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STUDY: States Refusing To Expand Medicaid Will Lose Out On More Than $8 Billion

By Tara Culp-Ressler on June 4, 2013 at 9:00 am

"STUDY: States Refusing To Expand Medicaid Will Lose Out On More Than $8 Billion"

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Medicaid proponents rally in Ohio (Credit: Columbus Dispatch)

The GOP-controlled states who continue to resist expanding their Medicaid programs under Obamacare are making a short-sighted financial decision, according to a new analysis from the Rand Corporation. The 14 states whose governors have indicated that they won’t accept the optional Medicaid expansion will lose out on $8.4 billion in federal funding while leaving an additional 3.6 million Americans uninsured.

The federal government currently pays for about 57 percent of the cost of each state’s Medicaid program — but under Obamacare, it will pick up the total cost of expanding the program to cover additional uninsured Americans, gradually reducing that federal contribution to 90 percent. That increased federal funding, as well as the savings that result from fewer uninsured patients unable to foot their medical bills, could ultimately save all 50 states as much as $18.1 billion a year by Rand’s estimations.

“Our analysis shows it’s in the best economic interests of states to expand Medicaid under the terms of the federal Affordable Care Act,” Carter Price, the study’s lead author, explained in a press release. “State policymakers should be aware that if they do not expand Medicaid, fewer people will have health insurance, and that will trigger higher state and local spending for uncompensated medical care.”

And Rand’s $8.4 billion figure could actually be an underestimation. The study focused on the 13 states that have already flat-out refused to participate in Obamacare’s Medicaid expansion as well as another state, Iowa, that is pursuing an alternative to the policy. But it didn’t include the six states that are leaning toward rejecting the Medicaid expansion — Alaska, Kansas, Nebraska, Utah, Virginia and Wyoming — which could also end up losing money if they officially decide against expanding their public insurance programs.

This is just the latest study to document the significant financial benefits for states that choose to expand Medicaid coverage under Obamacare. Nevertheless, stubborn Obamacare opponents in red states are still refusing to cooperate with any aspect of health reform — even at the expense of their most vulnerable constituents. Some of the nation’s most highly-uninsured states have resisted extending health coverage to additional low-income Americans simply to make a political statement against the health reform law.

That’s why the Republican governors who have already indicated their support for expanding Medicaid, like Arizona’s Jan Brewer and Ohio’s John Kasich, continue to encounter significant resistance from the rest of the members of their party. But that fierce opposition to Medicaid expansion stands in sharp contrast to public opinion. Most Americans strongly support this Obamacare provision, even in the Deep South.

Considering the fact that rejecting the Medicaid expansion represents a bad fiscal move for states, some Republican leaders have suggested that it’s not actually a conservative position. This week, Kasich pointed out that Ronald Reagan — who approved several expansions of the federal insurance program to additional populations, like pregnant women and low-income children, during his time in office — would likely be in favor of expanding Medicaid.

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