Can States Opt Out of Expanding Medicaid Coverage?

By David A. Kindig, MD, PhD

Of course they can, and several governors and legislatures have indicated they might. Would this improve population health?

Under the Affordable Care Act, states have the option in 2014 of expanding Medicaid coverage to all adults earning less than 133% of the federal poverty level, or about $31,000 for a family of four. The federal government will cover the full cost to the states until 2016, and gradually reduce their share to 90 percent in 2020, maintaining that rate in the following years.

The broad population health model that informs this blog’s perspective recognizes health care as one of many factors that drive health outcomes. In our model, health care plays a less prominent role than either health behaviors or social/economic factors. Yet health care is a critical determinant of health, particularly when provided under cost effective conditions. People without health insurance do access care in emergency rooms and free clinics, but this generally occurs under circumstances where it is difficult for providers and the system they work within to provide high quality, low cost care.

A growing body of research links health insurance coverage with improved population health. A recent study of Medicaid expansions in Arizona, Maine and New York found that such expansions may reduce mortality among adults (particularly those between the ages of 35 and 64 years), minorities, and those living in poorer areas (1). In a recent study by our own Population Health Institute, researchers found that a 2009 Wisconsin public insurance program for very low-income uninsured childless adults resulted in a 29% increase in outpatient visits and 46% decrease in emergency department visits, with a corresponding 59% decline in inpatient hospitalizations and fewer preventable hospitalizations after 12 months of enrollment (2).

From an economic perspective, health economist Karen Davis notes that “states that choose to forego the significant amount of federal aid available to expand Medicaid not only would deprive vulnerable families of participation in an effective program, but also would miss…the opportunity to lower the costs of uncompensated care for their hospitals and an infusion of federal dollars for traditionally underserved and rural areas. One estimate suggests that full implementation would save states at least $90 billion between 2014 and 2019 by reducing uncompensated care and expanding treatment for individuals with mental illnesses.”

Why might States still refuse the expansion possible under the ACA? For states with low coverage rates like Texas and Florida, even covering 5 or 10% of the costs after 2020 is a large amount of money, and it is always possible that a future Congress or administration could change the rules later and decrease the match.

I have argued that for population health to not be “everything if it’s nothing,” the test of how much health outcome improvement or disparity reduction is gained per marginal dollar invested on any program or policy is the critical test. It may be that some states will reject the ACA Medicaid opportunity, but with the federal match and good care management at the low rates Medicaid pays I strongly suspect it would be a very cost effective population health investment strategy.

References:

1. Sommers BD, Baicker K, Epstein AM. (2012). Mortality and Access to Care Among Adults After State Medicaid Expansions. New England Journal of Medicine, 367, 1025-1034.
2. DeLeire T, Leininger L, Freidsam D et. al. (2012). The Effect on Medical Care Utilization of Extending Public Insurance to Low-Income Adults Without Dependent Children. Under review (final report available here).
3. Davis K. Medicaid Works: Public Program Continues to Provide Access to Care and Financial Protection for Society's Most Vulnerable. Published August 23, 2012 on the Commonwealth Fund Blog.

David A. Kindig, MD, PhD is Emeritus Professor of Population Health Sciences and Emeritus Vice-Chancellor for Health Sciences at the University of Wisconsin School of Medicine and Public Health. Follow him on twitter: @DAKindig.