Report takes new look at Medicaid expansion costs

Print Friendly and PDF By: Andy Miller Published: Nov 26, 2012

A new study has estimated that Georgia’s 10-year cost of expanding Medicaid under the health reform law would be $1.8 billion.

Only five states – California, Texas, Ohio, Pennsylvania and Florida – would face a higher cost, the report said.

The Georgia increase would represent a 4.1 percent hike in Medicaid spending through the year 2022, according to the analysis, conducted by the Urban Institute and released Monday by the Kaiser Family Foundation.

Yet the report also notes that the state will increase its Medicaid rolls by 157,000 people even if it does not opt for expansion. That’s because of other provisions of the Affordable Care Act, as the health reform law is officially known.

The report said that overall, 698,000 Georgians could pick up Medicaid if the state expands the program  – a higher number than previously estimated.

A decision to expand would cut in half the number of uninsured people in the state, currently at roughly 1.9 million.

In June, the U.S. Supreme Court upheld the controversial ACA. But the court also gave states the option of not going along with the ACA’s Medicaid expansion plan. That one change could have far-reaching consequences because of the amounts of money involved and the numbers of people affected.

Medicaid expansion has the support of many Georgia health care provider groups and consumer advocates. Safety-net hospitals, in particular, worry about the hit to their bottom lines if the state rejects expansion, with federal funding for indigent care being removed by the ACA.

Gov. Nathan Deal, however, said recently that he opposes expansion as it’s currently outlined. He cited concerns about the cost to the state.

Other Southern governors have staked out similar positions.

Brian Robinson, a spokesman for Deal, told GHN on Monday in an e-mail:

“Governor Deal’s budget office has produced what honest observers should see as a conservative projection of the state Medicaid program’s new costs for complying with Obamacare and the optional eligibility expansion. Through 2023, we estimate that the state will take on an additional $4.5 billion in costs.

“History shows that advocates of expanded entitlements have long low-balled the future costs, and taxpayers should look askance at such estimates. As such we have every reason to believe that the state’s cost could actually exceed our projections.

“But the bottom line on Medicaid expansion is this: Regardless of whether the new costs are $2.5 billion, $4.5 billion or $6.5 billion, the state of Georgia doesn’t have the money to pay for it without a huge tax increase, crowding out all other spending or both.”

Georgia’s Medicaid program is currently facing a $400 million financial shortfall.

The Urban Institute report found that if all states expanded their programs, state Medicaid spending nationally would rise by $76 billion from 2013 to 2022, an increase of less than 3 percent, while federal Medicaid spending would increase by $952 billion, or 26 percent.

An additional 21 million Americans could gain coverage by 2022 if all states decided to expand, it said.

The financial impact, though, would vary by state. States with broad current Medicaid coverage would actually achieve a savings under expansion, the report found. But in areas such as the Southeast, with many more uninsured people and stricter eligibility requirements, states would have to increase their Medicaid spending.

Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, said in a statement, “While some states will see net savings, others will need to weigh the trade-offs between small increases in state spending in return for large gains in coverage supported by mostly federal dollars.”

But Georgia will have to increase its Medicaid expenditures even if it rejects expansion. That’s because of simplified enrollment procedures, and because the ACA’s new insurance exchange process will end up causing some people already eligible for Medicaid to be enrolled in the government program.

Many of these people are children, said Tim Sweeney, health policy director for the Georgia Budget and Policy Institute, which supports expansion.

Sweeney said Monday that the Urban Institute analysis shows Medicaid expansion “is a fantastic financial deal for Georgia.’’

“Southern states benefit the most in net dollars and in new people who will be covered,’’ Sweeney said.

The Urban Institute analysis calculated a reduction in state spending on uncompensated care for the uninsured as part of its financial projections. In Georgia, the savings is calculated at $726 million. That brings the $2.5 billion in state spending on expansion down to $1.8 billion.

Alan Weil, executive director of the National Academy for State Health Policy, acknowledged that in these difficult financial times, even a 1 percent increase in general state funds ‘‘is a lot of money.’’

But Weil pointed out that the uninsured have a greater burden of disease and a higher rate of premature death. “A human dimension . . . needs to be part of the discussion,’’ he said.

Enjoy Georgia Health News? Sign up for free Email Alerts or follow us on Facebook or Twitter

Help support our nonprofit journalism -- your gift is tax deductible!

Sponsorships















University of Georgia College of Public Health Logo









(Click on the logo for more information about our sponsors.)





Foundation Support for GHN:

Healthcare Georgia Foundation
Kaiser Permanente
Reynolds Charitable Fund
Georgia Health Foundation