“States that do not expand Medicaid will not receive the full benefit of the savings that will result from providing less uncompensated care,” Carter Price, the study's lead author and a mathematician at RAND, said in a news release. “Furthermore, these states will still be subject to the taxes, fees and other revenue provisions of the Affordable Care Act, without reaping the benefit of the additional federal spending, which will cost those states economically.”
Last June, the U.S. Supreme Court ruled that states could block the expansion of Medicaid under the ACA, which would provide health insurance to individuals and families who earn up to 138% of the federal poverty level.
As more people become eligible for Medicaid benefits under the law, the federal government will pay a larger share of Medicaid costs than it does now. The federal government currently pays about 57% of the total cost of Medicaid nationally. But under the expansion, the feds would cover 100% of those costs from 2014-2106, dropping gradually to 90% of costs in 2020.
According to the RAND study, the states' share of the cost of expanding Medicaid would be lower than the costs of providing uncompensated care to their uninsured residents. “Choosing not to expand Medicaid may turn out to be the more-costly path for state and local governments,” Price said in the release.
RAND is not the only organization to conclude that expanding Medicaid may be more cost-effective for states.
In North Carolina last month, more than 200 hospital leaders, led by Laura Easton, chair of the North Carolina Hospital Association, met to encourage Republican Governor Pat McCrory and the state's Republican-controlled legislature to reconsider healthcare funding policies, including their opposition to expanding Medicaid.
“Hospitals are working to adapt but may need to eliminate jobs, cut services or both in order to continue serving as the safety nets to our communities,” Easton said.
In Pennsylvania, the state's Independent Fiscal Office and the Pennsylvania Economy League both determined that Medicaid expansion would have a positive economic effect on the state. They found that $16.5 billion in federal payments would exceed by ten times the $1.64 billion cost to the state for the expansion. It's the kind of evidence that many state hospital associations, including Pennsylvania's, are pointing to as they continue to lobby their state governments on this issue.
“We continue to talk to the governor's office and legislators and hope they reach the conclusion we have reached about the economic effects,” Roger Baumgarten, director of media relations at The Hospital and Healthsystem Association said in an interview. “Our view is the governor is doing his due diligence. We've not heard the door slam on it just yet.”
Follow Rachel Landen on Twitter: @MHrlanden