Making the case for state Medicaid expansion
Thursday, June 19, 2014
Medicaid is a joint federal- and state-funded program that provides healthcare for more than 60 million low-income Americans.
As a result of the Affordable Care Act (ACA), Medicaid was expanded to cover people from 19 to 65 years old with incomes of no more than 138 percent of the federal poverty level (FPL). This is equal to an annual salary of about $31,809 for a family of four and $15,414 for a single person.
Previously, complex eligibility criteria based on assets and resources were used to determine Medicaid eligibility. Eligibility is now established based on household size and a person's Modified Adjusted Gross Income (MAGI) from the previous year's federal income tax filings.
Not all states are taking part in the expansion. This article makes a case in support of state-level Medicaid expansion, by examining health and financial factors. However, it is also important to consider the ethical and political factors at play. The matter is complex, and there are no easy answers.
Prior to the ACA, there were no federal requirements mandating coverage for adults without children. The expansion was designed, among other reasons, to fill this gap. In May of 2013, the Congressional Budget Office estimated the expansion would allow for coverage of an additional 13 million persons by the year 2023, significantly improving both access to, and use of, necessary healthcare services.
A recent Supreme Court decision has ruled this expansion nonmandatory, and decisions on whether to adopt this policy are now being left up to each state. Thus far, 26 states have opted to expand Medicaid funding to low-income residents. The opposing states are home to 46 percent of adults who would be eligible for insurance under the expansion.
Source: The Advisory Board Company
Should states adopt this expansion? For health and financial reasons, yes. The expansion will reduce mortality costs and improve health. Research shows that access to care and health improves when uninsured persons enroll in Medicaid.
A landmark article published in the New England Journal of Medicine examined the impact of Medicaid expansions on adult health outcomes in 2012. State Medicaid expansions were significantly associated with reduced all-cause mortality, particularly among the elderly, nonwhites and members of economically-disadvantaged counties.
Additionally, the expansions led to improved access to care and improvements in self-reported health. Expanded coverage leads to improved population health.
Expansion will also lead to fiscal improvements at the state and local levels. The Medicaid expansion is largely federally funded. States that opt for expansion will receive 100 percent federal funding for years 0-3, and will slowly drop to 90 percent federal support thereafter.
State and local spending that previously went to uncompensated care, will now be available for other uses. In 2013 alone, an estimated $84.9 billion was spent on uncompensated care at the state level. Thus, conservative estimates report long-term state-level savings in the billions.
In the area of mental health alone, Medicaid expansion is estimated to save states $11 billion to $22 billion between 2014 and 2019 in mental health programming, by providing coverage for mentally-ill, low-income, uninsured patients.
Federal Medicaid funding will filter through the state economy, consequently leading to gains in employment, labor income and capital income, as shown by research in North Carolina.
The expansion will support hospital financial operations. According to the American Hospital Association, hospitals provided over $40 billion in uncompensated care in 2011 — largely due to uninsured patients.
Medicare expansion will significantly reduce the number of uninsured patients treated at hospitals. Furthermore, individuals with health insurance are more likely to receive standard, cost-effective healthcare treatments in place of costly emergency room visits.
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