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States Could Lose $8.4 Billion Annually Without Medicaid Expansion, Study Finds

3.6 million people would be left uninsured (June 3)

States that choose not to expand Medicaid under federal health care reform will leave millions of their residents without health insurance and will increase spending, at least in the short term, on the cost of treating uninsured residents, according to a new study from the RAND Corporation.

If 14 states decide not to expand Medicaid under the Patient Protection and Affordable Care Act (PPACA) as intended by their governors, those state governments collectively will spend $1 billion more on uncompensated care in 2016 than they would if Medicaid were expanded.

In addition, those 14 state governments would forego $8.4 billion annually in federal payments, and an additional 3.6 million people would be left uninsured, according to findings published in the June edition of Health Affairs.

The states studied were Alabama, Georgia, Idaho, Iowa, Louisiana, Maine, Mississippi, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, and Wisconsin. Although governors in additional states oppose expanding Medicaid, the 14 states in the study were the first whose governors said they would not expand the program.

The study found that the cost to states for expanding Medicaid generally would be lower than the expense state and local governments will face for providing uncompensated care to uninsured residents after implementation of the PPACA.

The researchers estimate that increased insurance coverage triggered by health reform will reduce state and local spending on uncompensated medical care by as much as $18.1 billion annually across all states. Those savings may continue beyond 2020, when the states’ share of Medicaid costs will plateau.

The study suggests that changes could be made to the health care law to help some people targeted by the Medicaid expansion to obtain health insurance coverage through other means. Those options include a smaller expansion of Medicaid or changes in the new state insurance exchanges to allow more poor people to purchase private health insurance.

Sources: RAND Corporation; June 3, 2013; and Health Affairs; June 2013.

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