States Are Running Out Of Excuses For Refusing To Expand Medicaid


Medicaid proponents rally in Ohio (Credit: Columbus Dispatch)

Accepting Obamacare’s optional Medicaid expansion could be a better financial deal for states than initially predicted, according to new data from the non-partisan Congressional Budget Office (CBO).

Expanding Medicaid to extend health coverage to additional low-income Americans will cost about a third of what the CBO projected earlier this year, according to the agency’s updated estimates of Obamacare’s financial impact. Back in early February, the CBO estimated that state spending on Medicaid and CHIP would be $70 billion higher over the next decade because of the expansion. Now, that figure has been revised down to $46 billion.

Ultimately, states will only need to spend about 1.6 percent more on their public health insurance programs than they would have spent in the absence of health reform. And that’s before the potential long-term savings from Medicaid expansion — like the benefits of providing increased mental health treatment to low-income people — are factored in.

“Health reform’s Medicaid expansion, which many opponents wrongly claim will cripple state budgets, is an even better deal for states than previously thought,” Edwin Park, the vice president for health policy at the Center on Budget and Policy Priorities, the independent research group that first flagged the revision, noted.

The CBO revised its figure down because the agency predicts that most of the people signing up for Medicaid will be newly eligible under expansion, and the federal government will pick up the cost of their enrollment. States have been worried about what health policy experts call the “woodwork effect” — essentially, as Obamacare enrollment raises people’s awareness about their health options, people who could have signed up for Medicaid before health reform took effect will come out of the woodwork and enroll. States have to pick up a larger portion of the cost for those people. But CBO officials now expect the woodwork effect to be smaller than initially projected, which means states’ costs will also be smaller.

Many of the GOP leaders who have continued to resist Medicaid expansion say that it’s simply too expensive, or insinuate that the federal government won’t follow through on its commitment to provide funding. But those talking points don’t match up with reality.

The CBO numbers aren’t the only evidence that states’ concerns are overblown. Last month, a study found that the people who are enrolling in Medicaid tend to be in better physical and mental health than the people who are already in the program. That means the states that agree to expand Medicaid aren’t burdening their programs with a flood of sick and costly patients.

There’s also a significant human cost to resisting Medicaid expansion. Thanks to GOP-led states’ continued resistance to this policy, about 5.8 million impoverished Americans don’t have any access to affordable health care whatsoever. Harvard researchers recently estimated that as many as 17,000 people will die directly as a result of their states refusing to expand Medicaid.

Nonetheless, many GOP lawmakers haven’t indicated they’re ready to give up the fight against this aspect of Obamacare. Several states have recently laid the groundwork to continue blocking expansion even if the governor’s mansion is occupied by a Democrat.