The Pennsylvania Department of Public Welfare has released a letter it sent to the state’s Independent Fiscal Office (IFO) rejecting many of the assumptions underlying the latter’s analysis of the cost of expanding Medicaid eligibility in the state and stating that as a result of these incorrect assumptions, the IFO has significantly understated the cost of Medicaid expansion in Pennsylvania.
According to the letter sent by acting DPW secretary Beverly Mackereth to IFO director Matthew Knittel, the IFO inaccurately characterizes the baseline year during which to account for potential costs and savings; incorrectly maintains that upfront costs – including hiring 2000 new workers at higher salaries than the IFO projects – will be less than savings; and overstates savings associated with increased federal matching funds for General Assistance recipients.
DPW also maintains in the letter that the IFO incorrectly assumes that new enrollment will take place gradually instead of  fairly quickly once expansion begins; underestimates the number of new “woodwork” enrollees – individuals already eligible for Medicaid who will enroll in the program because of all the attention the eligibility expansion will receive; and prematurely assumes continued income from the gross receipts tax on Medicaid managed care organizations before the federal government has had an opportunity to decide whether the state will be permitted to continue levying that tax.
Read about the letter in this Philadelphia Business Journal article or download the letter itself here.