MEMORANDUM: Why GOP Governors Should Stop Looking the Medicaid Expansion Gift Horse in the Mouth

DATE: November 15, 2013

TO: Interested Parties

FROM: Brad Woodhouse, President, Americans United for Change


For Republicans at the federal and state level who’ve done everything in their power to sabotage and defund Obamacare since Day One and now hypocritically criticize the early enrollment numbers, there’s one enrollment number they’ve conveniently ignored this week: 444,000.  


That’s how many Americans, newly eligible to enroll in the Medicaid program under Obamacare, were estimated to have signed up in ten states since open enrollment began six weeks ago.  That’s nearly half a million Americans who wouldn’t have coverage today if Republicans had gotten their way.   It’s a huge success story that the right-wing noise machine wants to drown out. 


Millions more are expected to get coverage in the coming months in the states where their governments accepted Obamacare resources to expand Medicaid and fill in the gap of those not impoverished enough to qualify for Medicaid and earn too much to qualify for subsidies to get private insurance in the new exchange.  And in the states that made this no-brainer decision, the demand for care is being met and enrollment is going smoothly.  Unfortunately, only half the states have given their citizens this opportunity for health security.


25 state governments controlled by Republicans still say they aren’t interested in opening the door to immediate coverage to thousands of their uninsured state citizens through Medicaid without a dime added to the state budget, with no-strings-attached.  After three years, the federal government still picks up 90 percent of tab through 2020.  


Why would any Governor turn down the best deal since the Interstate Highway Syste?  They certainly can’t excuse their cruel behavior by claiming popular support.  To the contrary, a recent survey found that even residents from states in the Deep South support Medicaid eligibility expansion by a 62 percent margin.


Unfortunately, the needs of the many have been outweighed by the political spite and presidential ambitions of a few.  Whatever point these Governors are trying to prove has surely been lost on the nearly 5 million Americans they’ve forced into the Medicaid coverage gap.  It’ll soon be lost on many of their insured citizens too when they realize why they’re paying much higher premiums on behalf those who were eligible for Medicaid coverage, but were denied it for no good reason.


Here’s the Top Five Reasons Why Republican Governors should stop looking a gift horse in the mouth:


1)      Medicaid Expansion Will Help Put State Budgets Back in Black

CAP: “States that expand their Medicaid coverage will not incur unsustainable costs; rather they will enjoy net fiscal gains due to offsets in savings and increases in revenues. Sources of increased revenues include state sales taxes, insurance taxes, and prescription-drug rebates. States will also incur savings, as the federal government will be paying a much higher share of the cost for populations that were previously ineligible and therefore solely paid for by states. This will free up billions of dollars from state budgets, as is the case in Florida, where projected annual savings are $100 million, and in Ohio where projections call for $1.9 billion in savings and increased revenues by 2022.”

CBPP: “States will spend just 2.3 percent more on Medicaid with the expansion than they would have without health reform, CBO finds.  This 2.3 percent figure overstates the net impact on state budgets because it doesn’t reflect the large savings that states and localities will realize in health care spending for the uninsured.  The Urban Institute estimates that states will save between $26 and $52 billion in this area from 2014 through 2019.  The Lewin Group estimates the state and local savings at $101 billion.”


2)      Medicaid Expansion = Economic Expansion and Jobs, Jobs, Jobs

CAP: “When hundreds of thousands of individuals in a state are gaining health care coverage, there must also be thousands of health care professionals available to care for them. Likewise, there will be an increased demand for equipment for medical tests, the production of extra beds, more maintenance jobs at growing health care facilities—the list goes on. In short, Medicaid expansion is an engine for job creation. According to the Health Policy Institute of Ohio, by 2015 Medicaid expansion will create at least 23,000 new Ohio jobs in health care and other related industries, increase the earnings of Ohio residents by at least $16.7 billion, and increase the state’s total economic activity by at least $18.6 billion from 2014 to 2022. In fact, costs to employers could total $876 million to $1.3 billion in the states that oppose, are leaning against, or remain undecided on expansion as the result of penalties for noncompliance with the Affordable Care Act.”


National Health Law Program: “New federal Medicaid dollars will travel through the state economy, improving employment, labor income, and capital income. New federal dollars will turn over multiple times in the state economy (for example, from physician to employee to grocer).”


3)      Medicaid Expansion is Pro-Life. 

A total of 17 million low-income children and adults are newly eligible for Medicaid between 2014 and 2022 under Obamacare.  However, 5 million poor uninsured citizens are being denied the opportunity to get covered in states that refuse to expand Medicaid – and the cruel decision has potentially deadly consequences.  

The chilling 2009 Harvard study that found 45,000 deaths are linked to lack of health coverage every year remains relevant to this day.  The good news is that the National Health Law Program finds that “Medicaid Expansion will reduce adult death rates. In states that have already expanded Medicaid, mortality rates have been reduced significantly. Death rates were the greatest among adults between the ages of 35 and 64 years, people of color, and residents of low-income counties. Adults also experienced significant reductions in delays getting health care due to cost. Comparable states that did not expand Medicaid did not have similar results.  A report in Tennessee concludes that expanding Medicaid coverage to 225,000 people would save 9 lives in the state every week for the next 10 years.”

4)      Medicaid Expansion a Great Deal for Hospitals & Rural Hospitals Put in Jeopardy Without It

Urban Institute: “Expansion moves some patients from private insurance to Medicaid, which pays hospitals at a lower rate. However, hospitals’ resulting loss of revenue is more than offset by the many uninsured patients who gain Medicaid coverage. Altogether, for each dollar lost from private insurers, expansion increases hospitals’ Medicaid revenues by $2.59. Medicaid expansion also lets hospitals use the ACA’s new presumptive eligibility option to obtain payment for a significant proportion of the uncompensated care that would remain, even after expansion.”


According to CBPP, “More than 2.6 million low-income individuals who live in rural America and do not have health insurance could gain coverage if all states accept federal funds to expand their Medicaid programs in  2014 under health reform.  But not embracing Medicaid expansion could make matters worse.  As Think Progres notes: “In states that have rejected the expansion, rural hospitals face cuts without getting any of the potential benefits to offset them. States like Missouri have projected that, without Medicaid expansion, up to 50 percent of the rural hospitals in the state are likely to be forced to close.”


5)      Purposely Keeping Thousands of State Citizens Out of Medicaid and Uninsured Means Higher Premiums for the Insured

Before the Affordable Care Act became law, on average, 8 percent of families’ 2009 health care premiums—approximately $1,100 a year—was attributable to hospitals and other care providers shifting the cost of uncompensated care for the uninsured onto the insured.   Who do Republican Governors who refuse the expansion think will pick up the tab for the uncompensated care of the 5 million Americans they’re denying Medicaid coverage to?  The insured citizens in their states, that’s who, in the form of higher and higher premiums.  


For example, here’s how much less of a ‘hidden tax’ Missouri citizens would pay if Medicaid eligibility were expanded in their state.    According to the University of Missouri School of Medicine: “Given no change, the average private insurance premium for a family of four in Missouri was $12,754 in 2010 and is projected to cost $14,992 in 2014.  Of the growth in Missouri insurance premiums from 2010 to 2014, cost shifting from the unin­sured represents $434 of this growth.   When the full effects of Medicaid expansion are realized, the elimination of cost shifting means a family of four could expect to save $1,688 due to reduced premiums over the period 2014- 2020, and an individual would save $610 over this time frame   Across the period 2014-2020, privately insured individuals and families could potentially save nearly $1 billion due to reductions in premiums.”


A RAND Corporation study found similar consequences for the insured in three other non-Medicaid expansion states, Texas, Louisiana, and Florida:  “We considered the potential consequences for health insurance enrollment in scenarios in which Medicaid was not expanded. Across the three states, we estimate that an additional 2.3 million individual would be uninsured without Medicaid expansion and state uninsurance rates would increase by 5 to 6 percentage points, compared to scenarios that include Medicaid expansion.”