How conservative states are expanding Medicaid

Since January 1, 2014 North Carolina has declined to accept the “use it or lose it” funding available for Medicaid expansion from the federal government under the Affordable Care Act. In contrast, 28 states and the District of Columbia have all moved forward with the available funding to cover their lowest income residents with health plans.

Republican governors in states like Indiana and Pennsylvania have gotten federal approval to use this Medicaid funding for their own state-created plans with features like co-pays and wellness incentives not typically part of standard Medicaid coverage. Active discussions around such state-crafted health plans are now taking place in conservative states like Utah, Tennessee and Florida, driven by pragmatic Republican leaders with an eye towards economic benefit, job creation and an opportunity to extend health coverage.

Meanwhile, the more than 300,000 adults stuck North Carolina’s own “coverage gap” include parents, older adults ages 55-65, and people ages 18-64 without children in the home. The majority are working in occupations from construction, roofing and carpentry to waitressing and cashier positions.

People in this very low-income category make too little to qualify for federal tax credits to buy health plans on the www.healthcare.gov federal marketplace. But they can’t get state help because North Carolina does not provide Medicaid coverage to everyone who is poor.  A non-disabled adult without dependent children cannot get Medicaid in the state no matter how low their income. And parents only qualify if their family is making less than $667 monthly income for a family of three.

North Carolina’s leaders could make health coverage available to everyone in this gap within a few weeks if they chose to accept the federal dollars. And now, new data released in recent days makes the case for accepting the money even more compelling.

The US Department of Health and Human Services has two new short briefs out that assemble the most recent research and reports on the economic impact of Medicaid expansion across the country. The data on the huge drop in uncompensated care costs among hospitals is particularly startling. The reports also note recent overall economic impact studies. Key findings include:

1. 1. Hospitals in Medicaid expansion states have seen an average 26% drop in their uncompensated care costs compared to a 16% drop in non-expansion states. Overall, hospitals are treating many fewer uninsured people, but the drop in Medicaid expansion states is huge – over one-quarter of costs. The wait is on for more data but this may well have a positive effect on hospital finances in expansion states. Does new funding translate into things like more nurses in the hospital and enable hospitals to invest in more quality care for everyone?

2. 2. The overall picture of research so far on Medicaid expansion shows positive impacts on poverty reduction and state economies in general. For example, the authors cite the recent Deloitte study on Medicaid expansion in Kentucky which shows that the state has had the second largest decrease in the nation in its uninsured rate coupled with the creation of 12,000 jobs in in state fiscal year 2014 alone. The briefs also bring together comprehensive research from multiple state studies that show the positive economic impacts of Medicaid expansion.

That helping millions of people obtain health coverage and finally start paying their bills has a positive impact on health providers and states in general shouldn’t be a surprise. But in the current ideologically charged Medicaid debate, sometimes what should seem obvious becomes just one more, steep hill for policy “cyclists” to climb.

Recently an economist from Brigham Young University responded to some of this naysaying around Medicaid expansion in Utah and Republican Governor Gary Herbert’s “Healthy Utah” plan – with a trenchant observation: “Imagine someone saying that when tourists spend their money in our state, their purchases end up costing us jobs and hurting our economy. Who would believe that?”

Who indeed?

As states move forward through and complete their 2015 legislative sessions, more are likely to look at new evidence like the data above and explore crafting state-created plans to use the federal dollars. Click here to see a map of the states that are already having these discussions. If its leaders honestly consider the facts, North Carolina will join them.

Longtime N.C. Policy Watch contributor Adam Searing is now a Senior Research Fellow at the Center for Children and Families at Georgetown University. This essay was adapted from a blog post that first appeared on the website of Care Ring – a nonprofit organization dedicated to providing preventive health services for the uninsured, underinsured or those otherwise lacking access to affordable, high-quality preventive health care in Mecklenburg County.