This week, the interns at PRA are posting a series of blog posts examining the recent right-wing opposition to Medicaid expansion. In June 2012, The Supreme Court found the expansion of Medicaid an unconstitutional coercion of states’ rights, leaving the decision firmly in the hands of the states. Medicaid expansion is set to go in effect in this month, and as of now, only 25 states and Washington, D.C., are moving forward with the expansion. Expanding Medicaid is a necessary provision of the Affordable Care Act, and the 25 remaining states are ensuring that large portions of the population will still have no access to affordable healthcare. These blogs seek to explain both where opposition to Medicaid expansion originates, and why it might be in the interest of the politicians on the Right to accept the proposed expansion.
As Republican Governors cite fiscal responsibility in their refusal to participate in the Medicaid expansion, independent research and precedents in other states expose their arguments as extraordinarily selective. Though the expansion will increase state Medicaid expenses, they neglect to acknowledge the correlation between having fewer uninsured citizens and overall state health care expenses.
While the Congressional Budget Office predicts a menial 2.8 percent increase in Medicaid costs for participating states, that increase is misleading because it does not factor in other “savings that state and local governments will realize in healthcare costs for the uninsured.” Having more residents covered by Medicaid will help offset the amount states pay in expenses covering health costs for the uninsured, such as hospital fees.
According to a study by the Urban Institute, in 2008 state and local governments had to cover $10.6 billion worth of fees associated with healthcare services for the uninsured. The Urban Institute estimates that overall savings for each state that expands Medicaid will be between $26 billion and $52 billion from 2014 through 2019, noting that “total state savings would exceed states’ new costs.” Essential to consider is that savings resulting from expanded Medicaid coverage will continue to grow over time. As the Center on Budget and Priority Policies points out: “By shrinking the number of uninsured people and having the federal government pick up the overwhelming bulk of the tab, the Medicaid expansion will ease cost pressures on states stemming from uncompensated hospital care, mental health care, and other health care services.”
While we will likely continue to hear Republican Governors cite unfounded cost structures in their opposition to Medicaid expansion, other states have taken the initiative to reform their Medicaid systems before the expansion begins this month. Realizing the potential of Medicaid expansion, Massachusetts began reforming its health care system years before the Affordable Care Act was conceived. Other states, such as California and Minnesota, have begun implementing their own expansion to ease the transition into the new Medicaid system, before they even receive increased federal funding. These states assist us in understanding the long-term impact of expanded Medicaid coverage.
Successful Precedent: Health Care Reform in Massachusetts
In 2006, incumbent Governor Mitt Romney signed into law a comprehensive reform of the Massachusetts healthcare system, with the intention of providing near universal healthcare coverage to all state residents. From 2006 to 2010, the national average of uninsured Americans increased from 17.1 percent to 18.4 percent, but during the same time, the rate of uninsured residents in Massachusetts decreased from 10.9 percent to 6.3 percent, coming in nearly 12 percent below the national average. Massachusetts also witnessed an almost instantaneous impact on state healthcare costs. A study by The Massachusetts Center of Healthcare Finance and Policy noted in the first year of the states’ health reform implementation, there was a 38 percent decrease in spending on healthcare for the uninsured. The decrease in spending directly coincided with the decrease in uninsured residents, and the state has continued to see a decrease in health costs in the concurring years.
In taking a long-term approach to healthcare, Massachusetts was able to both decrease costs, while at the same time provide thousands of previously uninsured residents with coverage. Given the fact the decreased rate of uninsured was found through the MassHealth Medicaid program, there is little evidence to suggest the reforms in Massachusetts would not result in similar success throughout other states.
California’s Head Start to Medicaid Expansion
Due in part to its large population, California has by far the highest rate of uninsured people in any state, with over 7.1 million residents currently living without coverage. Governor Jerry Brown has been one of the more vocal supporters of Obamacare, announcing the day of the Supreme Court Ruling which upheld the law in June of 2012 that “today’s dramatic Supreme Court ruling removes the last roadblock to fulfilling President Obama’s historic plan to bring health care to millions of uninsured citizens.”
Not only were Brown and other Californian state legislators supportive of Medicaid expansion, they also decided to begin expanding the Medicaid program before the official expansion begins in January. Early expansion was viewed as an opportunity to make an efficient transition into the new program, an advantage seen by state legislators as being well worth the short-term increase of cost. As Peter Harbage, a consultant who worked with California on its Medicaid expansion, posited, the goal was to “start getting [the California population] into Medicaid and also get Medicaid ready to care for them.”
Brown, along with many other state officials, hopes that California can be the poster child for a successful transition into the new system, and believes California’s results will show the long-term benefits of Medicaid. Brown’s confidence in the early transition is easily recognizable, in an official statement he asserted “the rest of the country is looking to see how we did it.” Additionally, State Senate Health Committee Chair Ed Hernandez commented on the long-term financial benefits of the expansion, noting that the increased federal funds will “will trickle back into the economy as we address a segment of the population so much in need of healthcare.”
California has already welcomed 400,000 new enrollees to its state Medicaid system, and expects the number to continue rising quickly, as their are 1,873,000 residents who did not meet the previous criteria to receive coverage, but who now qualify for Medicaid.
The economic arguments against expanding their own Medicaid programs by conservative Governors and state legislators neglect to factor in the long-term benefits of expanding Medicaid coverage. They use only economic talking points that push forward their case against Medicaid, and refuse to look at the broader implications of how reforming the system will bring down health costs in the long-term. Expanding Medicaid is a long-term investment, which, in part, explains why the federal government would carry the financial burden for the first three years. If the Massachusetts system is any indicator, the states that participate will already see savings by the time they are required to cover a percentage of the expansion costs.