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Medicaid expansion could cost states less, help uninsured

Now that Obamacare's open-enrollment period for private health insurance plans is done for the year, the debate in individual states about whether to expand Medicaid eligibility is getting renewed attention as advocates argue such a move makes good financial sense for those states.

Just half of the states have expanded their Medicaid program's eligibility caps to include childless adults who earn about $16,000 or less annually, while the rest are either still debating that option, allowed by Obamacare, or have rejected the option.

For the first three years of expansion, the federal government picks up 100 percent of the costs of covering the newly covered, and 90 percent of those related costs thereafter.

The remaining states are "willing to sacrifice billions of dollars of injections into their economy in order to punish poor people," said MIT health economist Jonathan Gruber in a recent online video chat quoted this week by Los Angeles Times columnist Michael Hiltzik.

Patient with medical coverage through Medicaid expansion under the Affordable Care Act.
Luke Sharrett | The Washington Post | Getty Images
Patient with medical coverage through Medicaid expansion under the Affordable Care Act.

Hiltzik wrote that "the final battles of any war are often the bloodiest" and "the final battle of the war of the Affordable Care Act is being waged today over expanding Medicaid."

The LA Times column also noted that an estimated 5 million people who could be covered by expanded Medicaid eligibility are being denied that coverage because of their home states' refusal to authorize it. The non-expansion states tend to be controlled by Republican governors, legislatures, or both.

"What's most curious about states with Republican leaders ostensibly devoted to fiscal responsibility is that shunning Medicaid expansion makes no budgetary sense, given the huge federal financing commitment and the potential for reducing other state costs, including the public cost of treating uninsured patients," Hiltzik wrote.

This argument comes as new data is released on the cost of caring for those who recently signed up for Medicaid. A story published Friday on Marketplace.org said new Medicaid-related costs for all states are going to be about one-third less than had originally been estimated.

The new estimate by the Congressional Budget Office is based on data showing that fewer people who already were eligible for Medicaid have signed up for coverage since the launch of Obamacare than had been predicted. States pick up a much higher share of costs for the previously eligible than for people covered by expanded Medicaid eligibility standards.

The Marketplace report also quoted Dr. Randy Cebul, who operates the Center for Health Care Research and Policy, as saying that a pilot project in Cleveland, Ohio, has led to lower emergency room use, increased visits to primary care doctors and lower-than-projected spending after Medicaid was expanded in Ohio.

"We improved care. We improved outcomes, and we reduced costs," Cebul told Marketplace.org. Referring to the non-expansion states, Cebul said, "I think this should be a reason they want to reconsider their decision."

The same report quoted health economist Steven Hill, who said data has shown new Medicaid patients tend to be less depressed and less heavy than people previously enrolled.

"And so they may need even less care than current enrollees," Hill told Marketplace.

Read Michael Hilzik's Los Angeles Times column here.

Read Marketplace.org's story "Medicaid's new patients: healthier, and maybe cheaper" here.

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