The Cost and Coverage Implications of the New Medicaid Program

Reduction in Number of Uninsured Under ACA with All States Expanding Medicaid, 2022Linda Manns from Bellevue had health insurance all her life, until she recently lost her job as a certified nurse assistant.  Linda has diabetes, which kept her from working mandatory overtime her employer required, which she said resulted in her being let go.

Recently, Linda got an infection in her toe.  Without health insurance, she couldn’t afford to go to the doctor, but eventually the pain got bad enough she couldn’t wait any longer.  Doctors amputated her toe and told her she was lucky the infection didn’t spread.

“If I would have waited, they told me I could have lost my leg,” she said.

Now, Linda and her husband, who works as a dishwasher, are trying to figure out how to pay their mounting hospital bills.  If they can’t, the hospital may write off the cost of Linda’s treatment as uncompensated care costs.  That cost would be passed on to insurance companies, who would pass them on to the consumer in the form of higher premiums.

If Nebraska takes up the Affordable Care Act’s new Medicaid program, it would be a great relief to the Manns, and families just like theirs.  But, could it actually save states money as well?

A new report from the Kaiser Family Foundation shows with very small relative investments from the states, millions more people – people just like the Manns – will have access to health insurance.  Additionally, states could actually save money because uncompensated care costs would be drastically reduced.

Here are some of the top-level findings of the report:

  • The federal government will pay 100% of the costs for the newly eligible for the first three years.
  • An estimated 21.3 million more people will receive health insurance coverage, decreasing the number of uninsured by 41 percent. Even if states do not adopt the new Medicaid program, an additional 5.7 million more people are expected to enroll in Medicaid.
  • The additional cost of state Medicaid spending is relatively small, representing a 0.3 percent increase over what would be spent without the new Medicaid program.
  • States and local spending on uncompensated care will be reduced by $18 million, but uncompensated care as a whole would drop by $183 billion, and providers as a whole would see increased revenue.
  • Assuming all 50 states take up the new Medicaid program, states’ general fund spending would only increase by 0.1 percent.
  • Many states will see reductions in costs because some existing programs would be phased out as clients are shifted over to the new Medicaid program, which would be less expensive.

In short, the new Medicaid program is a great deal for states. Because the federal government is picking up so much of the costs, and so many more people will receive the health care they need, people like Linda Manns can get treatment early enough to avoid bigger health problems and go back to work.  Healthier residents will mean a healthier Nebraska economy.

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