RAND Report: Opting Out of Medicaid Expansion Will Cost States More

Image: RAND Report: Opting Out of Medicaid Expansion Will Cost States More Demonstrators outside the Ohio Statehouse on April 11 urge state lawmakers to expand Medicaid coverage under the federal healthcare law.

Tuesday, 04 Jun 2013 11:58 AM

By Melanie Batley

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States that opt out of Obamacare's expansion of Medicaid stand to lose billions in federal funding and will likely experience increased costs for treating the uninsured, according to a new report by the RAND Corp.

The report, published in the June edition of Health Affairs, focuses on a study of 14 states whose governors are opposed to the expansion of the program. According to the Huffington Post, the study by the nonprofit research organization reveals that collectively the states would lose $8.4 billion a year by rejecting Medicaid expansion and would spend an additional $1 billion of their own money in 2016 alone on compensating providers who treat uninsured patients.

Rand researchers concluded that 3.6 million people would also be left uncovered if those 14 states continue their opposition to Medicaid expansion.

"Our analysis shows it's in the best economic interests of states to expand Medicaid under the terms of the federal Affordable Care Act," said Carter Price, a Rand mathematician and the report's main author.

"States that do not expand Medicaid will not receive the full benefit of the savings that will result from providing less uncompensated care," Price added.

Furthermore, he said, fewer people will have health insurance, thereby triggering higher state and local spending for uncompensated medical care.

Researchers also estimate that for those states that accept Medicaid expansion, the increased insurance coverage will reduce state and local spending on uncompensated medical care by as much as $18.1 billion annually across all states, with savings possibly continuing beyond 2020.

A number of measures contributed to the findings, including the impacts of Medicaid expansion on insurance coverage, federal payments into the states, and state spending on care for the uninsured.

Nineteen states have decided against expanding Medicaid since the Supreme Court ruling last year giving them the authority to do so.

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