States That Opt Out of Medicaid Expansion Will Lose Billions in Funds
Not participating in the Medicaid expansion under the Affordable Care Act would mean states would lose out on billions in federal funding and millions fewer low-income residents would become insured, according to a study published Monday in the journal Health Affairs, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 6/3).
Background on ACA's Medicaid Expansion
Under the ACA, all U.S. residents with incomes up to 138% of the federal poverty level would have been eligible for Medicaid. However, the Supreme Court ruled that states could choose whether to participate in the expansion.
For states that opt in, the federal government will cover 100% of the cost of the expansion until 2016, and after that the federal share will decline gradually until it reaches 90% in 2020 (California Healthline, 3/15).
Although several Republican governors have voiced their support for the Medicaid expansion, others have outright refused to implement it, often citing additional costs to the state ("Healthwatch," The Hill, 6/3).
Study Details, Findings
For the study, researchers from the RAND Corporation examined the 14 states thought to be the least likely to support the Medicaid expansion:
- North Carolina;
- South Carolina;
- South Dakota;
- Texas; and
- Wisconsin (Landen, Modern Healthcare, 6/3).
If those states do not expand Medicaid, the study found:
- A total of 3.6 million fewer low-income residents would be insured, resulting in an additional $1 billion in state-funded uncompensated care in 2016; and
- States would forfeit a total of $8.4 billion in annual federal payments (Wayne, Bloomberg, 6/4).
The study also found that if the states did not participate in the Medicaid expansion, there would be a slowdown in the projected reduction in mortality rates. If the states participated in the expansion, mortality rates would be reduced by 90,000 lives per year.
However, if those 14 states opt out, the reduction in mortality rates would decline to 71,000 lives per year, according to the study.
According to Reuters, the findings suggest that the effects of not participating in the expansion are larger than even the government expected. For example, the latest estimate from the Congressional Budget Office indicated three million fewer low-income U.S. residents will be eligible for Medicaid coverage following the Supreme Court ruling (Morgan, Reuters, 6/3).
RAND researcher and the study's lead author Carter Price said, "Our analysis shows it's in the best economic interests of states to expand Medicaid under the terms of the [ACA]" ("Healthwatch," The Hill, 6/3).
Price noted that states that do not participate in the expansion still will be "subject to the taxes, fees and other revenue provisions" of the ACA "without reaping the benefit" (Modern Healthcare, 6/3). He added, "Choosing to not expand Medicaid may turn out to be the more-costly path for state and local governments" ("Healthwatch," The Hill, 6/3).
According to Modern Healthcare, RAND is not the only organization to conclude that participating in the Medicaid expansion is in states' best economic interests.
For example, more than 200 hospital leaders from North Carolina last month met with Gov. Pat McCrory (R) to encourage him and the state Legislature to reconsider their opposition to the expansion.
In addition, in Pennsylvania -- where Gov. Tom Corbett (R) announced that his state will not participate in the expansion -- the state's Independent Fiscal Office and the Pennsylvania Economy League both have concluded that the state would receive $16.5 billion in federal payments under the expansion, far more than the estimated $1.64 billion it would cost the state to expand the program (Modern Healthcare, 6/3).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.