States Should Expand Medicaid: The Consequences of Ignoring Federal Dollars

Twenty-four states have not yet expanded their Medicaid services, potentially depriving themselves of billions of federal dollars and leaving 5.7 million people without health care coverage in 2016, according to research by the Urban Institute, a nonprofit social and economic policy research organization. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) allows the opportunity for substantial economic boosts to states that expand their Medicaid eligibility to nonelderly members of families that earn less than 133 percent of the federal poverty level, so why haven’t these states taken advantage of this opportunity?

The Study’s Evidence

The Council of Economic Advisors (CEA) released a report along with the Urban Institute that gathered data and formed analyses on past Medicaid policy decisions’ effects on states as well as on economic and health policy literature. The analysis pointed to several benefits of expanding Medicaid eligibility including improved health care access, better preventative care, financial security, improved mental health, and healthy state economies.

Some of these benefits result in:

  • 1.4 million additional people having a usual source of clinic care;
  • 651,000 additional people receiving “all needed care” over a full year;
  • 829,000 people getting preventative cholesterol-level screenings and 214,000 middle-aged women receiving mammograms;
  • 255,000 fewer people handling devastating medical costs each year;
  • 810,000 fewer people having trouble paying other medical-related bills; and
  • 458,000 fewer people with depression.

As if all this weren’t enough, the federal government will pay 100 percent of health coverage costs for newly eligible individuals through 2016 and 90 percent through 2020 and subsequent years. In 2014, the government paid only 50 to 70 percent of health care costs for eligible low-income persons. The Urban Institute said that if all states would increase Medicaid eligibility, states would see a reduction in uncompensated care, offsetting additional Medicaid costs and producing $10 billion in savings over 10 years.

The CEA further outlines direct consequences of expanding Medicaid in states, including its effects on health insurance coverage, using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM) that gives a state-by-state analysis on how the decision to expand (or not) Medicaid affects health insurance coverage in each state. The model shows that if all states increased the eligibility, there would be 10 million insured people by 2016. Finally, the study showed states with expanded Medicaid report that 575,000 have excellent overall health, which allow them to be gainfully employed and contribute to their communities—a lesson for the 24 states refusing to expand the program.