Cosmic Irony: States That Didn’t Expand Medicaid Paying More For The Program

States that refused to expand Medicaid under the Affordable Care Act are now paying the price, literally.

A new Kaiser Family Foundation report released last week suggests that the Republican-controlled non-expansion states are seeing their share of Medicaid costs rise more sharply than expansion states.

The trend undercuts a popular argument against the Medicaid expansion in states where Republican leaders continue to resist opting into the program, under which the federal government pays 100 percent of costs through 2016 and at least 90 percent share after.

“We did see a higher growth rate of what states spent of their own dollars on Medicaid in the in non-expansion states than we did in the expansion states” said Laura Snyder, a senior policy analyst at the Kaiser Family Foundation. The report found that total spending in expansion states grew by 17.7 percent, but the state spending only grew by 3.4 percent. Meanwhile, state spending on Medicaid in non-expansion states increased by 6.9 percent as total spending rose by 6.1 percent.

According to Snyder, it is not entirely clear what is driving the trend, but a number factors appear to be at play. Obviously having the federal government bear the burden for Medicaid expansion costs helped expansion-states curb their own spending on the program after it expanded. However, it also appears that Medicaid expansion states have saved money beyond that, such as in the way it they were delivering the program or how the expansion affected other aspects of Medicaid.

“There’s some potential the ACA is having some effect in the report we did,” Snyder said. “Among the expansion states, some of them noted savings in other parts of their budgets, some of them also noted savings within the Medicaid program.”

Furthermore, the report found that more than two-thirds of expansion states saw that the amount they paid per member per month was at or lower than their previous projections.

Additionally, non-expansion states on average saw a rise in their enrollees, perhaps due to more people becoming aware they were eligible for Medicaid with the publicity about the ACA, which could have attributed to the rise in the states’ costs.

Finally, spending levels of non-expansion states — which was measured by Kaiser in weighted averages, rather than in state-by-state breakdowns in the report — could have been impacted by the rise in costs in big states like Texas, which saw a decline in their traditional match rate, Snyder said.

As originally envisioned, Obamacare would have expanded Medicaid in all 50 states by threatening to withhold funding from states that did not expand, but the Supreme Court ruled in 2012 that such coercion was unconstitutional and cleared the way for states to opt out.

Kaiser counted 29 states as expansion states for the purpose of the report, which covers fiscal year 2015. Montana and Alaska are moving to expand Medicaid in fiscal year 2016. Elsewhere, conservative lawmakers have resisted expanding the program, even when governors of their own party have asked them to.

“Everybody loves expanding Medicaid until they have to pay for it,” Greg Hughes, the Republican House Speaker of Utah’s Legislators, told reporters after state lawmakers blocked Gov. Gary Herbert’s (R) most recent attempt to expand Medicaid in the state.

Snyder said it’s a “little early, for sure,” to know the entire picture of the fiscal impact Medicaid expansion was having on states, since so many factors are at play.

However, she also pointed to a separate report from the Commonwealth of Kentucky that showed that Kentucky would continue saving money even after the state took a share of the cost of Medicaid expansion.

“When the state share was at its highest, they were still noting overall savings for the state.” Snyder said. “Some of the findings here bolstered that too.”