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Medicaid Expansion Benefits States and Beneficiaries

Medicaid provides public health insurance to seniors, people with disabilities and children with low incomes. Under the Affordable Care Act (ACA), since 2014, states can receive generous federal funding to expand Medicaid coverage to uninsured adults with incomes up to 138 percent of the federal poverty level ($27,724 for a family of three). Currently, 30 states and the District of Columbia have opted for Medicaid expansion, while several other states are exploring ways to expand their programs. States should be encouraged to expand their Medicaid programs, which would benefit low-income adults, hospitals, and local economies. An expanded Medicaid program. 

  • Provides greater access to health coverage. Medicaid expansion would provide more low-income adults with access to health care services, resulting in improved health outcomes.  In addition, Medicaid expansion would benefit people from communities of color because many work in low wage jobs that do not offer health benefits. Medicaid expansion would reduce the health coverage gap for many individuals below the poverty level. When the ACA was developed, policymakers expected all states to take part in the expansion and did not provide subsidies for people below the poverty level to buy private insurance in the health marketplaces. However, when the Supreme Court ruled in June 2012 that Medicaid expansion was optional for states, it created a coverage gap for this population. As a result, low-income adults living in a state without Medicaid expansion may also be ineligible for subsidies, and will likely remain uninsured. The Kaiser Family Foundation estimates that over five million individuals may fall into this coverage gap. 

  • Saves states money. Medicaid expansion is a good deal for states. The federal government will pay 100 percent of the cost for newly eligible low-income adults for the first three years (2014-2016), then phase down to 90 percent by 2020. States not participating in the expansion are forgoing billions of federal dollars that could provide their residents with health care coverage and financial protection.

  • Reduces uncompensated care. Medicaid expansion would reduce the cost of uncompensated care for emergency room use by individuals without health insurance. Absent Medicaid expansion, uninsured people are more likely to delay seeing a doctor and then go to the emergency room when their illnesses get worse. For those who do not pay their bill, the hospitals absorb the expense, which can be pass onto individuals with private insurance through higher premiums.

  • Promotes economic growth and job creation. Medicaid expansion would increase state economic growth by creating new health care sector jobs to treat the influx of newly enrolled Medicaid beneficiaries. Because newly hired health providers will receive payment for serving more beneficiaries, they will have additional resources to spend in their communities. In turn, local economies will benefit from greater tax revenues and opportunities for economic growth.

  • Allows for state flexibility. Although the federal government must approve states’ Medicaid expansion plans, states have the flexibility to develop innovative approaches to cover their Medicaid populations. Some states have proposed hybrid models that will allow them to use federal funding for Medicaid expansion to purchase private insurance for their uninsured.

NATIONAL COMMITTEE POSITION

The National Committee supports Medicaid expansion under the Affordable Care Act because it provides health coverage access to millions of low-income adults who are without health insurance. Medicaid expansion is a win for beneficiaries, a win for states, and a win for hospitals and local economies. States should be encouraged to move forward with Medicaid expansion as soon as possible.

 

                                                                        Government Relations and Policy, April 2016


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