If the 24 states that have refused to expand Medicaid under Obamacare don’t change that stance, they’ll lose out on about $420 billion dollars in federal funding between 2013 and 2022, according to new research from the Urban Institute. The hospitals located in those states will also miss out on a projected $167.8 billion boost from the patients who could have become insured through expansion.
The health reform law, which was designed with a national Medicaid expansion in mind, specifically allocates additional funding to finance the cost of adding more people to states’ Medicaid rolls. But since the Supreme Court ruled the expansion to be optional, only half the country is actually implementing this particular provision. Health officials were initially optimistic that the “unusually generous” federal funds would help encourage resistant lawmakers to expand Medicaid; however, that hasn’t turned out to be the case for many GOP-controlled states.
Many politicians have cited financial concerns to justify their decision to reject expansion, saying that it’s irresponsible to pour more money into an inefficient government program. But since the federal government will foot more than 90 percent of the costs of the Medicaid expansion over its first nine years, the new report finds that about $13.41 in federal dollars will flow into states for every $1 they spend on Medicaid.
Plus, according to the Urban Institute’s calculations, opting out of expansion also comes with other, more indirect costs. Without extending public insurance to additional low-income residents, states are forgoing potential jobs, higher hospital profits, and lower uninsurance rates. They’ll ultimately have to spend more money on their uninsured residents — particularly when its comes to services like mental health treatment, substance abuse programs, and prison health care — that otherwise could have been shifted onto the Medicaid program.
For instance, the new report cites a previous study that found Pennsylvania could end up saving $4 billion in those non-Medicaid costs if the state agreed to expand the program. Although that particular statistic is specific to Pennsylvania, researchers found similar budget savings when reviewing data for a diverse range of other states.
“The impact of not expanding Medicaid has broader implications than just the number of people who gain insurance. It significantly impacts state economies and hospital budgets,” Kathy Hempstead of the Robert Wood Johnson Foundation, which funded the study, said in a statement. “States are literally leaving billions of dollars on the table that would support their hospitals and stimulate the rest of their economies.”
There’s a significant human cost to resisting Obamacare’s Medicaid expansion, too. In the 24 states that have not expanded Medicaid, an estimated 6.7 million low-income residents are projected to remain uninsured in 2016 because they fall into a coverage gap and cannot access affordable health care. Researchers from Harvard have estimated that as many as 17,000 impoverished Americans will die directly as a result of their states refusing to expand Medicaid. In that context, activists have framed the policy as a “moral issue.”