Study: Rejecting Medicaid Expansion Loses States $8 Billion

The states that declined to expand Medicaid will lose out on a total of $8 billion in federal funds, have millions more residents uninsured, and spend about a billion dollars more on uncompensated care as compared to states that accept the expansion.

That’s the conclusion of a new study in Health Affairs by two RAND Corporation scholars, who model the impacts on the first 14 states that opted out of Obamacare’s Medicaid expansion, which was made optional by the Supreme Court.

In total, mathematician Carter Price and economist Christine Eibner find, the 14 states that rejected the expansion will wind up with 3.6 million more uninsured people, $8.4 billion less in federal funds, and up to $1 billion more in spending on uncompensated care in 2016.“We conclude that in terms of coverage, cost, and federal payments, states would do best to expand Medicaid,” Price and Eibner write.

The findings illustrate the compelling incentive states have to accept the federal Medicaid funds and the dilemma Republican governors have faced when deciding whether or not to expand Medicaid, caught between a lucrative deal and a conservative base eager to make a political stand against Obamacare. For Democrats, on the other hand, it’s a no-brainer on the substance and politics.

The Medicaid expansion would cover residents up to 133 percent of the poverty line. The federal government will pay the full cost through 2016 and 90 percent thereafter.

The governors who have opted out of the Medicaid expansion are mostly Republicans in conservative states, such as Texas’ Rick Perry and South Carolina’s Nikki Haley. But in other states, Republican governors who want to expand Medicaid are at loggerheads with their Republican-led legislatures who are determined to block them from doing so.

Republican Govs. John Kasich of Ohio, Rick Scott of Florida and Jan Brewer of Arizona have supported the Medicaid expansion but face stiff opposition from their legislatures. Brewer has responded by playing hardball, threatening to veto all legislation until the Arizona state house agrees to expand Medicaid.

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