California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Recent Reports Put Pressure on States To Expand Medicaid Programs

States that opted out of the Affordable Care Act's Medicaid expansion are facing increased pressure to change course, amid a spate of studies and financial reports showing the benefits of participating, Forbes reports.

For example, Tenet Healthcare CEO Trevor Fetter in a call last week said that its hospitals in five states that have expanded Medicaid have "benefitted from a significant migration of patients from uninsured into Medicaid with a 54% decline in uninsured admissions and a 27% decline in uninsured outpatient visits."

Similarly, the Urban Institute released a report last week that found that states that have not expanded Medicaid will "miss out" on more than $420 billion in federal funding between 2014 and 2022. In addition, states that opt not to expand will miss out on increased employment in the health care industry that would be generated by newly insured patients.

Meanwhile, Families USA has released 10 different issue reports showing the potential benefits of expansion in different states, including Alabama, Florida, Missouri and Virginia, among others. For example, the organization in a report last week found that had Indiana expanded its Medicaid program when the option was first offered, "by 2016 new federal funds flowing into the state would have supported 16,400 jobs and increased state economic activity by $1.9 billion" (Japsen, Forbes, 8/10).

Meanwhile, Princeton economics professor Uwe Reinhardt, writing in the New York Times' "The Upshot," notes that the Urban Institute report shows that states' decisions to opt out of Medicaid expansion are "in effect [a] vote against one of the most fantastic cash-flow deals ever offered them." He writes that given how states "are free to drop out of the Medicaid expansion if they choose to," there is no reason for them to not accept "the highly profitable deal," adding that he believes "politically powerful interest groups" in favor of expansion "will ultimately prevail and get the deal done" (Reinhart, "The Upshot," New York Times, 8/12).

Report: Federal Funding for Expansion Unlikely To Be Cut

In related news, the Urban Institute report also found that the federal government is not likely to cut promised funding to states that expand Medicaid under the ACA, the Washington Post's "Wonkblog" reports.

The federal government under the ACA pledged to fund 100% of Medicaid expansion costs through 2016, gradually cutting down funding to 90% by 2020. Several states that opted against expanding Medicaid have cited concerns that the federal government will back out on that promise, leaving the state to pick up a larger portion of the cost for new enrollees.

However, the Urban Institute report found that the federal government since 1980 has only once cut Medicaid funding to states, with most of its more than 100 cuts to the program targeting services, provider payments or program eligibility.  

In addition, the report found that the pledged expansion funding accounts for just under 7.4% of federal expenditures on Medicaid over the next decade, based on estimated from the Congressional Budget Office. According to "Wonkblog," lawmakers would not be able to save much money by cutting those funds (Millman, "Wonkblog," Washington Post, 8/11).

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