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Repealing Health Reform’s Medicaid Expansion Would Reverse Historic Coverage Gains, Harm State Budgets

The budget reconciliation bill that Senate Republican leaders will reportedly propose tomorrow would repeal health reform’s Medicaid expansion in 2018.  That would reverse the gains of the 30 expansion states (plus the District of Columbia) in providing health coverage to millions of their low-income residents; adversely affect state budgets and hospitals; and prevent the remaining states from adopting the Medicaid expansion in the future.

Evidence from the states that have expanded Medicaid to non-elderly adults with incomes below 138 percent of the poverty line demonstrates the Medicaid expansion’s substantial benefits, all of which would be lost under the Senate Republican leaders’ bill:

  • Historic gains in health coverage.  While uninsurance among non-elderly adults has dropped since health reform’s major coverage provisions took effect, the drops have been greatest in expansion states, where the rate has been cut in half (from 14.9 percent to 7.3 percent) since the end of 2013, an Urban Institute survey finds.  Some 14 million more people are expected to eventually gain Medicaid coverage under the expansion, according to the Congressional Budget Office
  • More use of preventive services.  Tens of thousands of Kentucky’s residents who gained Medicaid coverage under the expansion received preventive dental services as well as cholesterol, diabetes, and cancer screenings in 2014, a state report found.  And despite critics’ fears that there wouldn’t be enough doctors to care for the new enrollees, appointment availability for Michigan’s Medicaid beneficiaries actually rose after expansion, a University of Michigan study found.
  • State budget savings.  Expansion has allowed states to move people who previously received health services through targeted Medicaid programs, such as family planning services and care for certain women with breast and cervical cancers, at the state’s regular matching rate into the new eligibility group for which the federal government is now paying the entire cost.  And as more people have gained health coverage, demand for health services for uninsured low-income people that states fund entirely, such as funding for hospitals to offset their uncompensated care costs and for behavioral health services, has fallen.

    The combination of these factors has produced net budget savings in many expansion states.  For example, through June 2015, expansion had saved Kentucky nearly $110 million and Arkansas nearly $120 million.  In these and other states, expansion is expected to generate net savings even when they begin paying a modest amount of the cost in 2017.

  • Less uncompensated care.  Hospital uncompensated care costs fell by $7.4 billion in 2014 due in part to health reform’s coverage expansions, with a greater share of this drop in states that expanded Medicaid, according to a recent Department of Health and Human Services report.

Repealing the expansion would return states to the time when low-income people didn’t have options for affordable health coverage, and states and hospitals had to foot the bill for treating uninsured people’s medical conditions.