4 Unexpected Benefits For States That Agree To Expand Medicaid

CREDIT: AP Photo/Butch Dill

Jerry Burnet, of Huntsville, Ala., holds up a sign in support of the expansion of Medicaid in front of the Alabama State House

In the months since Obamacare’s open enrollment period first began, an estimated six million additional people have gained public health insurance. That’s largely thanks to the health law’s expansion of the Medicaid program, which gives states generous federal funds to extend health care to more of their low-income residents. But not every state has agreed to accept the optional expansion. This week, Virginia became the latest state to reject Medicaid expansion after the GOP won control of the Senate.

The decision to resist Medicaid expansion obviously has serious consequences for the low-income Americans who can’t access insurance, and that’s why activists have branded the fight over expansion as a “moral issue.” But there are additional impacts outside of health care, too. Agreeing to expand Medicaid can also benefit states in a range of other ways:

1. Preventing layoffs and creating new jobs.

The Mercy health system — which is the sixth-largest Catholic health care system in the country — announced this week that it will be forced to lay off 300 workers in multiple different states. Officials cited states’ refusal to expand Medicaid as one of the main reasons it can no longer afford to keep its current staffing level. On the other hand, multiple studies have projected that agreeing to accept the expansion will help states create thousands of new jobs in the health care sector to accommodate their growing population of insured residents.

2. Helping kids stay in school.

Expanding health coverage for low-income children can actually help them stay in high school, go to college, and complete a bachelor’s degree, according to a new report from the National Bureau of Economic Research. After Cornell and Harvard researchers examined the effects of Medicaid expansion in the 1980s and 1990s, they found that extending health insurance to poor kids can actually reduce economic and and educational inequality. That’s likely because of two factors: healthier kids tend to do better in school, and families that don’t have to spend so much money on health costs are freed up to focus on helping their children succeed in school.

3. Raising household incomes.

Without insurance, medical bills can bankrupt a family. But when families have health care plans to help them cover the cost of their medications and procedures, they’re able to save the money they otherwise would have spent on those services. There’s already evidence that Obamacare could help save some struggling Americans from financial distress, and boost the poorest Americans’ personal incomes by five percent. But that’s only if the coverage expansion is actually implemented.

4. Keeping hospitals open.

For some hospitals, the consequences of rejecting Medicaid expansion is even more dire than being forced to lay off staff. Many of the hospitals serving the poorest communities can’t afford to stay operating without the funding from the expansion, including the financial boon from serving more patients who have insurance. Rural hospitals in states like Georgia, Tennessee, Virginia, and North Carolina are being forced to close. This isn’t an unexpected consequence; hospital associations have lobbied hard for Medicaid expansion over the past year, predicting that failing to implement this Obamacare provision will cause them to close some of their facilities in impoverished areas.