4 Ways States Benefit When They Expand Medicaid

Louisiana Gov. John Bel Edwards recently adopted Medicaid expansion for his state, and Texans and Floridians are clamoring for their state leaders to do the same.

Medicaid expansion is popular even in deep-red Louisiana because it brings important services to underprivileged communities. It’s also expected to save Louisiana $677 million over the next five years.

Those benefits haven’t gone unnoticed by residents of nearby states. According to a study recently released by the Texas Medical Center Health Policy Institute, nearly two-thirds of Texas and Florida adults want their state leaders to embrace Medicaid expansion.

Why Aren’t Some States Expanding Medicaid?

States like Louisiana are slowly coming around to the advantages of Medicaid expansion after years of resistance from political leaders who cited budgetary concerns. But for all of lawmakers’ objections — which reached their zenith shortly after the passage of the Affordable Care Act in March 2010 — the promised fiscal woes never materialized. Instead, states adopting Medicaid expansion have reaped the benefits of those decisions.

Some states resisting expansion have asked for freedom to administer expansion through state-specific frameworks. Many of these governors want to include work requirements and copays as conditions of Medicaid benefits. In other cases, states want to limit expansion by reducing Medicaid eligibility to less than 138 percent of the federal poverty level.

The Obama administration has been flexible. It has negotiated large portions of Section 1115 of the Social Security Act, including granting waivers that allow states to charge mandatory premiums, impose lock-out periods, include wellness incentives, and eliminate certain types of coverage (e.g., non-emergency medical transportation).

In fact, the administration’s only point of inflexibility concerns Medicaid eligibility levels. The White House has insisted that the working poor be included, meaning states must not reduce eligibility below 138 percent of the federal poverty level.

What Can Medicaid Expansion Offer States?

While some governors choose to dig in their heels and ignore the benefits of expansion, the 32 expansion states have harvested enormous rewards. The facts point to an unavoidable truth: Medicaid expansion is beneficial not just for uninsured citizens, but state governments as well. Here’s how expansion states benefit:

1. Drastically reduced uncompensated care costs

Before Medicaid expansion, hospitals provided millions of dollars’ worth of uncompensated care to uninsured individuals who couldn’t pay. This cost was assumed by state governments’ charity care funds. Medicaid expansion states, however, have substantially fewer uninsured citizens than their peers, and as a result, less need for charity care.

Arkansas, for example, saved a whopping $17.2 million in 2014 on uncompensated care costs, representing more than half of its $30.8 million in total savings from Medicaid expansion. And because the federal government is covering more than 90 percent of expansion costs from now until 2020 and 90 percent from 2020 onward, the savings will continue to accrue.

2. Improved approval ratings from satisfied Medicaid recipients

Contrary to popular belief, Medicaid recipients are more satisfied with their care than their peers with private insurance. Additionally, Medicaid recipients report they find primary care providers easily and receive care quickly at prices they can afford.

From a political perspective, state governors who have chosen to expand Medicaid have been rewarded with boosts in approval ratings. After first attacking the program, GOP governors from Pennsylvania’s Tom Corbett to Michigan’s Rick Snyder have bowed to the wishes of their citizens and expanded Medicaid.

3. Stronger rural hospitals

Caring for the uninsured falls heavily on rural hospitals that can’t, by law, turn away patients without insurance. Expanded Medicaid can provide relief to these hospitals, but without it, they face rising costs. More than 60 rural hospitals spanning 20 states have closed since 2010, and 77 percent of rural hospital closures are in non-expansion states.

Thankfully, states that have chosen to expand Medicaid are seeing rural and small-town hospitals thrive alongside the increasing number of insured citizens. According to a University of Michigan study, states saw a 50 percent drop in care administered to patients without health insurance just six months after expanding Medicaid.

4. Robust economies and job growth

In a time when many industries are facing unstable growth rates, the healthcare field is booming. Thanks to the Affordable Care Act and expanded Medicaid, more hospitals and care facilities are able to hire and grow. For Medicaid expansion states, year-over-year growth in the health sector reached 2.4 percent, while states that did not adopt the free program grew by only 1.8 percent.

But the growth doesn’t stop there. The state of Kentucky projects an economic boost to the tune of $30.1 billion over the next five years. Similarly, Ohio estimates that Medicaid expansion will bring 31,872 new jobs to the state. For states considering Medicaid expansion, the benefits are clear: Happier, healthier citizens; better rural healthcare; decreased uncompensated care costs; and stronger economies.

Let’s put aside politics and provide people with the care they so desperately need. It’s time more state governors follow the lead of Louisiana’s Edwards and finally embrace expansion.