In wake of federal reform, Minnesota's Medicaid enrollment surges to 1 million

Minnesota's Medicaid rolls have soared past the 1 million mark for the first time, driven by two years of explosive growth in government insurance programs in the wake of federal health reform.

The enrollment surge — one of the largest in the country and the biggest for the state in 35 years — helped push Minnesota's uninsured rate down to about 5 percent and has enabled more low-income families to receive regular medical care, doctors say.

But it also means that Medicaid and its sister program, MinnesotaCare for the working poor, now rank among the state's largest health insurers, which could place long-run strains on the state budget. Fully one in five Minnesotans now receive health insurance from public programs, up from one in 10 just five years ago.

While unprecedented, the spurt was not unexpected after the administration of Gov. Mark Dayton made an ambitious push to cover more of Minnesota's uninsured population.

"Our growth has been very much on target, especially given all the changes in the health care market," said Human Services Commissioner Lucinda Jesson. "That is really good for the state."

The ground was set for an enrollment surge two years ago, when Dayton made Minnesota one of 33 states that opted to expand Medicaid eligibility under the Affordable Care Act of 2010. Along with a streamlined application, state officials pushed to enroll large numbers of people who were eligible for public coverage but had not enrolled.

But that rapid growth troubles some state leaders, given that health care now consumes roughly a fifth of the state budget.

"Medicaid is eating 50 state budgets right now," said Rep. Matt Dean, R-Dellwood, chairman of the House Health and Human Services Finance Committee. "We are looking at $10 billion of spending [counting federal and state payments]. It is an incredible growth and it is also affecting the other areas of our budget."

While Medicaid's long-term state budget impacts are unknown, the short-term consequences appear to be modest. For people who became eligible under the Affordable Care Act, the federal government picks up 100 percent of the cost for the first three years, phasing down to 90 percent of the cost by 2020. That means that state spending on Medicaid will not grow as fast as enrollment.

United Family Medicine, a community clinic in St. Paul, is one of the clinics seeing more patients with health insurance, especially Medicaid. In 2014, it saw a 17 percent increase in the number of visits by patients with Medical Assistance. By contrast, the number of visits by uninsured patients dropped by 11 percent.

"Folks are more likely to show up at the clinic knowing they don't have a financial obligation," said chief executive officer Brian Nasi. "When they are self-pay or sliding fee scale, that can be a big hurdle for some."

The Medicaid program also pays slightly more than the federal reimbursement the clinic receives for treating uninsured patients. Anticipating that health care reforms could drive more patient demand, the clinic hired two additional employees.

United Family was one of dozens of "navigator" organizations hired by MNsure, the state's online health marketplace, to help uninsured people enroll.

"We were anticipating a jump in demand in the first part of 2014," Nasi said. "To some extent that didn't happen because of some of the challenges that MNsure had rolling out."

Once MNsure worked out its website glitches, the enrollments began growing and the clinic began seeing more patients with insurance.

Although the statewide pool of uninsured patients has shrunk, the clinic is still helping people sign up through its outreach efforts at about 15 community locations.

Despite the improving state economy, Jesson said she is not surprised that public program enrollments are growing.

"A lot of people are still in relatively low-paying jobs," Jesson said. "A number of them are eligible for the MinnesotaCare program."

MinnesotaCare covers people who are not poor enough to qualify for Medicaid, but it also requires enrollees to pay some premiums and co-payments. The future of the program, which began in 1992, is in doubt after the Minnesota House voted this year for its elimination. As part of a legislative budget compromise this spring, MinnesotaCare remains, but its future, along with that of MNsure, will be studied this year by a 29-member task force.

Although overall growth in health care spending has slowed sharply in recent years, locally and nationally, it still plays a sizable role in Minnesota's budget.

In 2015, total Medicaid spending is projected to be $10.6 billion, with the state paying $4.2 billion, up 9 percent from 2013. More than half of Medicaid spending — 58 percent — goes toward long-term care of the elderly and the disabled, even though they make up 17 percent of enrollment.

Human Services officials forecast smaller Medicaid enrollment gains in the future, with a projected 3.6 percent increase in the 2016 fiscal year, then 1 percent per year for the following three years.

Glenn Howatt • 612-673-7192