Religious leaders demand: Expand Medicaid, and save money

Rev. Raphael Warnock

A group of religious leaders is demanding that states that haven't yet embraced Obamacare's Medicaid expansion do so, calling the lack of health coverage in those states for poor adults "a moral crisis" that shouldn't be subject to political feuding.

Those leaders also said that even if politicians don't buy into the moral argument, the money that would flow to those 24 remaining states and businesses if they expanded Medicaid eligibility to more than 5 million adults is just too good to pass up.

"The fact is, we cannot afford to not expand Medicaid," said the Rev. Raphael Warnock, senior pastor of Ebenezer Baptist Church in Atlanta, during a conference call with reporters and other religious leaders.

"I don't think in the past 50 years we have seen the kind of obstruction of a law passed by Congress, supported by the Supreme Court, as we are seeing right now now," said Warnock, whose church was previously headed by civil rights leader Martin Luther King Jr. "It's not just politically wrong, it's morally wrong. It's not the difference between left and right, it's the difference between right and wrong."

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The states that have blocked Medicaid expansion are overwhelmingly led by Republican governors who oppose Obamacare, and who have objected to the additional costs that will come from insuring more people.

But some Republican-led states have embraced Medicaid expansion because the federal government will foot all of the bill for the newly covered in the first three years, and then 90 percent of the costs thereafter in perpetuity—a much better financial deal for states compared with the roughly 50-50 split they have with the federal government for previously eligible Medicaid recipients.

Indiana Gov. Mike Pence, a conservative Republican who is considered a possible GOP presidential contender in 2016, last week said he wanted his state to expand Medicaid eligibility.

Indiana Gov. Mike Pence
Michael Hickey | Getty Images

Hospital groups in Republican-led states have been among those clamoring for Medicaid expansion because it would lower their costs from so-called bad debt, or the cost of caring for poor people who show up at the hospital and get treatment, and then can't pay their bills.

"States make money off this expansion, they don't lose money, and that's the real crime" of not expanding, said Jonathan Gruber, an MIT professor who was one of the architects of Obamacare.

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Gruber, when asked about Pence and other GOP leaders embracing Medicaid expansion, said he expects there will be a growing "positive move in this direction."

"I think particularly after the 2014 midterms [elections] I think we're going to see a lot more movement ... but I think there's still going to be a hardcore of 10 to 15 states that are not going to move after the midterms," Gruber said.

Sister Carol Keehan, the CEO of the Catholic Health Association, a group of more than 600 hospitals, said, Medicaid expansion is "good not only for the poor, it's good for the hospitals, it's good for other businesses."

"To say that we're not going to do it because we have a political agenda ... or we're going to put up some false excuse, is so incredibly frustrating," she said. "It's just so unfair in the worst way." Keehan was speaking on the call, which included leaders affiliated with the PICO National Network community organizing group and the Moral Mondays social justice movement.

Obamacare, when passed into law in 2010, originally called for all states to expand eligibility to all people with incomes up to 138 percent of the federal poverty line: about $16,000 for an individual, and $32,500 for a family of four. But the 2012 Supreme Court decision upholding Obamacare's overall legality said individual states would have to decide whether to expand Medicaid eligibility.

That decision created a perverse situation. People who earn between 100 percent and 400 percent of the federal poverty level are eligible for federal subsidies to buy private individual Obamacare insurance on government exchanges. But people in non-Medicaid expansion states who make less than that are not eligible for those subsidies, meaning that if they were ineligible for Medicaid before they are left without affordable health-care coverage options.

Twenty-six states and the District of Columbia have either expanded Medicaid eligibility or are moving toward doing so. In the remaining states, there are an estimated 5 million or more poor people who have fallen into a so-called coverage gap, where they cannot receive Medicaid at no costs to themselves, and cannot receive subsidies to buy Obamacare policies.

The Rev. Susan McCann, rector of Grace Episcopal Church in Liberty, Missouri, said about 300,000 people in that state are in the coverage gap, and that the lack of health coverage for them is having fatal consequences.

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"Life expectancy in one-quarter of our counties is going down," McCann said, nothing that such a decline is the first time in recorded Missouri history that the life-expectancy rate has decreased. "Missourians are living sicker and dying younger."

Warnock, of Ebenezer Baptist in Atlanta, noted that Georgia has about 600,000 people in the coverage gap.

"It occurs to me that these are not numbers, these are our neighbors," Warnock said. "They work in restaurants, they offer security at night ... some of them clean businesses and hospitals, some of them sit by the bedsides of others when they are sick."

Gruber, the MIT professor, pointed to recent research which found that more than 300 lives were saved each year in Massachusetts after the state expanded health insurance coverage under Romneycare, the precursor to Obamacare.

Extrapolating those findings to the 5 million or more people who are being kept from Medicaid in 24 states, Gruber said the lack of expansion there is "costing us in the order of 6,000 human lives a year."

"That's 6,000 people who will die every year," he said. "It's a crime against humanity, it's a crime against economics, it's a crime against good public policy."

—By CNBC's Dan Mangan.