Three terrible, horrible, no good, very bad reasons for not expanding Medicaid

Only twenty-five states are electing to expand the Medicaid program under the Affordable Care Act. The rest of the states have either elected not to expand or have not acted.

There are three principal reasons given by Governors and other state leaders for not expanding Medicaid:
• We can’t afford it
•We are not putting money into a broken system
•the Federal match may someday go away.

None of these reasons can be supported by either facts or logic.

We simply can’t afford it.

There simply is no “we” that makes that a true statement. Costs to every group in the state are higher without Medicaid expansion. It certainly isn’t true if “we” are the state and local taxpayers. In Georgia the cost of care for the uninsured is well over $2 billion dollars annually. That care is often given in the most expensive places (emergency rooms) and often given at the most expensive time (late in an episode of illness). Expanding access to insurance coverage reduces emergency room visits and hospitalizations.* If the state chooses not to expand Medicaid more than 1.6 million Georgians will lack health insurance coverage in 2014. Georgia taxpayers will continue to bear the costs of care for Georgia’s uninsured while their Federal tax dollars will help reduce those costs for taxpayers in states that are expanding their Medicaid programs.

The Federal government pays the vast majority of the costs in the first three years: 100 percent of the cost of care; the state share for those three years is increased administrative expenses. The Federal money that Medicaid expansion would draw into a state would generate new economic activity, increase employment, create income and increase state and local tax revenue. Estimates of job creation to do Medicaid expansion in states include 12,000 in Alabama, 44,000 in South Carolina, 50,000 in North Carolina and 70,000 in Georgia. These states see a net gain in employment and economic activity because they have a high number of uninsured who could gain coverage under Medicaid expansion. If these states opt out of Medicaid expansion they give up that income and the tax revenue generated by it.

Failure to expand Medicaid puts employers in the state at greater risk. Not only will they have a less healthy, less productive workforce, they are more likely to face a tax penalty if they do not offer affordable health insurance to their employees. Under ACA employers who have workers who are eligible for a subsidy in the exchange pay a “shared responsibility” tax. Without Medicaid expansion there are more workers who would be eligible. Jackson Hewitt estimates that those costs to employers could range from $71 million to over $107 million in Georgia**

Even if the “we” is simply the state government the affordability argument is difficult to reconcile with both the increase in state revenue and the savings to a whole host of state programs resulting from Medicaid expansion. Medicaid expansion would replace behavior health costs paid by the state, decrease criminal justice costs, decrease public health costs, and increase direct revenue from assessments on health care providers.

Expanding Medicaid would also increase access to care for all Georgians. Many parts of Georgia have been identified as Medical workforce shortage areas. Those mostly rural areas lack the resources necessary to attract and retain physicians and other health care providers. Medicaid expansion increases the resources available for those areas.

We are not putting money into a broken system

It is often unclear if the broken system being referenced is the Medicaid program or the entire health system. In the case of state Medicaid programs there are numerous was it could be made better including changing reimbursement mechanisms and levels, measuring and rewarding the quality of care, and incentivizing healthy behaviors. All of these elements are under control of the state. Its not clear why states can’t use the resources that Medicaid expansion would give them to address any flaws in the Medicaid program.

Often the argument is made that Medicaid would be a better system if the Federal government would change the financing to block grants. Under the current (and expanded) Medicaid program the Federal government matches state expenditures. The block grant recommendation is made as a way to say the address perceived Federal deficits issues. It only works if less money is sent to the states. If states are feeling the pinch of Medicaid expenditures under the current system its difficult to understand how they would be better off with less money.

The Medicaid program is currently on an unsustainable path as is all types of public and private health care financing. The whole health care delivery system is a broken system. That of course is underlying rationale for the Affordable Care Act. Health care cost inflation cannot be slowed by simply decreasing eligibility to public programs or reducing provider payments. The incentives in the health care market must be altered to give providers, consumers, and payers incentives to improve health cost-effectively.

The Feds won’t keep the match

Given the importance of Medicaid expansion as a piece in the puzzle of developing a sustainable health care system it seems unlikely that some future Congress would defund the program. Future Congresses will be made up of Senators and Representatives from the states who expanded Medicaid.

It is ironic that many of the same voices calling for the Federal Government to block grant the Medicaid program also voice this concern about Medicaid expansion. A block grant by design would shift more of the costs to the state.

The politics of its enactment aside, decades of analysis, experimentation and debate generated a consensus around the policies that underlie the Affordable Care Act. Any health reform that preserves the private sector role in health care delivery would resemble the Affordable Care Act. Medicaid expansion’s role in that reform is to provide a seamless path from public to private coverage as family incomes grow.

* Kolstad, Jonathan T. & Kowalski, Amanda E., 2012. “The impact of health care reform onhospital and preventive care: Evidence from Massachusetts,” Journal of Public Economics, Elsevier, vol. 96(11), pages 909-929

**Accessed at:

One comment Add your comment


April 7th, 2013
7:49 pm

We All know the reasons given are politically motivated and do not hold Water. Sady it is the Children of Georgia who woll suffer the most because of this denial of CARE.