Report: Md. could save $829M in 10 years of health care reform, then more costs shift to state

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Md. could save $829M under health care reform

ANNAPOLIS, Md. — Maryland could save about $829 million on health care costs between fiscal year 2011 and 2020 because of federal health care reform, according to a model the state released Monday.

The savings, however, last only until the end of the decade, when the federal law shifts a greater share of financial responsibility for Medicaid expansion to the states.

The projections are in an interim report by Maryland’s Health Care Reform Coordinating Council, which Gov. Martin O’Malley created in March to study how the federal health care reform law will affect the state.

While the report emphasizes that current and future projections are fluid, it cautions that the state must stay committed to reducing overall health care costs. That’s because Maryland is projected to spend $46 million more in fiscal year 2020 as a result of health care reform than it would without it.

“For this reason, the state must focus on bending the cost curve early in order to improve the outlook at the end of the decade,” the report said.

Richard Cauchi, a health program director for the National Conference of State Legislatures, said while many states are focusing on how federal health care reform will affect finances, the Maryland report shows the state is in the top ten for analyzing the law’s impact.

“Clearly Maryland has taken some serious initial steps on this,” Cauchi said. “There is definitely a general value to states being able to plan and be as accurate as they can with spending.”

The council’s report recommends taking steps to prevent health care costs by increasing access to primary care through patient-centered medical homes, in which teams of health care professionals provide primary care in a coordinated manner. The report also recommends building a health information technology infrastructure and reducing the number of hospital-acquired infections.

The report’s projections are based on research by The Hilltop Institute of the University of Maryland, Baltimore County.

The major elements of federal health care reform become effective in 2014.

The peak savings for the state take place in fiscal year 2016, when the state will save an estimated $250 million. But the savings begins dropping off in the next fiscal year to $145 million, then to $80 million in fiscal year 2018 and $46 million in fiscal year 2019.

John Colmers, secretary of Maryland’s Department of Health and Mental Hygiene, emphasized the model is a tool for policymakers and others to use in evaluating how health care reform is going to effect the Maryland budget over the next decade.

“There are assumptions that are built in here that are simply that: assumptions,” Colmers said. “We expect that those assumptions will change over time as we know more as decisions are refined and are adopted and as budgets are built surrounding this.”

Maryland currently has between 700,000 and 800,000 uninsured residents, according to state health department estimates. The report notes that after the federal law is fully implemented, that number will be cut in half.

The reason it will only reduce the rate by half is largely because the law doesn’t apply to people who are not citizens and because not everyone who is eligible for Medicaid applies for it.

The report points out that federal health care reform will have unique effects in Maryland. That’s because the state in recent years extended coverage to more than 200,000 people by expanding Medicaid eligibility to low-income adults. Maryland also has helped small employers offer coverage. In 2003, Maryland formed a high-risk pool for people barred from insurance for health reasons.

“In some areas, federal health care reform presents a logical extension of these efforts and other initiatives, while in other cases, federal mandates may require rethinking existing efforts,” the report said.

O’Malley created the council the day after President Barack Obama signed the national health care bill into law. The council, which has held four meetings and received hundreds of public comments, will continue to hold meetings and appoint workgroups to address challenges in implementing the federal law. Colmers and Lt. Gov. Anthony Brown co-chair the council.