According to the Federal government, the prices in Affordable Care Act (ACA) marketplaces in Medicaid expansion states are on average 7 percent lower than in non-expansion states. At the time of writing, 19 states rejected expansion, most because the program would burden the state with higher costs while also increasing premiums for residents.
This research (conducted by the Department of Health and Human Services) suggests such fears are unfounded, especially in the wake of New Jersey’s successful expansion which saw the state save money, reduce premiums, and insure over half a million people.
Why Is Medicaid Expansion Lowering Prices?
The 31 states that accepted Medicaid expansion offer coverage for anyone earning at or below 138 percent of the Federal Poverty Line (FPL), approximately $16,000 per annum for a single person. If you are above this threshold, you can purchase insurance in the new ACA marketplaces.
In the other 19 states, single people with incomes below 100 percent of the FPL have no subsidized coverage option, but those with incomes between 100 percent and 138 percent of the FPL do. According to the HHS, this is the cause of such a significant difference in premiums between expansion and non-expansion states.
When the ACA began, every state was required to expand its Medicaid program. A 2012 Supreme Court decision changed this, allowing states to have the option to join or reject the program. Nineteen states have thus far refused to expand.
There have been attempts to entice more states to join. For example, the federal government has agreed to cover the vast majority of the costs of the newly eligible. This incentive may cause larger non-expansion states such as Florida and Texas to make the switch. Perhaps the suggestion of falling premiums may further persuade them to change.
A Win-Win Situation
Sylvia Mathews Burwell, secretary of the HHS, described Medicaid expansion, saying that states can expand coverage to a greater number of people while reducing premiums for those who are already insured. She continued by saying that the report clearly shows benefits for consumers on top of other positives for millions of Americans who would gain coverage.
In fact, n estimated four million people would gain Medicaid coverage in the 19 non-expansion states if these states reverse their stance.
The future of Medicaid expansion is unclear, mainly because the future of the ACA itself isn’t set in stone. However, it does seem as if non-expansion states need to have a rethink for the good of their residents.