of Medicaid. For the 17 states and the District of Columbia that have decided to implement it, most are attempting to determine how much the expansion will cost. Hardly any states are yet addressing how they might pay for the expansion. On January 14, Arizona Gov. Jan Brewer announced a plan to adopt the ACA Medicaid and to pay for it through a hospital provider tax but is already facing opposition in her state legislature.8 California Gov. Jerry Brown has already set aside $350 million, and has proposed two options for sharing some of the cost burden with counties: (1) to ask counties to assume more responsibility in providing social services; (2) to ask each county run its own expansion program.9 Bill Provisions: Declares the importance of K-12 education, the passage of ACA, the findings of the Kaiser Family Foundation, and the assertion that appropriating General Fund dollars to pay for ACA Medicaid necessarily reduces education funding. Prohibits reducing education funding to pay for ACA Medicaid. Fiscal Impact:

Henneberry, Joan. "Impact of PPACA on the Colorado State of Health." ColoradoCultureofHealth.org. Colorado Business Group on Health. Web. 7 Kerry White, Fiscal Note S.B. 13-006 (January 14, 2013). 8 Christie, Bob. "Hospital Tax May Pay for Ariz. PPACA Medicaid Expansion." LifeHealthPro.com. Summit Business Media, 21 Jan. 2013. Web. 25 Jan. 2013. 9 Lin, Judy. "California: Brown OKs Medicaid Expansion, Fears Costs." LifeHealthPro.com. Summit Business Media, 14 Jan. 2013. Web. 25 Jan. 2013.

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For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.

In the absence of legislation that specifies how Colorado will expand Medicaid under ACA and pay for any future costs, this analysis assumes that this bill could affect the allocation of state moneys in the future. Two scenarios are considered below. First scenario. If Colorado expands Medicaid and legislation does not specify how costs will be paid in the future, two options exist: expansion costs would be paid with cash funds or the General Fund. If cash funds are insufficient, the state could decide to use General Fund money or repeal the expansion. If the state elects to appropriate General Fund money for an expansion of Medicaid under ACA, doing so will reduce the amount of General Fund money available for other purposes. However, because the General Assembly has discretion to appropriate resources among all state agencies, it is uncertain that any General Fund cost increases would result in a reduction in public school funding. Second scenario. If Colorado expands Medicaid and legislation specifies that no General Fund money will be used for this purpose, the bill will not affect the allocation of General Fund money or public school funding.

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For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.