Medicaid Expansion Continues to Benefit State Budgets, Contrary to Critics’ Claims
As residents of
In the face of this evidence, critics of Medicaid expansion (including the conservative
Medicaid Expansion Continues to Produce State Budget Savings
Under the ACA, the federal government paid 100 percent of the cost of Medicaid expansion coverage from 2014 to 2016. The federal share dropped to 95 percent in 2017, 94 percent in 2018, and 93 percent in 2019 and will settle at 90 percent in 2020 and each year thereafter. By comparison, the federal government pays between 50 and 76 percent of the cost of other Medicaid enrollees, depending on the state.
Many state and independent analyses have found that expansion produced net savings for state budgets while the federal government was paying the full cost of expansion enrollees, since expansion allowed states to spend less in other areas.(5) For example, as more people gained coverage, hospitals' uncompensated care costs -- and thus, for some states, payments to hospitals to help cover those costs -- fell. States also spent less on programs serving people with mental health or behavioral health needs since Medicaid paid for their treatment, and less on corrections as federal Medicaid dollars paid a greater share of the inpatient hospital costs of inmates eligible for and enrolled in Medicaid. And, in states that tax managed care plans serving Medicaid beneficiaries, increased enrollment has generated revenue gains that further offset the cost of expansion.
Going forward, even with the federal share of expansion dropping to 90 percent, some states project savings that will offset much (though not all) of their expansion costs, while others project expansion will continue producing net budget savings.
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The conservative
In fact, Medicaid enrollment and costs have stabilized after initial growth when expansion first took effect in 2014. Overall Medicaid enrollment grew by 8.8 percent in 2014 and 7.6 percent in 2015 but only 3.1 percent in 2016, according to the
Medicaid Expansion Has Led to Large Coverage Gains, Improved Health, and Supported Work
Even as expansion imposes little if any burden on state budgets, evidence of its positive impacts continues to accumulate.
States that have adopted expansion have a much lower uninsured rate than states that haven't, and the gap continues to widen. The uninsured rate in expansion states dropped 6.4 percentage points from 2013 to 2017, from 13 percent to 6.6 percent, according to Census data.(14) In non-expansion states, it dropped 4.8 percentage points, from 17 percent to 12.2 percent. This gap between expansion and non-expansion states has grown each year beginning in 2014.
See chart here (https://www.cbpp.org/health/medicaid-expansion-continues-to-benefit-state-budgets-contrary-to-critics-claims).
Beneficiaries gaining coverage through expansion are using it to obtain cancer screenings, prescription drugs, and treatment for chronic health conditions. Evidence suggests that expansion coverage leads to more appropriate use of care by increasing the use of primary care services and reducing emergency room visits by the uninsured.(15) And expansion has reduced the medical debt of low-income Americans and improved their financial situation generally.(16) (See Figure 1.)
Medicaid also supports work. "No studies have found negative effects of expansion on employment or employee behavior," a comprehensive literature review by the
The Heartland-IFF report claims that expansion could "pull tens of thousands of hard-working Idahoans out of the labor force."(18) To the contrary, ample evidence suggests that Medicaid expansion has been a crucial work support for people with low incomes. In studies conducted in
Conclusion
Voters in
Footnotes:
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(2)
(3) See, for example,
(4)
(5) See, for example,
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(15) See, for example, "Chart Book: The Far Reaching Benefits of the Affordable Care Act's Medicaid Expansion," Center on Budget and Policy Priorities,
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(18) Katebi and Atkinson, op. cit.
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