Some States Still Debating Expanding Medicaid

One of the primary goals of the Patient Protection and Affordable Care Act (ACA) is to reduce the number of uninsured Americans. To achieve this, the act provides for affordable options for coverage including Medicaid and Health Insurance Exchanges.

After the US Supreme Court ruled on the ACA in June 2012, states have needed to make a decision about whether to adopt the Medicaid expansion outlined in the law. The low-income population in the United States will feel the greatest impact from these decisions, according to a recent report from the Kaiser Commission on Medicaid and the Uninsured titled The Cost of Not Expanding Medicaid.

The report highlights the implications of the states’ decision on Medicaid expansion. As of July 24, 2013, 24 states were moving to implement the expansion, 21 states were not moving forward on the expansion, and 6 states were still debating the issue. Decisions by as many as 27 states not to expand their Medicaid program will “leave a major hole in the health reform effort,” according to the report.

The authors built on work done by the Kaiser Commission on Medicaid and the Uninsured conducted in November 2012. That analysis utilized the Urban Institute’s Health Insurance Policy Stimulation Model (HIPSM) to provide national and state-by-state estimates of cost and coverage implications of the ACA Medicaid expansion.

The current analysis was conducted to provide a clearer picture of how states’ decisions about whether to implement the Medicaid expansion will affect the incremental changes related to Medicaid enrollment, reductions in the number of uninsured, and federal and state expenditures. Because there are 21 states that have opted not to move forward with the expansion and 6 that are still debating, the number of uninsured Americans will remain higher than intended by the ACA; at the same time, federal and state expenditures will be lower.

If all 50 states adopted the Medicaid expansion, an estimated 13.1 million Americans would enroll in 2016; of those potential new enrollees, 4.8 million live in states that have made the decision to move ahead with the expansion (1.6 million in California). Sixty-four percent of consumers, who were part of the 13.1 million, live in states not moving forward with the expansion (6.3 million) or still debating the decision (2.1 million). Of the states not moving forward, half of the potential enrollees live in Texas, Florida, and Georgia. In the states still debating the decision, the expansion would result in an average 24.9% increase.

The report’s authors stressed that, “Given the current status of state decision-making, the Medicaid expansion would have more than twice the effect on enrollment in the states that are not moving forward, compared with the states that have decided to expand.”

If all 50 states expanded their Medicaid programs, federal funds would increase by $80.6 billion in 2016 and $800.2 billion over the period from 2016 through 2022. In 2016, the states opting not to expand will forego $35.0 billion and the states with ongoing debate will lose eligibility for $15.2 billion. Over the period 2013 through 2022, states not expanding will forego $345.9 billion and those with ongoing debate will lose $151 billion.

Finally, the report’s­ authors noted that the inequities in coverage created by states deciding not to move ahead with the expansion will leave gaps in coverage and result in substantially less revenue for hospitals. Under the ACA, regardless of whether a state adopts the Medicaid expansion, hospitals in that state will still face cutbacks in Medicare and Medicaid disproportionate share hospital payments as well as lower Medicare payment rates. Based on their analysis, the authors concluded that, “the economic case for Medicaid expansion for state officials is extremely strong.”