The Cost of Not Expanding Medicaid

Note: I made an error in this post originally that I preserved via strikethrough. I have now done a further post as well.

The Kaiser Family Foundation/Urban Institute has a comprehensive report on the cost to States of not expanding Medicaid. The report is a fairly dispassionate look at cash flows, and changes in the rate of lack of health insurance that will/could come about with the Medicaid expansion available under the ACA.

If you view moving toward covering everyone with health insurance as a public policy goal worth taking imperfect steps to reach (indeed, there are no perfect steps), then North Carolina’s decision to not expand Medicaid is an example of ideology and political calculation trumping practical self interest. The idea that we cannot expand Medicaid while reforming the system (I am very much for reform) is untrue. It neither makes it true, nor does it become good public policy, to simply say over and over again that we cannot expand Medicaid because it is broken.

There is so much in the report, but for now, I will highlight just one table. Table 5 (part of it is at the bottom of this post) shows the impact on State expenditures paying for uncompensated care (what we now do) as well as new State dollars we would spend if we undertook the expansion. The KFF/Urban Institute analysis assumes that States will only reduce planned payments for uncompensated care by one-third if they expand, so the analysis is conservative, and the net effect could be even larger (by reducing State payments outside of Medicaid to hospitals, etc more than they assume States would).  This study says that over the years 2013-2022, if North Carolina choose to undertake the Medicaid expansion, we would have increased State expenditures on Medicaid by $1.725 3.075 Billion (table 4), and reduced State payments for uncompensated care by $1.350 Billion dollars, for a net spending increase of $375 1.725 Million over the years 2014-2022 (cumulative cost, across 10 years).

And 478,000 people would be covered by Medicaid instead of being uninsured. Does anyone have a way to cover this many people for that amount of State money?

We can expand Medicaid while still beginning a reform of the program. It is presumably too late to do this for 2014, but not too late to begin the next year. Tomorrow I will write my next installment in a series of posts on Gov McCrory’s proposed Medicaid reform “Partnership for a Healthy North Carolina” and make the case that if you believe the Governor’s plan is the direction in which we should go in Medicaid reform, that makes undertaking the Medicaid expansion available under the ACA all the more crucial.