WASHINGTON – States should think twice before turning down optional provisions of President Barack Obama’s Affordable Care Act, a new report finds.
The report released Monday by the Henry J. Kaiser Family Foundation argues that states could cut the number of uninsured Americans in half by expanding Medicaid under the new law with less than a 3 percent increase in overall state Medicaid spending.
The hardest selling point is for states with the highest uninsured populations,including Texas,Nevada,Florida and Mississippi. These states would be responsible for the most new enrollees to Medicaid and would face the highest costs to expand their Medicaid programs.
Texas has the highest rate of uninsured residents of any state at 26.3 percent,according to data from the 2010 Census. The report says Texas could face a 2 to 4 percent increase in Medicaid spending. In 2010,Texas spent more than $27 billion on Medicaid.
John Holahan,the primary author of the paper and director of the Health Policy Research Center at the Urban Institute,said in a conference call Monday that 12 states,mostly in the South and Southwest,might face a 4 to 7 percent increase in Medicaid expenditures if all states approved the expansion. In 2010,Florida spent $17.3 billion on Medicaid,while Nevada spent $1.5 billion and Mississippi spent $4.1 billion.
The report’s authors argued that federal subsidies would absorb most of the costs.
“States are deciding whether to expand the Medicaid program,and they clearly will be balancing improvements in coverage against new costs for states,” Diane Rowland,executive vice president of the Kaiser Foundation,said.
The total cost of the Medicaid expansion from 2013 to 2022 – if all states take part – would be $1.03 trillion. Of that,states would pay $76 billion,an increase of 2.9 percent compared to what states would have paid without the Affordable Care Act.
The federal government will cover all the costs of the Medicaid expansion from 2014 to 2016,and will pay at least 90 percent in the following years,the report said.
Rowland argued that if coverage is expanded,these states will save by lowering uncompensated care costs – emergency room treatment for uninsured patients. If all states adopt Medicaid expansion,that savings could reach $18 billion by 2022,according to the paper.
“While some states will see net savings,others will need to weigh the trade-offs between small increases in state spending in return for large gains in coverage supported by mostly federal dollars,” Rowland said.
The report finds that states with Medicaid programs that already cover adults,including Vermont,Massachusetts,New York,Maine and Maryland,will save money.
Under the Affordable Care Act,the federal government will offer higher matching rates for states that already cover adults.
Alan Weil,executive director of the National Academy for State Health Policy,said states often balk at the total cost of the Affordable Care Act,but don’t realize that the optional part – expanding Medicaid – is only a fraction of the cost.
“It’s fairly easy to have a little sticker shock at the potential cost of various policies’ options in this area,” Weil said. “I think many states will be surprised at the result showing that the cost to them with the coverage expansion in the ACA comes largely from the things that they must do,and that the choice about expanding Medicaid actually is a fairly small share of the ultimate cost that states may face.”
If states expand their Medicaid programs,they would have to accept into Medicaid adults under age 65 who have incomes less than 133 percent of the federal poverty level – $15,415 for an individual or $26,344 for a family of three. This new coverage under the Affordable Care Act ends a longstanding exclusion of adults from the program.
If all states choose to expand Medicaid,the report claims that an additional 21.3 million individuals would gain Medicaid coverage by 2022,cutting the national uninsured population by 48 percent.
Governors in eight states – Alabama,Georgia,Louisiana,Maine,Mississippi,South Carolina,Oklahoma and Texas – have said they will not expand Medicaid.
Many states have yet to make a decision.
In New Hampshire,Jennifer Kuzma,liaison to the executive council at the governor’s office,said Gov. John Lynch,D,is in favor of expanding Medicaid.
“The expansion of Medicaid under the ACA would provide health coverage for thousands of New Hampshire’s uninsured – a goal Governor Lynch supports,” Kuzma said.
She said the state Department of Health and Human Services is assessing the cost of the expansion,which will help Gov.-elect Maggie Hassan,D,decide how to make the program work.
In Virginia,Jeff Caldwell,press secretary for Gov. Bob McDonnell,R,said the expansion will take a backseat to more pressing issues.
“Medicaid continues to consume more and more of the state’s budget,crowding out funding for other important areas,” Caldwell said. “Right now,we cannot consider expanding Medicaid without some concurrent,meaningful reforms of the system that will make it affordable and sustainable moving forward.”
Caldwell said that a number of governors have reached out to Secretary of Health and Human Services Kathleen Sebelius for additional information about the merits of expanding Medicaid and how they might find room for it in their budgets.
Reach reporter Jory Heckman at [email protected] or 202-326-9868. SHFWire stories are free to any news organization that gives the reporter a byline and credits the SHFWire.