The Growing State Cost of Not Expanding Medicaid

January 16, 2014 at 10:37 am

Policymakers in some of the 25 states that haven’t expanded Medicaid as part of health reform (see map) are putting expansion at the top of this year’s legislative agenda.  The New Hampshire House passed an expansion bill on the first day of its session last week, for example, and Virginia Governor Terry McAuliffe advocated for expansion in his first address to lawmakers.  These policymakers are wise to prioritize the Medicaid expansion, as the costs of not expanding have begun to accrue:

  • States’ failure to expand has created a “coverage gap” containing nearly 5 million people.  People in this gap — which includes more than a quarter of the uninsured, non-elderly adults in these 25 states, according to a recent analysis by the Kaiser Commission on Medicaid and the Uninsured — are shut out of health reform’s coverage options.  Their income is too low to qualify for help buying private coverage through the new marketplaces and too high to qualify for Medicaid.
  • States that haven’t expanded are missing out on a very good financial deal.  The federal government will pick up 100 percent of the cost of covering newly eligible people through 2016 and no less than 90 percent of the cost after that.  So, the amount of federal money that states forgo by not expanding will continue to grow.
  • States that have expanded expect slower growth in state Medicaid costs than states that haven’t expanded.  This finding, from a recent Kaiser survey of states, reflects the fact that expansion states anticipate savings in state-funded services that they have provided to uninsured individuals who are now eligible for Medicaid.  Examples include mental health care, corrections-related health care, and uncompensated care.

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More About Jesse Cross-Call

Jesse Cross-Call

Jesse Cross-Call is a Policy Analyst in the Health Policy division of the Center on Budget and Policy Priorities. In this role he examines issues related to the implementation of health reform and provides information and technical assistance to state and local officials, providers, and nonprofit organizations who are working on issues related to expanding coverage to the uninsured through Medicaid and the new health reform marketplaces.

Full bio | Blog Archive | Research archive at CBPP.org

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