CHICAGO — Hospitals in the 24 states that opted against expanding Medicaid under federal healthcare reform stand to lose out on $168 billion over 10 years, while those states will lose out on more than $400 billion, a report from the Urban Institute concludes.
The analysis — "What is the Result of States Not Expanding Medicaid?" — released Aug. 7 by the policy research organization, reaches similar conclusions to other reports from the federal government and rating agencies.
Hospitals in the 24 states that have decided against expanding Medicaid are projected to lose out on a 30% boost in Medicaid reimbursement funding that totals $168 billion over 10 years. Those funds were intended to offset major cuts to their Medicare and Medicaid reimbursement called for in the Affordable Care Act.
States are projected to lose out on $424 billion in federal funding while the cost for those states to leverage the higher funding and reimbursement levels would total $32 billion over 10 years, according to the report.
The 24 states are Alabama, Alaska, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, Wyoming.
The other 26 states and the District of Columbia have agreed to expand their Medicaid programs, a joint state-federal program that provides insurance to low-income residents, as allowed under the ACA. The expansion allows all individuals with incomes below 133% of the federal poverty line to enroll in the program.
The federal government agreed to pay all costs of expansion for the first three years, with the states' contributions climbing to 10% by 2020.
A review of first-quarter 2014 earnings reports from several interstate hospital chains showed improved finances at hospitals where Medicaid has been expanded. The improvements were seen in lower uncompensated care expenses and higher Medicaid revenue. In non-expanding states, balance sheets took a hit with uncompensated care and self-pay patient loads rising and Medicaid revenue falling.
From a state perspective, the revenue loss for the 24 that have decided against expanding their Medicaid programs also translates into lost opportunities for job growth and economic activity.
The institute found state-level fiscal studies in 16 states all concluded that expansion is fiscally beneficial.
"Every comprehensive state-level budget analysis of which we know found that expansion helps state budgets, because it generates state savings and additional revenues that exceed increased Medicaid costs," the report reads.
The report offers an argument against concerns expressed by states that forgo expansion over worries the federal government will eventually shrink funding and leave them holding the bag.
"The current structure and past history of federal Medicaid spending show that, when federal leaders turn to deficit reduction, they will almost certainly seek and find other ways to cut Medicaid without lowering the federal share of Medicaid spending below the ACA's statutory level," the report reads.
Congress has lowered the federal share of Medicaid spending just once since 1980, instead trimming eligibility, services, and provider payments more than 100 times. "Medicaid expansion thus offers significant state-level fiscal and economic benefits, along with increased healthcare coverage," the report concludes.
The number of uninsured in states that have expanded Medicaid has fallen 38% since the fall of 2013, compared to a 9% drop in the other 24.
States that have opted not to expand Medicaid could lose out on $66 billion in economic activity over the next three years and $88 billion in direct federal aid through 2016, the White House Council of Economic Advisors said in a recent report. Ratings agencies have also warned that the decision to opt out could generate credit pressures for non-profit hospitals beginning this year.
