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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 over 300,000 adults remaining uncovered in NC’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 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 this week makes the case for accepting the money even more compelling.

The US Department of Health and Human Services has two new short briefs out assembling 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. 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. 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 Kentucky study on Medicaid expansion showing the state having the second largest decrease in the nation in its uninsured rate coupled with creation of 12,000 jobs in SFY 2014 alone. Also brought together is the comprehensive research so far in multiple state studies showing positive economic impacts.

That helping millions of people get 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 ideologically charged Medicaid debate sometimes what should seem obvious becomes just one more steep hill for a cyclist to climb.

Recently an economist from Brigham Young University – responding to some of this naysaying around the Medicaid expansion debate in Utah around Republican Governor Gary Herbert’s “Healthy Utah” plan – had a good response to this denial of the obvious argument: “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?”

As states move through 2015, more are likely to look at new evidence like the data above and see if they can move towards crafting a state-created plan to use the federal dollars. The states in the map at the top of this blog that are in yellow are already having these discussions – perhaps North Carolina will join them.

Adam Searing, Senior Research Fellow at the Center for Children and Families at Georgetown University, recently visited the Queen City to provide the keynote speech for the 4th Annual MedLink Community Forum. At the event he discussed Medicaid expansion in states across the country, and after the event we asked him to pen a post for our blog on this topic.

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