Study Finds That Red States Rejecting Medicaid Expansion Will Lose Billions Over Time

On Thursday, USA Today ran a story about a study that was done by The Commonwealth Fund. This study was done to see what the benefits are of the expansion of Medicaid, and what effects will be had in the states that have rejected the increased federal funds. The results were somewhat unsurprising, as it showed that overall, states that reject the increased funds will lose money.  However, the amount and the impact might be larger and greater than was previously thought.

Basically, the gist of the Medicaid expansion is that it helps to cover more people under the federal health insurance plan by expanding the criteria. Now, per the criteria under the ACA, those who make 138% or less of the federal poverty level are now eligible for Medicaid. To pay for this expansion, the federal government is using increased taxes to those making over $250,000 a year and other smaller tax increases, like on tanning salons. They then provide 100% of the funds to the states until 2016 and then 90% after that. This means that the states will only ever have to kick in 10% of the additional funds needed to pay for the increase in Medicaid.

Anyway, the Medicaid expansion was supposed to roll out to all the states. However, when the Supreme Court ruled that the ACA was constitutionally legal, they also ruled that individual states could opt out of the expansion. Suddenly, every state with a Republican governor or majority GOP legislature decided they weren’t going to accept the money. While some Republican governors and red states acquiesced and are now accepting the money, there are still 20 states refusing to participate. The main excuses used are that their states ‘can’t afford it’, even though they wouldn’t pay anything into it for three years and then only 10% after that.

Well, this study pretty much proves that all of these states are just shooting themselves in the foot just to spite the President. And in doing so, they are denying their states increases in federal funds that not only help cover more of their citizens, but inject more money into the overall economy. As the study points out, the federal money coming in from Medicaid goes directly to the health care providers. So, when hospitals and clinics receive more funds due to them for seeing patients with Medicaid, this improves their bottom line and helps create more jobs. Therefore, improving the overall state economy.

What is staggering is seeing the amount of money that states will be losing out on just by being bullheaded. Texas, for instance, will lose out on over $9 billion by opting out. Florida will be short of $5 billion, while other states like Georgia and Virginia will also miss out on billions to inject into their economies and help out their citizens. Considering that all tax paying citizens pay federal Medicaid taxes, the residents of these states that are refusing the increased Medicaid funds are helping to pay for other states accepting the expansion while not getting the benefits of it themselves.

In essence, what the study really shows is that the claims that Republican governors have made stating that this would be a drag on their states’ budgets is complete crap. In fact, they are hurting their states by not accepting the increased federal funds. Not only are they leaving millions of citizens without health coverage, they are actually hurting their own economies. There will be no need to increase state taxes over time to cover for the state’s portion after 2016, as the increased revenue driven by the overall influx of federal cash will increase the economic growth enough to make up for any perceived shortfall.

The lead author on the study, Sherry Glied, had some interesting comments about the results of the study. When it came to states’ claims about raising taxes, she said that would not be the case. She also compared the new federal money flowing in as par with large defense contracts. Basically, states go out of their way to land these defense contracts becuase of the large amount of federal money coming their way and that it ends up creating jobs. In the end, Medicaid expansion will help create jobs while at the same time insuring over 20 million more people. It is a win-win. Eventually the red states will see this. But, will it be too late when they do?

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Justin Baragona

Justin Baragona is the Managing Editor at Politicus Sports as well as Senior Editor at PoliticusUSA. He was a political writer for 411Mania.com before joining PoliticusUSA. Politically, Justin considers himself a liberal but also a realist and pragmatist. Currently, Justin lives in St. Louis, MO and is married. Besides writing, he also runs his own business after spending a number of years in the corporate world. You can follow Justin on Twitter either with his personal handle (@justinbaragona) or the Sports site's (@PoliticusSports).

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