As Some Holdout States Revisit Medicaid Expansion, New Data Show It Pays Off

From the article by Shefali Luthra on Kaiser Health News:

Although the GOP-controlled Congress is pledging its continued interest — despite stalls and snags — to dismantle Obamacare, some “red state” legislatures are changing course and showing a newfound interest in embracing the health law’s Medicaid expansion.

And a study out Wednesday in Health Affairs adds to these discussions, percolating in places such as Kansas, Georgia, Virginia, North Carolina and Maine. Thirty-one states plus the District of Columbia already opted to pursue the expansion, which provided federal funding to broaden eligibility to include most low-income adults with incomes up to 138 percent of the federal poverty level (about $16,000 for an individual).

Researchers analyzed data from the National Association of State Budget Officers for fiscal years 2010 to 2015 to assess the fiscal effects of expansion’s first two years.

Their findings address arguments put forth by some GOP lawmakers, who say the expansion will add to the nation’s budget deficit and saddle states with additional coverage costs, forcing them to skimp on other budget priorities like education or transportation.

The researchers concluded that when states expanded eligibility for the low-income health insurance program they did see larger health care expenditures — but those costs were covered with federal funding. In addition, expansion states didn’t have to skimp on other policy priorities — such as environment, housing and other public health initiatives — to make ends meet.

“This is a potential big benefit, not only to people who get coverage, but to state economies,” said Benjamin Sommers, an associate professor of health policy and economics at Harvard University’s public health school, and the study’s first author.

This finding — that states expanding Medicaid didn’t encounter unforeseen budget problems — shouldn’t be surprising.

“Expansion is basically free” to the states, agreed Massachusetts Institute of Technology economist Jonathan Gruber, one of Obamacare’s architects who worked with Sommers to systematically compare the budgets of all 50 states to examine Medicaid expansion’s impact. “That’s the big insight,” he said. “There’s no sort of hidden downside.”

And that may be part of what’s fueling this renewed interest, said Edwin Park, vice president for health policy at the left-leaning Center for Budget and Policy Priorities. These states are seeing the federal windfall their neighbors received while trying to navigate public health concerns like opioid addiction, he said. They “are looking at how their neighbors or expansion states have done, and see the benefits,” Park said. “The primary argument against the expansion on the state level has been it’s going to break the bank. The research demonstrates that’s not the case.”

But a caveat: The data used in this analysis reflected only years during which the federal government picked up 100 percent of the tab for expanding Medicaid eligibility and therefore could overestimate the benefit to state budgets. That’s because in 2017 that federal support begins to taper off, and by 2020 states have to pay 10 percent of the expansion costs themselves.

Read the full article.

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