What Medicaid Non-Expansion Costs States, Hospitals & People

The 24 states that did not expand Medicaid under the Affordable Care Act are losing enormous sums of money--as are their hospitals--and the decline in their numbers of uninsured are equally abysmal compared with states that expanded. A new report from the Urban Institute’s Health Policy Center shows just how much is being left on the table and the human cost.

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No Thank You No Thank You

For the 24 non-participating states to have expanded Medicaid would have cost them a total of $31.6 billion over 10 years. But they are passing on $423.6 billion in federal funds from 2013 to 2022, “which will lessen economic activity and job growth,” according to report authors. Florida alone would have spent $5.37 billion but received $66.1 billion, with Texas spending $5.67 billion and getting $65.6 billion.

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Money Down Drain Money Down Drain

Here are a few ways that states lose money by not expanding Medicaid: States generally fund mental health care for poor, uninsured adults. With Medicaid expansion, states can put many of these adults on Medicaid and shift many of the mental health costs to Medicaid with the feds taking significant financial responsibility. Also, states lose out on increased state and local general revenue to the extent that increased federal Medicaid funds boost economic activity. Many states also tax provider or insurer revenue, which could rise under expansion.

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Raining Dollars Raining Dollars

Overall, every $1 a state invests in Medicaid expansion generates $13.41 in federal funds to the state. Early in ACA implementation the savings are huge: The 24 states rejecting expansion would have had to cumulatively spend $291 million--a 0.3 percent increase over Medicaid costs without expanding--to receive $42.9 billion in 2016. That’s an increase in federal Medicaid receipts of more than 30 percent and a return in federal funds of $147.42 for every dollar invested.

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Hurting Hospitals Hurting Hospitals

Hospitals in the 24 states that declined to expand Medicaid are losing a 31 percent increase in Medicaid funding that was intended to offset cuts to Medicare and Medicaid reimbursement rates. The cost to hospitals is $167.8 billion over 10 years. That’s $34.3 billion lost to Texas hospitals, $22.6 billion in Florida, $12.8 billion in Georgia, $11.3 billion in North Carolina and $10.6 billion in Pennsylvania.

Up & Down Up & Down

First-quarter financial reports from several interstate hospital chains show that hospital finances improved as Medicaid revenue increased and uncompensated care dropped in expansion states. At the same time, hospitals in non-expansion states saw finances worsen as Medicaid revenue fell while uncompensated care and self-pay patient caseloads increased.

Sobering View Sobering View

In less than one year, states that expanded Medicaid saw a substantial decrease in the number of uninsured compared with the states that did not. “Between September 2013 and June 2014, the proportion of non-elderly uninsured adults in non-expansion states fell from 20 percent to 18.3 percent, compared with a drop from 16.2 to 10.1 percent in states that expanded Medicaid,” report authors say. “Put differently, the number of uninsured declined by 9 percent in nonexpanding states and 38 percent in states that expanded Medicaid.” (Photo Credit: Fotolia)

Lost Jobs Lost Jobs

Another human and economic cost: In total, the rejected Medicaid federal funds would have created 172,400 jobs during 2015, according to the Council of Economic Advisors.

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Spending Elsewhere Spending Elsewhere

In the most recent years for which data among the 24 non-expanding states is available, the states spent an estimated $44.9 billion on tax breaks and other subsidies to attract private businesses. That is 14 times more money than the average amount the states would have spent to finance Medicaid expansion.

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More results from the Urban Institute report, which the Robert Wood Johnson Foundation sponsored, are available here.

The 24 states that did not expand Medicaid under the Affordable Care Act are losing enormous sums of money--as are their hospitals--and the decline in their numbers of uninsured are equally abysmal compared with states that expanded. A new report from the Urban Institute’s Health Policy Center shows just how much is being left on the table and the human cost.

 

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