August 14, 2014
2 min read

Opting out of Medicaid expansion could mean billions lost for states, hospitals

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A report from the Urban Institute, funded by the Robert Wood Johnson Foundation, projects that states that did not participate in Medicaid expansion to include eligibility for adults with incomes ≤138% of the federal poverty line will miss out on $423.6 billion in federal funding between 2013 and 2022.

Additionally, hospitals in those states are projected to lose $167.8 billion in added revenue from Medicaid reimbursement within that time period.

According to the report, 6.7 million residents will likely be uninsured in 2016 within the 24 states that did not expand Medicaid. Between September 2013 and June 2014, however, the rate of uninsured adults fell by 38% in states that did expand.

“The impact of not expanding Medicaid has broader implications than just the number of people who gain insurance,” Kathy Hempstead, PhD, director of the Robert Wood Johnson Foundation, said in a press release. “It significantly impacts state economies and hospital budgets. States are literally leaving billions of dollars on the table that would support their hospitals and stimulate the rest of their economies.”

Texas has the most to lose overall, according to the report, at $65.6 billion in federal funding to the state and $34.4 billion in hospital reimbursement; the 10-year cost of expansion in Texas is estimated at nearly $5.7 billion.

Of the 24 states that did not expand Medicaid, Florida is projected to miss out on $66.1 billion in federal Medicaid funding and $22.6 billion in hospital reimbursement over 10 years. The projected cost of Medicaid expansion in Florida is approximately $5.4 billion over 10 years.

Georgia, North Carolina and Pennsylvania are projected to lose between $33.7 billion and $39.6 billion in Medicaid funding over 10 years, and between $10.6 billion and $12.8 billion in additional hospital reimbursement. The cost of expanding Medicaid in these states ranges between $2.5 billion and $3 billion over 10 years.

Researchers analyzed the results from 16 state-level fiscal analyses, all of which concluded that Medicaid expansion aided budgets at the state-level. They also calculated that, for every $1 spent by a state to expand Medicaid over the 10-year period, that state would receive $13.41 in additional federal funding, according to the press release.

“Every comprehensive state-level budget analysis of which we know found that expansion helps state budgets, because it generates state savings and additional revenues that exceed increased Medicaid costs,” the authors wrote.