States Without Medicaid Expansion Search for Alternatives

It's difficult to overstate the effect of losing tens of billions of dollars in healthcare funding, and not just on state budgets. Now those leaders who opted out of Medicaid expansion are falling back on an old ploy: When in trouble, form a committee.

A task force in North Carolina this month issued recommendations for improving health outcomes in its 2.2 million residents living in rural areas.

In many respects, the report issued by the  North Carolina Institute of Medicine Task Force on Rural Health identifies the problems in healthcare access and delivery that challenge many rural areas in states across the nation.  

"Priorities" identified in the report include: improving job prospects and investment in rural areas; improving access to school readiness programs and quality daycare for children; improving nutrition education; using primary care to screen for mental health and substance abuse; and incentivizing healthcare providers to settle in rural areas.

Left all but unmentioned in the report, however, was the wooly mammoth in the room. North Carolina is one of 24 states that rejected the Medicaid expansion and the tens of billions of dollars in federal funding that come with it.

The Urban Institute issued a study this month which showed that the decision by state lawmakers and the governor of North Carolina to reject Medicaid expansion would mean the loss of $40 billion in federal funding from 2013-2022. In addition, 414,000 mostly working poor North Carolinians who would otherwise have qualified for Medicaid, will have to find coverage elsewhere if they can afford it.

Nationally, the Urban Institute says that the 24 states that have not expanded Medicaid are foregoing $423.6 billion in federal matching funds through 2022. Hospitals in those states will lose $167.8 billion in state and federal matching funds, which was to represent a 31% increase in Medicaid to offset reimbursement cuts in Medicaid and Medicare. In addition, 6.7 million residents in those states who would have become Medicaid eligible will remain uninsured in 2016.

As the months pass, other disparities are becoming apparent. Non-expansion states saw the number of uninsured residents fall by 9% since last September, thanks largely to health insurance marketplaces and the coverage mandate. States that accepted the Medicaid expansion have seen the number of uninsured residents fall by 38%.

Politicians in non-expansion states have argued that they cannot afford their share of the expansion, or that they don't trust the federal government to maintain funding levels. Both arguments are suspect.

For example, each state dollar spent on Medicaid expansion on average brings back $13.41 in federal matching funds. North Carolina was required to spend $3 billion in state funds over 10 years to bring down about $40 billion in federal Medicaid expansion money.

"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 Urban Institute says.

"The current structure and past history of federal Medicaid spending show that, when federal leaders turn to deficit reduction, they will almost certainly seek and find other ways to cut Medicaid without lowering the federal share of Medicaid spending below the ACA's statutory level."

It is also difficult to overstate the effect of losing tens of billions of dollars in healthcare funding, and not just on state budgets. Hospitals are often the biggest economic driver in rural communities and the money they generate is spent in the community. Access to quality healthcare is critical for any community hoping to attract business investment.

Politicians bellowing against federal mandates neglect to mention that the Medicaid expansion is not a take-it-or-leave-it proposition. Governors and state legislatures in Arkansas, Maryland, and Kentucky are crafting compromise plans to create private insurance options with money that would otherwise go toward Medicaid expansion.

Of course, rejecting Medicaid expansion was never about state budgets. This was always about political gamesmanship and appeasing the radical base of one political party. Now, healthcare infrastructures in non-expansion states are starting to crack under the strain of that appeasement. Politicians who made those dumb calculations now fall back on an old ploy: When in trouble form a committee!

Georgia is Exhibit A. After leading the charge to reject Medicaid expansion and about $45 billion in federal funding that comes with it, Gov. Nathan Deal this spring established a Rural Hospital Stabilization Committee to find ways to keep rural hospitals in the Peach State from shuttering. One obvious resource, accepting Medicaid expansion money, was not on the agenda.

Don't blame the people serving on these committees in North Carolina and Georgia and other states who are being asked to identify problems and find solutions without access to an obvious, immediate and massive federal resource.

Speak privately with people on these committees and their frustration is palpable. They see firsthand the life-and-death consequences of rejecting Medicaid expansion. It's tragic that their elected leaders choose to ignore that reality.