Expanding Medicaid

Although ten Republican governors have pledged not to accept the Medicaid expansion funds in the Affordable Care Act and 22 other governors are also considering turning down the money, Think Progress explains how these funds save money for the states:

1. Under Obamacare, states no longer have to finance health insurance for people above 133 percent of the federal poverty level. Many states fund health insurance programs which cover residents living at more than 133 percent of the federal poverty level (FPL). Obamacare makes residents at higher than 133 percent of the FPL eligible for subsidized health insurance through state insurance exchanges at no cost to states. For example, Idaho would no longer have to fund health insurance for its 63 percent of uninsured residents who are above 133 percent of the FPL, reducing its $47 million annual uncompensated care cost to $17.3 million.

2. Under Obamacare, states pay billions less to cover people below 133 percent of the federal poverty level. States pay billions in health insurance programs for residents living at less than 133 percent of the FPL. After five years of Obamacare, the federal government will cover 90 percent of insurance costs for state residents making less than 133 percent of the FPL. For the first three years of the expanded Medicaid program, the federal government will cover 100 percent of Medicaid costs. The surveyed states will save $4.2 billion (100 percent of their uncompensated care costs) annually for the first three years, and $3.0 billion annually starting in 2019. For example, Michigan pays $212 million annually in uncompensated care costs. After five years of Obamacare, Michigan would have to pay only $68 million annually in the expanded Medicaid program.

3. By making health insurance universally available, Obamacare slashes the “hidden tax” states pay in health insurance premiums. States pay a “hidden tax” in the form of higher insurance premiums to account for the cost of covering the uninsured. “By greatly reducing uncompensated care,” the Council explains, Obamacare works to “reduce this hidden tax.” For example, North Carolina would see its annual $58.6 million insurance premium “tax” reduced to reflect a much smaller number of people without health insurance.

A modern industrialized nation should really be able to do even more for the working poor than to place them on Medicaid. I wish that the entire idea of expanding Medicaid would disappear and instead there was more money to assist more people in purchasing real insurance through the exchanges (perhaps made more economical with a public option). At least the Affordable Care Act also increases payment for primary care services temporarily, but unless this is made permanent those on Medicaid will continue to receive second class care. It is unrealistic to expect physicians to see more Medicaid patients at a loss.

Unfortunately at present expanding Medicaid is the most likely means of extending health care to the working poor. Ultimately I expect that most red states will give in and take the federal funds to provide this coverage, but many people might continue to suffer until this happens.