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How states will benefit from Medicaid expansion

Medicaid, the federal health-insurance program for low-income individuals, is set to undergo a big expansion in 2014 as part of the implementation of the Affordable Care Act. That expansion is good news for the children of low-income adults who will be newly eligible for health insurance, according to an opinion piece published online yesterday in JAMA Pediatrics.

Under the current system, Medicaid and SCHIP health insurance cover a much larger proportion of low-income children than adults, with the result that many insured children have uninsured parents. While insuring kids is important, it isn't always enough, say the authors of the new piece, who are from Indiana University and Boston University.

"Children with uninsured parents are significantly less likely to receive recommended health services, even if they themselves are covered," they write.

However, because of the U.S. Supreme Court's 2012 decision on the Affordable Care Act, states get to choose whether or not to expand Medicaid. (The Supreme Court ruled that the ACA's Medicaid-expansion mandate was coercive.) This is where the story gets really interesting. The piece describes states' financial concerns about Medicaid expansion - essentially, that it will be expensive to add people to the Medicaid rolls - but then elaborates on some of the financial factors that states turning down Medicaid expansion may not be considering:

...[O]verall, the cost of the Medicaid expansion to states would be less than 1% of their local gross state product. Others have illustrated that, because uncompensated care reimbursements will decrease under the ACA and because some individuals will shift from Medicaid coverage to coverage through the private exchanges, many states might actuallywind up saving money by accepting the expansion. Medicaid can also have a stimulative effect on the economy, leading to increased employment and revenues, and, once again, can increase the potential for overall savings for many states.

Refusing the expansion will also come at a cost to clinicians, offices, and hospitals. Disproportionate hospital share payments will be trimmed by the ACA, reducing a source of income to hospitals. If many citizens are denied Medicaid, then it is likely that they will remain uninsured. Providers that continue to care for them will do so at a significant loss. Although many complain that Medicaid reimbursements are too low, they are still better than nothing. Such a complaint also ignores the fact that reimbursements for primary care services (even those provided by subspecialists) will go up significantly under the ACA, starting this year.

The authors hope that some or all of the states that have announced they will not expand Medicaid will eventually decide the expansion would be beneficial for their low-income citizens, including parents and children, and for their overall financial picture.

Previously: Stanford economist Victor Fuchs: Affordable Care Act "just a start", Roundtable of doctors discuss Affordable Care Act and Analysis: The Supreme Court upholds the health reform act (really)

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