Medicaid’s Flimsy Math

by Charles Katebi

The director of Wyoming's Department of Health, Tom Forslund, recently sat down before the Joint Appropriations Committee (JAC) to make his plea for more spending. The biggest item by far on the agency's wish list was Medicaid Expansion, costing a whopping $268 million. How did he try selling such an expensive line item to the JAC? He claimed Medicaid Expansion would actually save Wyoming money.

The notion that taxpayers will save money while government programs grow is certainly attractive to beneficiaries of government largesse. Vickie Diamond, President and CEO of the Wyoming Medical Center, echoed this fallacy in the Casper Star Tribune, saying Medicaid Expansion would:

"significantly reduce our $200 million budget shortfall. This funding frees up state dollars currently being spent on programs for the uninsured, allowing the governor and the Legislature to redirect funds to other important areas like building roads and investing in our schools."

While this claim is indeed appealing, it is complete fiction.

Should legislators expand Medicaid, the government's burden on taxpayers will still go up. The Health Department is expected to spend $1.92 billion in the current biennium. But for the next biennium, the department wants $355 million in new spending, bringing their total budget request to $2.29 billion. What this government agency really means by "savings" is that Medicaid Expansion would help pay for the new spending it wants.

One of the Health Department's biggest budget requests is $11.3 million in new spending on Title 25, i.e. emergency detentions and involuntary hospitalizations. Under Title 25, Wyoming's 23 counties have the authority to detain mentally unstable individuals suspected of being a threat to themselves or others. Once an individual is identified as a threat, they are transferred to a hospital for involuntary treatment. Counties pay for the first 72 hours of detention and treatment. And the Department of Health is on the hook for all other costs going forward.

But even by the Health Department's questionable definition of "savings," Medicaid Expansion won't cover the cost of the agency's spending increases. It turns out that under its rules, Medicaid cannot pay for involuntary treatments. So even if Wyoming expanded the program, the state and counties would still have to pay millions to treat mentally ill individuals under Title 25.

Members of the Appropriations Committee quickly realized these purported savings were imaginary. Upon hearing that Medicaid Expansion wouldn't actually displace Title 25 spending, Senator Bruce Burns (R-Sheridan) asked Director Forslund:

"Am I missing something here? How would Medicaid Expansion care for them if [Medicaid] can't pay for involuntary hospitalization?"

Forslund admitted:

"We can help [the mentally unstable] before they reach crisis situations. Medicaid Expansion, by itself, will not solve the problem of Title 25."

It turns out that Forslund's grand money-saving scheme is to expand Medicaid and hope it reduces the number of individuals admitted into hospitals through Title 25.

The Department of Health's assumption that Medicaid Expansion would reduce future involuntary treatments is without foundation. According to agency officials, the department has no idea whether individuals being hospitalized through Title 25 would even qualify for expanded Medicaid. It's likely that many Title 25 individuals will either make too much money, or belong to a household that makes too much money to qualify for Medicaid Expansion.

And even if an individual qualifies, they would still have to enroll. People hospitalized through Title 25 usually end up there because they lack the family and community resources that are essential to treating mental health. Without support from their families and communities, many mentally ill individuals are more likely to forego treatment than to seek it out for themselves.

A survey by the Employment Benefit Research Institute found that mentally ill individuals seek far fewer mental health treatments when they live by themselves than if they are a dependent. Merely expanding a faceless government program won't help mentally disabled individuals if they lack social support to guide them through the enrollment and treatment process.

There are far more humane and cost-effective ways to treat the mentally disabled. The Title 25 Subcommittee recently proposed a series of reforms that would make mental healthcare more patient-centered and less invasive. And none of these proposals include signing vulnerable individuals onto a federal program that's hurtling towards bankruptcy.

After hearing the Health Department's testimony, it became clear to listeners that Medicaid Expansion won't relieve Wyoming's fiscal crisis. Taxpayers will still be on the hook for another ballooning government budget.