The Cost of Opting Out: How State Decisions about Medicaid Expansion Will Affect the Delta

What impact will state decisions about Medicaid expansion have on the Delta?

The Supreme Court decision on the constitutionality of the Patient Protection and Affordable Care Act (PPACA) gave each state the option of expanding Medicaid coverage to almost all persons with incomes up to 138% of the federal poverty level ($32,499 for a family of four in 2013) beginning in 2014.  This substantial expansion of eligibility sought to expand health insurance coverage to low income persons with incomes above the current levels in most states, to reduce the interstate variability in eligibility for this joint federal-state public insurance program, and to provide the currently uninsured with a means to comply with the PPACA’s individual mandate for health insurance coverage. The federal government would pay 100% of the health care costs for the newly eligible who enroll in Medicaid from 2014 through 2016, and then a declining percentage to 90% in 2019 and thereafter.

“A decision not to opt for Medicaid expansion would result in an extra 9,441 deaths per year and a $3.3 billion loss of economic productivity.”

We sought to assess the impacts of Tennessee’s decision to opt in or opt out of this Medicaid expansion for the state and, by extrapolation, to other states in the Mississippi River Delta region, using publically available secondary data sources.  This decision will likely to have a greater than average impact on the Delta states because of relatively high rates on uninsurance, low incomes, and limited current Medicaid eligibility.

Our studies suggested that full PPACA implementation, including Medicaid expansion, would reduce the number of uninsured in Tennessee from 910,215 in 2009 by approximately 558,044 after full PPACA implementation, a 61% reduction.  The largest cohort of the newly insured (239,101 persons) would be insured through Medicaid expansion. For Tennessee, we estimated that a decision not to expand Medicaid coverage would leave 150,700 of these persons uninsured when compared to a decision to expand coverage according to the PPACA guidelines.

This decision would have significant impacts to the uninsured, to the health care system, and to the state’s economy, in addition to its impacts on the state government’s budget.  Based on available models, the additional 150,700 uninsured population would result in (in comparison to full Medicaid expansion) an additional 857 deaths per year, an increase of $610 million in uncompensated care to health care providers, a loss of $9.4 billion in federal dollars flowing into the state between 2014 and 2019, and a loss of $303 million in overall economic value each year related to the reduced health and well-being of the uninsured.  These forgone economic gains may be expected to lose a potential 28,000 new jobs by 2019. We further estimated the cost to the state budget to be approximately $315.6 million between 2014 and 2019, including only the costs of the newly insured resulting specifically from the state’s decision to expand coverage based on the Supreme Court’s ruling.

Among the eight Delta states, 4 have announced plans not to expand Medicaid coverage based on the PPACA guidelines and one (Tennessee) is uncertain. These decisions will reduce health insurance coverage after full PPACA implementation by 1.6 million persons. When health and economic consequences of this increase were estimated, we suggest that in these states that a decision not to opt for Medicaid expansion would result in an extra 9,441 deaths per year and a $3.3 billion loss of economic productivity.

Written by David M. Mirvis, MD. For additional information, or copies of published reports on these topics, please contact him at mirvis@msn.com.

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