The Supreme Court’s decision on health reform upheld its constitutionality but gave states much greater freedom in deciding whether to expand Medicaid – the main engine for increasing access. The Court said that states have the option of a lifetime: 100 percent of the costs of expanding Medicaid for all to 133 percent of the federal poverty level for three years, leveling off at 90 percent in 2020. States have to put in a dime to bring in large numbers of their citizens. By contrast, states now put in 43 cents for every dollar of Medicaid coverage.
And, with expanded coverage, state expenditures required to pay for critical services for uninsured residents will plummet. When states do the math, many, perhaps most, will find they actually save money while at the same time improving the health of their citizens.
Hospitals also get a good deal because much of this money will support the care of people without insurance who they now treat for little or no reimbursement. And think about what all of these dollars mean for the state’s economy.
Turns out the good deal is too good to believe to reform skeptics or committed opponents who have shifted ground after losing at the Supreme Court. The new charge is that states cannot trust the feds to deliver on the good deal and that they will get caught in a fiscal trap – new benefits without Washington’s help to pay for them.
Faced with looming budget deficits, states cannot ignore the threat. However, more than a half century of experience with Medicaid provides no basis for these latest fears. Medicaid has been expanded many times and the Feds have never pulled funding for major new benefits that left states in a later fiscal trap.
For instance, the Reagan Administration signed-off on large state expansions of Medicaid to millions of children and pregnant women. Those benefits survived numerous rounds of budget cuts. In fact, rather than slash federal matching dollars, Congress has increased them to provide temporary fiscal relief to states during periods of economic depression, most recently in the 2009 Economic Recovery Act.
This pattern of ratcheting-up can also be seen in the establishment, expansion, and re-authorization of the State Child Health Insurance Program – with enhanced federal matching dollars -- that has enjoyed bipartisan support for well over a decade. Every state opted in, millions of children benefited, and Washington’s commitments to states were honored.
For states not re-assured by this unwavering record of delivering promised funding, there is the option to tie new benefits to the continuation of the enhanced federal matching funds.
Fail safe check -- No money, no benefits.
States need to put aside unfounded warnings and follow the facts. A clear-headed sizing up the Medicaid expansion reveals that the fiscal benefits outweigh costs, currently unavailable essential care will be made available to citizens, and hospitals, doctors and clinics will be spared the threat of insolvency. It also promises a needed economic boost to job growth and economic development by expanding the health care sector, lowering the drag on businesses paying for uncompensated care, and improving work performance.
Medicaid expansion is a once-in-a-lifetime deal for states.
Deborah Bachrach is special counsel for healthcare transaction and policy at Manatt Health Solutions. Previously she was the Medicaid director and deputy Commissioner of Health for the New York State Department of Health, Office of Health Insurance Programs.
Lawrence R. Jacobs is the Walter F. and Joan Mondale chair for political studies and director of the Center for the Study of Politics and Governance in the Hubert H. Humphrey Institute and Department of Political Science at the University of Minnesota.