Adam Thomas: Expanding Medicaid will not cost states much and it's the right thing to do

WASHINGTON — With the national election a few weeks away, state policymakers have become pivotal players in the debate over health reform.

Although the Supreme Court's landmark health care ruling broadly upheld the constitutionality of the Patient Protection and Affordable Care Act, the court struck down a provision in the law that would have given the federal government the authority to withhold Medicaid funds from states that decline to expand Medicaid coverage to people with incomes that are above current eligibility thresholds but below 138 percent of the federal poverty line — about $32,000 for a family of four.

The Supreme Court's ruling was designed, in the words of Chief Justice John Roberts, to give states a "genuine choice" about whether to expand their Medicaid programs.

In the wake of the court's decision, officials in 11 states have expressed reluctance to expand their Medicaid programs due to budgetary concerns. Expansions appear likely to occur in 14 states and the District of Columbia, and the remaining 25 states are currently undecided.

The Congressional Budget Office now estimates that 6 million potentially eligible low-income individuals will not qualify for Medicaid because of some governors' stated intentions not to expand their programs.

However, the facts on the ground make clear that states would be wise to expand Medicaid. This is true for three reasons:

First, states will be required to pick up very little of the tab. The federal government will pay for 100 percent of the cost of states' Medicaid expansions through 2016. The federal contribution will start to decline gradually beginning in 2017, and states will be required to pay for 10 percent of the cost of the expansion in 2020 and beyond.

Second, by expanding Medicaid coverage, states will be able to reduce their spending on uninsured individuals through programs other than Medicaid.

Recent estimates show that state and local governments cover nearly 20 percent of the cost of uncompensated hospital care and nearly 45 percent of the cost of mental health services provided to low-income and uninsured individuals. States will be able to shift a part of these costs to the federal government by moving newly eligible patients into their federally subsidized Medicaid programs.

The third rationale for expanding state Medicaid programs is perhaps the most compelling: expanded health coverage will help millions of low-income Americans to lead healthier, more productive lives.

Medicaid provides preventive care, reproductive health services, prescription drug coverage, acute and long-term care, and a range of other services to many of the most vulnerable members of our society.

The benefits afforded by expanded Medicaid coverage are well documented. A study published last month in the New England Journal of Medicine shows that Medicaid expansions reduce mortality rates among new beneficiaries.

In my own research, I have shown that expansions in states' Medicaid family planning programs reduce rates of abortion, teen pregnancy and out-of-wedlock childbearing. I also find that, because these family planning expansions ultimately help to reduce government dependency, they save taxpayers between $2 and $6 for every dollar that the government spends.

State lawmakers are understandably wary of the daunting fiscal challenges that lie ahead. However, Medicaid expansions will improve the well-being of low-income Americans at a modest cost to state governments. Yes, expanding Medicaid is a fiscally viable option. But it is also the right thing to do.

Adam Thomas is a visiting assistant professor at the Georgetown Public Policy Institute.