The Case Against Medicaid Expansion Gets Even Weaker

New research and the experience of several states chip away at conservative arguments against expansion.

By Nathan Pippenger

Tagged Affordable Care ActHealth CareMedicaid

When the Supreme Court ruled in 2012 that states could opt out of Obamacare’s Medicaid expansion, it handed Republican-controlled states the power to block one of the ACA’s main paths to expanding health insurance. By the most recent count, 19 states are still holdouts, meaning that nearly 3 million poor Americans, overwhelmingly in the South, find themselves in a gap unimagined by the law’s writers: they earn too little to qualify for tax subsidies on the health insurance marketplace, but since their states didn’t raise Medicaid’s eligibility threshold, they earn too much for that program. (Which is not very much: in 2016, the median income limit came to less than $9,000/year for a family of three, and in almost all of the states that haven’t expanded Medicaid, childless adults are not eligible at all.)

Conservatives have consistently argued that this is no big deal, if not a downright positive development, since expanding Medicaid is useless from a health perspective and unaffordable from a budgetary one. In 2010, a Wall Street Journal piece warned states not to “turn a blind eye toward the coming storm”: the expansion will “place an ever-increasing fiscal burden on state policymakers.” In 2011, the Heritage Foundation claimed not only that “policymakers should not expect significant health improvements” from the expansion, but that it could “potentially worsen overall population health,” suggesting that having Medicaid is not only inferior to having private insurance, but “even [to] being uninsured.” Last fall, National Review echoed the line: “Medicaid has a miserable track record of providing adequate care for poor Americans…expanding Medicaid is neither good for the state budget nor for Medicaid’s new beneficiaries.”

A new testing ground for this argument, and an exception to the Southern Medicaid holdouts, is Louisiana. Expansion began there earlier this summer, and more than a quarter-million people have already enrolled. This coincides with the release of a new study comparing 9,000 low-income adults in two expansion states (Arkansas and Kentucky) and one holdout state (Texas). The findings: expansion was linked to drastically lower uninsured rates, lower out-of-pocket spending, and a lower incidence of skipping medication for cost reasons. It was also associated with “significantly increased access to primary care,” “reduced likelihood of emergency department visits,” “increased outpatient visits,” increases in diabetes screenings and care for chronic conditions, as well as improvements in “[q]uality of care ratings” and increases in “the number of adults reporting excellent health.” The study’s lead author, a professor of medicine and public health at Harvard, explained it this way: “Health insurance matters to people’s health.”

It also matters to state budgets. As the Center for Budget and Policy Priorities (CBPP) observes, apocalyptic budget predictions have fared roughly as well as dismissals of Medicaid’s importance to low-income patients. Net budget savings have been achieved “in a diverse group of states such as California, Colorado, Michigan, Oregon, Pennsylvania, and West Virginia.” Expansion has achieved net savings of about $350 million per year in New Jersey; Louisiana expects to save nearly $700 million over the next five years. Many states expect the savings to continue even as they begin to bear more of expansion’s cost (which the right denounced as a “temptation” and a “deceptive” budget trick that would come to haunt states that foolishly took the bait). Expansion has helped generate higher tax revenue, connect poor individuals with preventive care (which should prove cheaper in the long run), bring consistent health coverage to people struggling with mental illness and substance abuse, and improve access to care for the homeless and those recently released from prison.

Some of the expected benefits of expansion will take time to fully measure—including the financial stability it brings to families, the relief it provides to the chronically ill, the pathways it opens into more stable employment, and the improvements it generates in preventive care and consistent mental health and substance abuse treatment. “For those of us trying to evaluate the law,” writes Margot Sanger-Katz, “the slowness of results is frustrating.” But many of expansion’s benefits are becoming obvious to patients, policymakers, and state-level officials, and a clearer overall picture is beginning to come into focus. The rationale for blocking coverage to poor Americans—already flimsy to begin with—is growing weaker by the day.

Read more about Affordable Care ActHealth CareMedicaid

Nathan Pippenger is a contributing editor at Democracy. Follow him on Twitter at @NathanPip.

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