What Could Medicaid Expansion Mean to Your State?

If given the opportunity to save money and also help their residents be healthier, should state governments take it?

When the Supreme Court ruled on the Affordable Care Act earlier this summer, it decided that states could choose whether to expand their Medicaid program to more uninsured people. You might be curious how this choice could impact your state and community.

Medicaid is a partnership between individual states and the federal government to provide health care for uninsured people living in poverty. Costs are split between state and federal governments, depending on the income levels of the state. The average federal share of Medicaid cost is 57 percent. About 50 percent of Medicaid participants are children. Low-income elderly, people with disabilities, and pregnant women make up the rest.

Medicaid is especially important for rural communities for several reasons. Incomes in rural places are lower than urban counterparts, and fewer workers have employer-provided health insurance. We also have more elderly in our communities, many of whom need long-term care in nursing homes.

Did you know that right now, 40 percent of all costs for long-term care come from Medicaid? This will only grow in rural communities as our population ages.

There are a few important points to consider about the Medicaid expansion. One is that the federal government covers the vast majority of the cost increase. In fact, the first 3 years of the expansion is 100 percent covered at no cost to states.

Another point is that right now, states pay substantial costs because of uninsured patients. If you go to the doctor but can’t pay, state governments pay some of that cost. Taken together, states would spend an estimated $18 billion in the next 10 years on care that patients can’t pay if they don’t adopt the Medicaid expansion. Expanding Medicaid will reduce the number of uninsured patients by as many as 14.3 million by 2022. That saves us about $10 billion.

According to a recent report by the Kaiser Family Foundation, some states would actually save money by expanding Medicaid. Others could see their costs increase by up to 11 percent. About half the states would see Medicaid costs increase by less than 5 percent. Rural states, because of our aging population and lower incomes, could see substantial benefits.

Reducing the number of uninsured rural Americans is good for all of us. Expanding Medicaid is a good way to do this with a minimal cost to states.

You can find out more in our report, Medicaid and Rural America.