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The Supreme Court ruling on the Affordable Care Act made the expansion of Medicaid optional for states. Already a few Republicans governors have said they don’t plan to take part. A new analysis by the Kaiser Family Foundation found if states do take part in the expansion it will requires states to only modestly increase their spending on the program. From the report:
If all states implement the ACA Medicaid expansion, the federal government will fund the vast majority of increased Medicaid costs. The Medicaid expansion and other provisions of the ACA would lead state Medicaid spending to increase by $76 billion over 2013-2022 (an increase of less than 3%), while federal Medicaid spending would increase by $952 billion (a 26% increase). Some states will reduce their own Medicaid spending as they transition already covered populations to the ACA expansion. States with the largest coverage gains will see relatively small increases in their own spending compared to increases in federal funds.
It should be noted that it is blue states that already have rather generous Medicaid programs that should see their Medicaid spending go down as a result of taking part in the expansion. It is mostly red states, the ones debating whether or not to take part in the expansion, that would see their spending increase the most.
The incremental costs or savings of implementing the Medicaid expansion vary across states. For 10 states, implementing the expansion would reduce net Medicaid spending; most of these states had expanded coverage to all poor adults before the ACA and so would receive increased federal matching payments for coverage of adults without dependent children that had previously been matched at the regular Medicaid match rate. For 12 states, the expansion would increase state Medicaid spending between 4% and 7% (Figure ES-4), based on the factors we could quantify using 50-state data.
This report should provide ammo to both sides in the coming political fights at the state level. Taking part in the Medicaid expansion is a great deal for all the states. It would help millions of people in the states and bring large amounts of federal funds to states in exchange for only modest increases in state spending.
On the other hand it will cost red states real money to take part. It is a very good deal, but it is not free. Avoiding this extra expansion is one of the main justification opponents of the law are using to justify not taking part.
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Common sense tells you that if the feds pick up 90% of the tab for Medicaid expansion ALL states will come out ahead.
You can’t just consider the state’s 10% contribution. You have to consider that Medicaid will replace state spending on things like mental health for the indigent.
Furthermore there is a multiplier effect on new Medicaid money coming into the state which will boost local health care businesses, create jobs and increase tax revenue.
If this were a 401(k) and the government was offering a 9:1 match everybody would be clamoring to sign up. Because it’s Medicaid it becomes a political football. Make no mistake though, it’s all just posturing.
States must have balanced budgets. Most states are having to cut spending to balance their budgets. Even if it is a 9 to 1 match if you don’t have the 1 you can’t get the 9. This means some other program must be cut or revenue raised to get the one with no sure deal that econmic activity will increase revenues in the future to pay for it. This is the same argument against tax cuts paying for themselves. You cant have it work one day and not the next.
No exactly because “some other program that must be cut” is state spending for health care which will now be paid for by Medicaid.
For example, Oklahoma spends about $50 million annually on mental health services for the poor. If that cost is transferred to Medicaid they save most of the $50 million, which means they have $50 million to use for the 1:9 Medicaid expansion match.