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Chart Book: The Far-Reaching Benefits of the Affordable Care Act’s Medicaid Expansion

October 2, 2018

So far, 32 states (including Washington, D.C.) have expanded Medicaid coverage to low-income adults under the Affordable Care Act (ACA). Virginia also will do so in January 2019, and several other states may expand through initiatives on the November ballot.

A growing body of research shows that Medicaid expansion has produced significant benefits — for those gaining coverage, their families, and their communities. Medicaid enrollees have improved health care access, health outcomes, and financial security, among other things. More people with opioid use and other substance use disorders are getting treatment. Hospitals, particularly in rural areas, have seen improved financial health.

The charts below show how Medicaid expansion has led to:

  • Wider health coverage
  • Better access to health care
  • Better health outcomes
  • More financial security
  • More support for employment
  • Improved substance use treatment
  • Better financial health for rural hospitals

The charts in the final section show that Medicaid is efficient, with costs that are lower — and rising more slowly — than private insurance.

 

Wider Health Coverage

The nation’s uninsured rate remained at a historic low in 2017, the fourth full year of the ACA’s major coverage expansions (the Medicaid expansion and subsidized marketplace coverage). Since 2013, the uninsured rate has declined by more than one-third.

 

In 2017, states that had adopted the expansion had a 46 percent lower uninsured rate than non-expansion states, and the gap is widening.

 

Ohio’s uninsured rate among low-income adults fell by more than half following the state’s expansion, from 32 percent in 2012 to 14 percent in 2015. More than 700,000 people have enrolled in Medicaid through the expansion. The state’s Medicaid department also finds that these adults had improved access to critical health services, improved employment prospects, and improved personal finances.

 

A sizable and growing body of research finds that children eligible for Medicaid coverage are likelier to participate when their parents also are eligible. The ACA’s Medicaid expansion raised parents’ eligibility in the typical state from 61 percent of the federal poverty line (annual income of roughly $12,680 for a family of three in 2018) to 138 percent of poverty (roughly $28,680). Experience suggests that this increased eligibility will improve children’s participation, as parents with their own coverage are better able to navigate the health care system and have stronger family finances, which frees up resources for children’s health care.

 

Better Access to Health Care

In 2008, Oregon expanded Medicaid to a limited number of low-income adults chosen in a lottery from among those eligible. This approach enabled researchers to compare outcomes for those selected through the lottery to otherwise-similar adults not selected. Those enrolled in this limited expansion of Medicaid were found to have greater access to health care, more regular diagnostic and preventive screenings, and higher-quality care.

 

Harvard University researchers periodically survey poor adults in Arkansas, Kentucky, and Texas about their health care experience. In Arkansas and Kentucky, which have adopted the expansion, adults are now likelier to have a personal physician, receive care for chronic conditions, and receive an annual check-up — improvements not seen in Texas, which hasn’t expanded.

 

The American Academy of Pediatrics recommends that children adhere to a regular schedule of well-child visits with their primary care physician. These visits are key to preventing illness, tracking growth and development, educating parents and children on such things as nutrition and safety, offering a regular opportunity to raise concerns, and creating familiarity between the child and the medical team. Researchers find that children are more likely to receive an annual well-child visit — and low-income children are almost twice as likely — when their parent is enrolled in Medicaid. Having their own coverage likely helps parents navigate the health care system for both themselves and their children.

 

Since July 2016, when Louisiana adopted the Medicaid expansion, more than 476,000 Louisianans have enrolled in expansion coverage. These low-income adults are receiving critical mental health and substance use disorder care, as well as diagnosis and treatment for diabetes, hypertension, and cancer, the state reports.

 

More Financial Security

Medicaid enrollees have fewer debts and are less likely to have trouble paying for health care, studies show.

 

The above-mentioned survey of poor adults in Arkansas, Kentucky, and Texas finds that adults in expansion states Arkansas and Kentucky have experienced reductions in the shares delaying health care due to cost, using the emergency room as a usual source of care, or having trouble paying medical bills relative to non-expansion state Texas.

 

Medicaid offers very affordable coverage. Although Medicaid beneficiaries have lower incomes than other groups, they are much less likely to have trouble paying for care out of pocket, or to have financial problems due to medical costs, than people who have private coverage or are uninsured.

Medicaid beneficiaries also are much less likely to go without needed care due to cost than privately insured or uninsured people.

 

More Support for Employment

Most low-income adults enrolled in Medicaid expansion coverage in Ohio and Michigan find that Medicaid makes it easier to look for work and makes it easier to work once they have a job. Health care coverage helps low-income adults to address health problems such as diabetes or depression, which are a common reason why some people lose their job or are unable to find one. These employment benefits are on top of the health benefits that Medicaid expansion enrollees in these states also cited.

Improved Substance Use Treatment

While some have claimed that the Medicaid expansion helped cause the nation’s opioid-use crisis, the most recent, comprehensive data show that opioid-related hospitalizations were higher in expansion states than non-expansion states as early as 2011 — three years before Medicaid expansion took effect. And opioid-related hospitalization rates have been growing at roughly the same rate in expansion states and non-expansion states since expansion took effect. Medicaid is part of the solution to the opioid crisis, not a cause.

 

There’s an acute need for substance use disorder treatment, particularly as related to opioid-use disorders. A record 63,000 people died of drug overdoses in 2016, with 42,200 due to opioid use. Medicaid expansion appears to have been critical for expanding coverage to those with opioid-use disorders: the share of opioid-related hospitalizations in which the patient was uninsured has plummeted 79 percent in Medicaid expansion states since expansion took effect, compared to a 5 percent decline in non-expansion states.

 

These data are consistent with other evidence that Medicaid expansion is improving access to care for people with opioid use and other substance use disorders. For example, Medicaid data and interviews with Medicaid officials in four states reveal that Medicaid expansion is improving access to outpatient care for those battling opioid-use disorders. Significant majorities of Medicaid expansion enrollees diagnosed with opioid abuse or dependence received outpatient services, including diagnostic services, psychotherapy, evaluation, and management services.

 

Better Financial Health for Rural Hospitals

Medicaid has long played a greater role in providing health coverage in rural areas than in urban areas, and the ACA has made Medicaid even more vital to rural America. Nearly 1.7 million rural Americans have gained coverage through the Medicaid expansion. Health coverage gains in states that expanded Medicaid to low-income adults have substantially improved rural hospitals’ finances: Medicaid revenue has risen by 33 percent as a share of total rural hospital revenue since 2013.

 

Similarly, the Medicaid expansion significantly improved rural hospitals’ operating margins, which have risen by 4.0 percentage points more in expansion states than in non-expansion states.

 

The Medicaid expansion has also reduced rural hospitals’ uncompensated care costs — services for which hospitals aren’t reimbursed by an insurer or patients. Rural hospitals’ uncompensated care costs fell 43 percent in expansion states between 2013 and 2015, compared to 16 percent in non-expansion states.

 

When a state’s uninsured rate falls, uncompensated care costs as a share of total hospital costs fall at roughly the same rate. This relationship is especially strong in Medicaid expansion states, likely because Medicaid serves financially vulnerable people who are less likely able to pay medical bills when uninsured. 

Also, uninsured rates and uncompensated care costs fell more in expansion states than in non-expansion states between 2013 and 2015.

 

Medicaid Is Efficient

Medicaid is more efficient and cost-effective than private insurance. Adult Medicaid beneficiaries are in poorer health than other adults, on average, but research that looks at enrollees with similar health status finds that it costs significantly less to cover an adult in Medicaid than in private health insurance. That’s because Medicaid’s provider payment rates and administrative costs are lower than those of private plans.

 

Over the past 30 years, Medicaid costs per beneficiary have essentially tracked costs in the health care system as a whole, public and private. In fact, costs per beneficiary grew much more slowly for Medicaid than for private insurance between 1987 and 2014, and they are expected to continue growing more slowly than for private insurance in coming years, according to the Medicaid and CHIP Payment and Access Commission.

Moreover, the Congressional Budget Office has lowered its projection of Medicaid spending for the 2011-2020 period by $311 billion (9.3 percent) since 2010, largely due to slower expected growth in per-beneficiary costs.