States are now in the middle of determining whether to expand their Medicaid coverage under the Affordable Care Act. A new report from the Kaiser Family Foundation aims to help with that decision.
The report finds that states are going to spend significantly more on Medicaid under the Affordable Care Act -- but that the expansion accounts for a relatively small fraction of those costs.
Here's one graph from the report, which looks at the additional Medicaid costs that states can expect to incur due to the Affordable Care Act.
Those bars on the left show what states end up spending if every state participates in the Medicaid expansion. The ones in the middle look at what happens if none signs up. The difference between the two, for states, is $8 billion over the next decade.
So, what are states spending $68 billion on if they elect to leave their Medicaid program exactly as is? This Kaiser study predicts that Medicaid enrollment will grow by 5.7 million, among those are people who are currently eligible for benefits but have not yet signed up. States will have to absorb the costs of the new enrollees.
"Participation rates are what's important," says Diane Rowland, executive director of the Kaiser Commission on the Medicaid and the Uninsured. "Those eligible for Medicaid may not be participating, and with all the activity going around about enrollment...we'd expect some of those people will be coming into the program."
Rowland expects this to be especially true for children, whom states tend to allow into their Medicaid programs at higher incomes. An adult who earns about 200 percent of the federal poverty line, for example, may sign up for subsidies -- and, in the process, realize that her daughter is eligible for Medicaid coverage.
The additional $8 billion in spending comes from when the 100 percent match rate for the Medicaid expansion starts to phase out. It drops to 95 percent in 2017 and then stays at 90 percent after 2020.
It's worth noting, however, that these costs aren't equally distributed among the states. States that tend to have the smallest Medicaid programs -- and would, therefore, have the biggest expansion -- would likely see their costs increase the most. You can see that in this map, which models expected increases in Medicaid spending should states expand the program.
Politics aside, this explains some of the resistance from states such as Georgia: That state would expect to see Medicaid spending increase by 6.1 percent should it choose to participate in the Medicaid expansion. That's not including the other cost increases that I discussed earlier.
A state like Georgia, with a high uninsured rate, could also expect to net some savings: The amount it spends on uncompensated care would likely drop. Nationally, Kaiser estimates that the savings on uncompensated care would total just over $18 billion, more than enough to offset the additional $8 billion in Medicaid spending.
To stick with Georgia as an example, the Kaiser Family Foundation expects that expanding Medicaid would lead to an additional 489,000 people gaining health insurance (that number could end up being higher, as Kaiser estimates that 73 percent of those who become eligible for the expansion will actually enroll).
So, 489,000 people would now have someone to pay their medical bills, the ones that might have gone unpaid at hospitals and in emergency rooms. That doesn't necessarily help the state's bottom line: The federal government, counties and cities often end up picking up uncompensated care costs.
The bottom line from the Kaiser study seems to be that the Affordable Care Act will mean higher Medicaid spending for states. The majority of that spending, however, has nothing to do with the expansion, and everything to do with making Americans more aware of options they already have.