Off the Charts Blog | Center on Budget and Policy Priorities

Louisiana Governor Bobby Jindal’s recent claims that expanding Medicaid will force people out of private coverage and into government health care are overblown.  The reality is this:  an overwhelming majority of people who would get coverage under a Medicaid expansion are low-income people who are uninsured, and they generally can’t afford private health care to begin with.

As we’ve noted before, states that expanded Medicaid in the past by raising income eligibility levels for adults reduced the ranks of the uninsured without undermining private coverage.  That’s based on an analysis of Census data and consistent with an extensive body of research.  In states that expanded Medicaid, about the same proportion of Medicaid-eligible adults had private coverage as in states that didn’t expand, but the expansion states had a much lower proportion of uninsured low-income residents.

Governor Jindal fails to recognize that many people who would qualify for an expanded Medicaid program under health reform work in low-wage jobs for small firms or service industries that typically don’t offer health insurance benefits.  In addition, coverage in the individual insurance market is unaffordable for most of those who would be eligible for the Medicaid expansion.  My colleague, Jesse Cross-Call, recently pointed out that:

• 81 percent of workers earning less than 138 percent of the poverty line — the threshold for qualifying for Medicaid under health reform — don’t get coverage through their employer.

• The median annual cost of single coverage in the individual market, including premiums and out-of-pocket costs, would consume more than one-third of the total income of a family of three at the poverty line.

The bottom line:  expanding Medicaid will not lead to low-income people dropping out of employer-based coverage.  But failure to expand would force them to remain uninsured and forego care.

Medicaid beneficiaries have very good access to quality health care, despite claims to the contrary that House Budget Committee Chairman Paul Ryan has made to justify his proposal to convert Medicaid to a block grant.

As we’ve explained, Chairman Ryan’s budget plan would slash federal Medicaid spending and add millions to the ranks of the uninsured and underinsured.  It also rests on a flawed perception of the program.  Ryan claims that Medicaid provides poor quality care and that beneficiaries often can’t find a doctor who accepts Medicaid, thus creating a two-tiered health care system for low-income individuals and families.

A large body of research, however, has consistently demonstrated the reverse.

• Children on Medicaid and the Children’s Health Insurance Program (CHIP) have the same level of access to primary care as children with private insurance.  While children on Medicaid and CHIP may face greater barriers to access to specialty care than children with private insurance, they are more likely to have access to such services than uninsured children (see chart).
• Adults on Medicaid fare as well as privately insured adults on a number of measures of health care access, and they also have greater access to care than uninsured adults.  And despite the fact that Medicaid beneficiaries tend to be sicker and are more likely to have chronic illnesses or disabilities and greater health needs than those using private insurance, their access to care is as good (see chart).

Research also shows that Medicaid improves the overall health and financial well-being of millions of low-income individual and families.  As my colleague, Judy Solomon, has noted, a landmark study of Oregon’s Medicaid program found that people on Medicaid were less likely to experience a decline in health or have unpaid medical bills and financial insecurity than people who did not have insurance.

Ironically, Chairman Ryan’s proposal to convert Medicaid into a block grant could cause his claims about the program’s shortcomings to become a reality.  His plan would cut federal Medicaid funding by 31 percent by 2023 (and by more in later years) relative to current law (not counting the effects of also repealing the Affordable Care Act’s, or ACA’s, Medicaid expansion).

Funding cuts of this magnitude would leave states little choice but to slash already-low provider payment rates — by more than 30 percent, the Urban Institute has estimated — and thus make it far more likely that doctors would be unavailable to serve Medicaid patients.  Moreover, the Urban Institute also projected that a similar block grant proposal in Chairman Ryan’s budget last year would have resulted in states cutting Medicaid enrollment by between 14.3 million and 20.5 million people by 2022.  (This is on top of the effects of repealing the ACA’s Medicaid expansion, which would deny access to care to 17 million people who would otherwise gain coverage if all states adopt the expansion).

Millions more low-income Americans would be uninsured, lack access to care, and thus be made worse off under the Ryan budget.  That’s a two-tiered health care system that we should worry about.

A recent New Jersey Star-Ledger editorial called on Governor Chris Christie to adopt health reform’s Medicaid expansion for low-income adults, explaining in part:

More than 300,000 working adults without health insurance . . . aren’t eligible for Medicaid now because our state doesn’t cover adults without children unless they go on welfare and make less than $140 a month.  These low-income people would be newly eligible if [Governor] Christie expands the program.  They can’t afford the cost of insurance on the individual market.  And most work for small employers who can’t afford to provide insurance for them.  But when they end up in the emergency room, we all pick up the tab.

Indeed, my earlier testimony before a New Jersey Senate committee laid out several reasons why the Medicaid expansion is a very good deal for states, such as:

• State and local spending on health care services for the uninsured would fall because many uninsured residents would have Medicaid coverage, largely financed by the federal government.

• The expansion could strengthen New Jersey’s economic recovery.  For every $1 that the state spent on the expansion, it would receive $9 from the federal government.  That would equal between $9 billion and $11.1 billion in additional federal dollars coming to the state between 2014 and 2019, according to the Urban Institute.

• Research shows that people on Medicaid are more likely to get preventive care than people without insurance.  Better health care, in turn, leads to better health.  “State Medicaid expansions to cover low-income adults were significantly associated with reduced mortality as well as improved coverage, access to care, and self-reported health,” according to research published in the New England Journal of Medicine.

The committee approved a resolution urging the governor to move forward with the expansion.  Governor Christie should act now.

A recent analysis conducted for Idaho’s Department of Health and Welfare supports what we’ve been saying all along:  health reform’s Medicaid expansion to cover all low-income adults is a good deal for states.  (A study by Arkansas’ Department of Human Services found much the same thing.) The Idaho study estimates that the expansion would actually save the state $6.5 million from 2014 through 2024.

That’s because state and local spending on health care services for the uninsured will fall by roughly $792 million over that period if Idaho expands Medicaid — since many uninsured residents will get health care services through Medicaid — while the federal government will pay the vast majority of the added Medicaid costs.

This finding is so compelling that the panel of community and state leaders that the governor appointed to examine the issue unanimously recommended that Idaho move forward with the expansion.

Very low-income uninsured people with significant health care needs could be left without access to health insurance because their states’ governors are refusing to expand Medicaid under the Affordable Care Act (ACA), as a recent Associated Press article describes.

Under the ACA, states have the choice of expanding Medicaid to cover low-income adults with incomes up to 133 of the federal poverty line, with the federal government paying for nearly all of the cost.  Governors in Florida, Texas, Louisiana, and several other states have rejected the Medicaid expansion, in some cases relying on flawed estimates that overstate the financial impact on their states, as I’ve explained.

Many people recognize Medicaid as a program that provides health coverage to the poor, but few know that millions of adults don’t currently qualify for Medicaid — even if they have little or no income.  That’s because most states don’t cover adults without dependent children, regardless of how low their incomes are.  All states cover low-income parents, but in the median state, the income cutoff to qualify for Medicaid for a working parent is 63 percent of the poverty line (about $12,000 for a family of three), and a non-working parent can’t have income of more than 37 percent of the poverty line (about $7,000 for a family of three).  In Louisiana, where Governor Bobby Jindal opposes the expansion, a parent can’t qualify for Medicaid if his or her household’s income exceeds just $4,800 a year.

More than 11 million poor, uninsured adults would be unable to get any help securing health coverage if their states do not expand Medicaid, according to the Urban Institute.  States shouldn’t leave these people out in the cold.  As we’ve shown, the Medicaid expansion is a very good deal for states, and it will provide much-needed help to their low-income, uninsured residents who can’t afford to buy coverage on their own.