A new report issued by the Kaiser Family Foundation and the Urban Institute – two health care think tanks—described the benefits to states which choose to expand Medicaid coverage as allowed under the federal health care reform law, the Affordable Care Act. The report found that states will receive more than $9 in federal money for every $1 they spend to cover low-income residents.
That’s right: a $9 to $1 ratio.
Medicaid is the government-run health insurance program that covers the poor and the needy. In New York State well over one half of the costs of covering the poor are covered by the federal government, with the remaining amount paid by the state and county governments.
Over 5 million New Yorkers are Medicaid beneficiaries and the state spends over $50 billion on the program, of which roughly $20 billion is paid by the state.
Expanding Medicaid to cover about 20 million more low-income people will cost over $1 trillion nationally for the decade from 2013 to 2022, said the joint report from the Kaiser Family Foundation and the Urban Institute. But the analysis found that states will pay just $76 billion of that, a combined share of roughly 7 percent. The feds will pay the other $952 billion.
A central goal of the federal Affordable Care Act is to significantly reduce the number of uninsured by providing a continuum of affordable coverage options through Medicaid and new Health Insurance Exchanges. Following the June 2012 Supreme Court decision, states face a decision about whether to adopt the Medicaid expansion.
The argument supporting expansion of the Medicaid program is that it will help ensure coverage for more people in need. The plan is to boost coverage to those whose incomes are as much as 138 percent of the poverty level. The poverty level in 2010 was over $11,000 for an individual and just over $22,000 for a family of four. Those levels are quite low, and there is still a need to help those individuals making, say $15,000. Without help, these individuals simply cannot afford health insurance.
Health care costs are a contributing factor in nearly two-thirds of individual bankruptcies. Even people with health insurance may find they are overwhelmed by the costs because their insurance is inadequate or they lose a job and the insurance that goes with it. And it is often impossible for a low income senior with a serious illness to afford all the premiums, cost-sharing, and deductibles that are associated with Medicare without the help of Medicaid.
Medicaid enrollees are more likely than the uninsured to have a usual place of care and to receive recommended preventive screenings. In addition, Medicaid recipients are less likely to report financial problems. A 2011 study of the Oregon Medicaid expansion found that Medicaid enrollees were 40% less likely than their uninsured counterparts to report having to borrow money or skip payment on other bills because of medical expenses. Having access to care through a program like Medicaid increases the likelihood that diseases like cancer will be found at their earlier stages where treatment can be less costly and there is an increased likelihood of survival.
In addition to providing health insurance to those in need, the expansion would help New York State’s finances as well. New York has already expanded coverage to low income individuals. Currently, New York and the federal government are splitting the costs of the program roughly 50-50. If New York opts into the Medicaid program, that split will become 90-10 – meaning that New York will spend hundreds of millions of dollars less on Medicaid coverage than it does now. A policy no-brainer.
In other states, the decision is more complicated. Initially, the federal government will pay for all of the costs of the Medicaid expansion in most states. After a few years, it will cover 90% of the costs of expansion, but not 100%. Yet the decision to expand Medicaid coverage should not be one that rests solely on a concern over dollars and cents. Tens of millions of Americans are uninsured. There is no defense for that. And there is no defense for choosing not to expand Medicaid to help cover needed health care services.
Blair Horner is the Vice President for Advocacy for the American Cancer Society, Eastern Division. His commentary does not necessarily reflect the views of the American Cancer Society.
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