Although the Supreme Court deemed most of the ACA constitutional in June, detractors gained a minor victory when the Court declared Medicaid expansion to be an optional decision for states. Seven governors, including Rick Scott of Florida and Bobby Jindal of Louisiana, have already announced their rejection of this provision — a provision that provides federal subsidies to states in order that they expand Medicaid coverage to all individuals and families at or below 133% of the poverty line — citing their states’ inability to financially support the extended coverage. As a result, low-income individuals in states that choose to opt out of the provision can only qualify for Medicaid if they are already below their state’s income threshold for coverage. But does a cost-benefit analysis really render states’ decisions to opt out of the extended coverage prudent?
The Center on Budget and Policy Priorities estimates that between 2014 and 2022, coverage expansion will only increase state Medicaid expenditures by about 2.8% while providing an additional 17 million Americans with coverage. For the first 3 years after the provision is enacted, the federal government is required to pick up 100% of all coverage costs for newly covered individuals. After that, federal funding only scales back slightly before it becomes fixed at 90%. If ever there was a free lunch, this has got to be it. To reject extended coverage on a financial basis is ludicrous given a measly 2.8% bump in spending over 8 years.
However, critics of the provision also commonly argue that extending coverage won’t necessarily improve care because Medicaid patients will not be able to find doctors willing to treat them. Perhaps this is true. As of 2009, Medicaid reimbursement rates were 42% lower than private insurance reimbursement rates, and a 2011 study by the Center for Studying Health System Change found that only 42% of physicians were accepting new Medicaid patients. But opting out isn’t going to make it easier for covered patients to find willing physicians either. As part of the plan to create funding for expanded coverage, the federal government is phasing out Medicaid Disproportionate Share Payments in states that opt out of expanded coverage. This means hospitals in these states will lose their reimbursement for a portion of the losses incurred from treating patients covered by Medicaid. Therefore, by refusing to expand coverage, states are actually increasing providers’ incentives to turn Medicaid patients away.
Furthermore, studies conducted on states that have recently expanded Medicaid coverage show that increased coverage is correlated with lower death rates. One in particular, conducted by researchers at Harvard University’s School of Public Health, concluded that over a five-year period, minor increases in coverage in New York, Maine, and Arizona yielded roughly 2,000 less deaths per year among individuals between the ages of 20 and 64.
So if there are no valid reasons for states to opt out of expanded coverage pertaining to funding or practicality, then why are states still not sold on coverage expansion? It seems to me that instead of examining the evidence, these governors blindly rely upon anti-Obama/anti-health care sentiment, stubbornly and reflexively opposing whichever parts of the ACA that they can. These governors who have taken a hard stance against the provision need to reanalyze their motives for rejection and perhaps consider what a severe decline in the health of their states’ working poor will mean to their states’ economies.