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When States Reject Medicaid Expansion, Providers, Businesses Will Pay

John Commins, for HealthLeaders Media, March 18, 2013

According to the analysis from Jackson Hewitt Tax Service Inc., the associated costs to employers could total anywhere from $876 million to $1.3 billion in the 22 states that are either opting out of the expansion, or are leaning that way. In Texas, for example, federal tax penalties on the state's employers would increase from $299 million to $448 million each year.

"Any projections of the 'net' costs of Medicaid expansions should reflect the very real costs of the shared responsibility penalties to employers in any particular state," the analysis said.

Brian Haile, senior vice president for Health Policy Jackson Hewitt, and the author of the study, says states and businesses must make sure they understand the consequences of forgoing Medicaid expansion funding.

"The tax code is incredibly complex but in light of the Supreme Court's decision making Medicaid expansion optional you have some unanticipated results," Haile told HealthLeaders Media. "Folks who are very concerned about taxes might in some senses favor expanding Medicaid. You usually can't say that in the same sentence but you can in some instances say that here."


John Commins is a senior editor with HealthLeaders Media.

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2 comments on "When States Reject Medicaid Expansion, Providers, Businesses Will Pay"


Todd Madden (3/19/2013 at 1:25 PM)
One should remember that Medicaid reimbursement rates are significantly below hospital costs. To say those losses will not be offset by employers would be disingenous. While there may be more in taxes with the ACA, there will be more cost shifting if Medicaid is expanded. Oh and don't forget the lack of primary care providers to see patients before they go to the ER, further perpetuating the cost shift.

Larry J. Jones (3/18/2013 at 10:25 AM)
I live in Texas. As a taxpayer I take issue with Gov Perry's refusal to accept some of MY tax money back to fund a program of great benefit to our state and myself personally. I have no doubt he has a 'cadillac' health plan paid for by the state. Nor do I see him objecting to the millions (billions?) Of our taxes going to subsidize the oil & gas industry; currently the most profitable business on the planet. Texas has roughly 1/4 of it's population w/o health benefits of any kind. He acts as if he is proud of this!