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Expanding Medicaid in the States

Posted on Feb 05, 2013 by Ailee Slater ()

Here's a question - why would a state refuse federal money? Governors and representatives may complain about Obama and his health care policies, but saying "No!" to millions in federal funding is a whole other matter. Still, that's what many states are doing right now - saying "No" to the offer of federal money for state Medicaid expansion. 

Most of us have heard of Medicaid, but not everyone knows precisely what it is. Medicaid is an insurance program for low-asset Americans, funded by both the states and the federal government. Each state is responsible for running its own Medicaid system. There are some basic health services that Medicare insurance will always cover - medical and surgical dental work, inpatient and outpatient hospital needs, laboratory tests and more. With his Affordable Care Act, Obamacare wanted to expand Medicaid in all states; raising the minimum eligibility so that more people would be able to join the program. However, the Supreme Court decided that it was unconstitutional for the federal government to force states to expand their programs. Therefore, the White House came up with another way of encouraging state Medicaid expansion - a tempting financial offer.

If a state chooses by 2014 to expand their Medicaid coverage as per federal guidelines, the federal government will provide a whopping 100 percent of that state's new Medicaid expenditures for three years, at least. After those three years, the federal government will continue to support 90 percent of the Medicaid program expansions, while the state itself will be responsible for funding the rest. It sounds like a fantastic offer, and many states have agreed. Seventeen, in fact, decided almost immediately to take this opportunity to expand their State Medicaid program and enjoy the huge financial assistance from the federal government. Governor of California Jerry Brown announced his enthusiastic support of the plan, calling it a good move in helping uninsured within the state; an unsurprising sentiment seeing as California has been working toward Medicaid expansion since late 2010.

Even states that have expressed dislike for the President and his health care policies are agreeing to the Medicaid expansion - Governor Jay Nixon of Missouri, for instance, has said: "We're not going to let politics get in the way of doing the best thing for our state." Other states, however, have remained firmly opposed to the Medicaid expansion plan, despite the federal money that would come with it. South Carolina Governor Nikki Haley has said that expanding Medicaid would mean throwing money at an inefficient system. In South Carolina as well as other parts of the country, voters have expressed discomfort at the idea of paying more taxes into a federal program, when those funds might be used to support Medicaid in states other than where the taxpayers reside. Texas is another state that, for the moment, is not predicted to take the federal Medicaid offer. Governor Rick Perry has likened the entire Medicaid system to the Titanic, saying that it makes no sense to invest in a sinking ship.

The question of Medicaid expansion in Texas is especially interesting seeing as Texas has more uninsured residents than any other American state. Around one quarter of the population in Texas does not have health insurance. In fact, Texas's health insurance issue has prompted many policymakers to consider Obama's Medicaid expansion plan very thoughtfully. Billy Hamilton, a nonpartisan consultant commissioned by the Methodist Healthcare Ministries of South Texas, has recommended taking the money. Hamilton points out that using federal funds to invest in Texas's Medicaid program would lead to an immediate decrease in those without insurance, possibly by as much as 25 percent. What's more, Hamilton estimates that accepting the money would save the lives of 5,700 adults and 2,900 children every year. In his arguments, Billy Hamilton considers the financial impacts as well. Like many others, Hamilton claims that expanding Medicaid will cost Texas a small amount of money now, while saving a large amount of money in the long run. Much of Texas's contribution to the expansion will be offset by federal funding, and what's more, job creation and fewer sick people will benefit the state for years to come.

Local hospitals already spend money on treating sick people without insurance, and so expanding Medicaid would greatly improve the financial stability of the Texas health care system. Despite these arguments in favor of accepting the federal money for Medicaid expansion, all signs point to Governor Perry's rejection of the offer. Other states rejecting the expansion plan include Alabama, Maine, Oklahoma and South Dakota. These states have given various reasons for their reluctance to participate - the cost of expansion, the fear of putting more money into a faulty system, and a dislike for accepting a federal, one-policy-fits-all approach to health care. Some states have even asserted a fear that the promise of financial help from the federal government may disappear if more budgeting troubles arise, leaving the states to cope with even more health care funding burdens. Still, those states that have agreed to participate and accept federal funds seem optimistic about expanding Medicaid.

Colorado Governor John Hickenlooper announced earlier this year that his state is expected to save more than $280 million thanks to Medicaid expansion along with other health care system reform, such as rewarding effective care delivery and results, and reducing waste and fraud in health care administrative services. With these reforms plus expanded Medicaid coverage and funding from the federal government, Colorado will be able to cover an additional 16,000 adults at no additional cost to the state budget. From Colorado to Texas, from California to South Carolina, it is clear that every state has a different opinion on the benefit of federal money to expand Medicaid. Perhaps only in five years time - when states will have the chance to quantifiably analyze how their budget and health care have changed under Obamacare -  will each state be able to answer the question of whether or not  their initial Medicaid decision was correct.

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