Medicaid expansion seen as sound investment for states

The Supreme Court's recent ruling on the Affordable Care Act allows states to opt out of the health reform law's Medicaid expansion without losing federal funding for their entire Medicaid program. The expansion would provide coverage to low-income adults and children.

Several governors quickly announced their intention to opt out, citing state budget concerns.  Gov. John Hickenlooper has not publicly stated a position on these expansions.

The Center on Budget and Policy Priorities (CBPP) has released a report examining how Medicaid expansion will affect state budgets. The report asserts that the cost of covering 17 million more low-income adults and children will not put an undo strain on state budgets.

CBPP uses data from the non-partisan Congressional Budget Office showing that Medicaid expansion will increase state spending by $73 billion nationwide, or 2.8 percent of the $2.6 trillion states are projected to spend without health care reform. This estimate includes the cost of covering people who are eligible for Medicaid but are not currently signed up and likely will be as the expansion rolls out. CBPP also emphasizes that the increased coverage of individuals under Medicaid will reduce costs associated with uncompensated care and services to the uninsured.

CBPP argues that these savings, in conjunction with the federal coverage of expansion costs, averaging about 93 percent but totaling no less than 90 percent of total cost, make opting in to Medicaid expansion a sound financial move for states.

CBPP also points out the impact of opting out on the 11.5 million workers with incomes that exceed the Medicaid eligibility requirements but who remain below the poverty line. These workers would not qualify for subsidies to purchase insurance and would be unlikely to afford coverage.

The report states that, beyond reduced costs of uncompensated care and treating the uninsured, states that opt in may see a healthier workforce with better access to care and the security of having health insurance. States that opt out will still incur costs from other ACA requirements, such as increased enrollment among those eligible for Medicaid and the expected increase in Medicaid payments for primary-care services.

The report concludes that the small state expenditure on Medicaid expansion, the decrease in cost of uncompensated care and amount of federal assistance makes opting out an unwise financial move.

– Cortney Green


Article posted on July 31, 2012