States Continue to Weigh Pros and Cons of Medicaid Expansion
July 30, 2012
States continue to weigh the pros and cons of Medicaid expansion in an effort to project whether the fiscal model is sustainable in the long term. Given the impact of such a huge decision, the 2014 deadline doesn’t seem that far away. Here are some of the latest news items around this debate.

Following the Supreme Court’s upholding of the Affordable Care Act, the primary focus of analysts and consumers was on the tax increase that enabled the Act to survive. However, lost in the shuffle (at least initially) was the fact that Medicaid expansion has been left up to individual states. Although there will be subsidies to buy private insurance for those people who are within 100% and 400% of the federal poverty level, this will only alleviate a portion of the lost coverage. Just how many uninsured adults would not be eligible for Medicaid if states opted not to expand the program? According to a recent brief by the Urban Institute, “Of 22.3 million uninsured Americans who could be potentially eligible for Medicaid under the [Affordable Care Act], 67% (15.1 million) are adults not currently eligible for Medicaid. Of this group, 11.5 million have incomes below poverty and would not qualify for any other subsidized coverage.” This Businessweek article shines some light on the working class poor who would be most affected by a lack of expansion.

Of course, it’s easy to say that expansion should be done in order to provide affordable coverage to as many Americans as possible. The fact is that there are other factors—particularly financial ones— that must be considered to determine whether Medicaid expansion is sustainable. It’s a large concern for state lawmakers. Among them is West Virginia Governor Earl Ray Tomblin who drafted 16 questions in a letter to Secretary of Health and Human Services Kathleen Sebelius in order to gather as much information as possible before making the decision to expand Medicaid for his state.

"On the one hand, the expansion would cover well over 100,000 hard working West Virginians and would in turn allow them to begin receiving appropriate diagnosis and treatment at a much earlier stage...on the other hand, even though the promised federal match rate is very favorable, I must determine whether the State can afford this expansion in the long run. I think we all agree the federal government's current fiscal path is unsustainable,” said Gov. Tomblin.

Pam Belluck of the New York Times writes that Medicaid expansions are controversial not only because they cost states money, but also because “some critics, primarily conservatives, contend the program does not improve the health of recipients and may even be associated with worse health.” Unfortunately, Belluck continues, “attempts to research that issue have encountered the vexing problem of how to compare people who sign up for Medicaid with those who are eligible but remain uninsured. People who choose to enroll may be sicker, or they may be healthier and simply be more motivated to see doctors.” The article goes on to call attention to a recent study in the New England Journal of Medicine by Harvard researchers that found “when states expanded their Medicaid programs and gave more poor people health insurance, fewer people died.”

Given the concerns over the costliness of Medicaid expansion, is there anything that can be done to combat the Medicaid Albatross? That depends on who you ask. According to the Washington Post’s Robert J. Samuelson, we should nationalize Medicaid. In doing so, “we could transfer all its costs to the federal government; in exchange, the federal government would end state aid for K-12 education and transportation. Though initially a dollar-for-dollar swap, the change would give states more control over their budgets.”

Judging by this map, it looks as though a majority of the country is still wary of Medicaid expansion. But according to one study, the “additional cost to the states represents a 2.8% increase in what they would have spent on Medicaid from 2014 to 2022 in the absence of health reform,” and that percentage “does not reflect the savings that state and local governments will realize in other healthcare spending for the uninsured.”

The next several months will be key as states continue to perform their due diligence in gathering as much pertinent information as possible.