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Wednesday, June 5, 2013

RAND Corporation Researchers Agree: Medicaid Expansion Is a Good Deal for States

Amy Traver

Staff Writer

A RAND Corporation Study released this week concludes that states would be smart to expand Medicaid. This is yet another study demonstrating what we have known for a while: The Medicaid expansion is a good deal for states.

The study estimates that, if all states expand Medicaid, then 27.4 million people would be newly insured in 2016. This increase in health coverage would reduce state and local spending on uncompensated health care by $18.1 billion. Alternatively, looking at 14 states where expansion is unlikely, the study estimates that 3.6 million fewer people would be insured in those states in 2016 if they choose not to expand. Additionally, those states would see a $1 billion increase in state spending, and billions of federal dollars would be left on the table.

This is just the most recent of a long litany of studies released over the past year that all confirm that the Medicaid expansion is a good deal for states. By choosing to expand Medicaid, states choose to do the following:

Strengthen safety net hospitals. Expanding Medicaid will reduce the number of uninsured in the state and lessen the burden of uncompensated costs on local hospitals. Safety net hospitals provide care to the uninsured and underinsured, often collecting little or none of the cost of that care from patients. The American Hospital Association recently reported that U.S. hospitals provided $41.1 billion of uncompensated care in 2011 alone.

Take advantage of an economic stimulus. When states choose to expand Medicaid, billions of new federal dollars will come into the state. These new dollars will generate thousands of new jobs and increase business activity across the entire state economy, not just in the health care sector.

Alleviate pressure on their state budget. States will not have to pay more than 10 percent of the cost of expanding Medicaid; the majority of the cost will be borne by the federal government. Furthermore, most states have a variety of programs that fund specific health care services for the uninsured. If states choose to expand Medicaid, they will significantly reduce the demand for these programs and can begin to see savings in their budgets without risking the health of their residents.  

Provide their residents with the opportunity to get affordable health care. Most individuals who will be newly eligible under the Medicaid expansion would not be able to afford health coverage if a state chooses not to expand. Medicaid coverage has been shown to improve access to health services and increase financial security. By choosing to expand Medicaid, states are choosing to have a healthier population and a healthier workforce.