There's a simple explanation for that—the woodwork effect. Before Obamacare's Medicaid expansion, about a third of poor families eligible for the program never signed up. That's why most hospitals have a policy of registering them once they show up in the emergency room.
Many of those folks are now proactively seeking out insurance because the government and consumer, patient and low-income advocacy groups have promoted the insurance expansion. For some people, the effort to obtain coverage through the exchanges resulted in being signed up for a program—Medicaid—that they would have been eligible for even without the program's expansion.
For those new enrollees, the states will not get the 100% reimbursement promised by the reform law, which drops down to 90% in a few years. State governments—even in the red states that didn't expand Medicaid but are seeing a surge in new enrollees anyway—will have to pick up about half the tab since they are being enrolled in traditional Medicaid.
Yet it would be a mistake to say, as some critics have, that Medicaid has become an ever-expanding entitlement program that will drown state budgets in red ink. That's possible, of course, if more and more Americans are thrown into the ranks of the poor and near-poor.
But the latest numbers from the CBO—remember, they were right about the initial estimate—suggest the surge in Medicaid enrollment will abate in a few years. In March, the agency predicted that about 25 million people will obtain insurance coverage between 2017 and 2024.
That's a net number. About 38 million will actually obtain coverage under reform—25 million through the exchanges and 13 million through Medicaid and the Children's Health Insurance Program. About 12 million will lose employer coverage, with about 5 million obtaining coverage on their own and the remaining 7 million becoming uninsured.
So rather than the 50-50 estimate of the early years, that's more like a 2-to-1 split. Moreover, the CBO estimated that the federal government will pick up 95% of costs of the Medicaid expansion for the 10 years between 2015 and 2024. States will spend only 1.6% more on Medicaid and CHIP because of reform.
And as the left-leaning Center for Budget and Policy Priorities pointed out in a research note, the increase doesn't include an expected reduction in state spending on mental health and substance abuse treatment for the previously uninsured.
No provider constituency has a greater stake in expanding Medicaid than the nation's hospitals, which provided 60% of $85 billion in uncompensated care in 2013. Those hospitals absorbed nearly 40% of their costs after receiving some reimbursement from various federal and state programs.
That's why they should step up their lobbying in states that haven't yet expanded the program. They can be confident that CBO data show it won't bankrupt those states.
Follow Merrill Goozner on Twitter: @MHgoozner
