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April 5, 2013

States still undecided about ACA's Medicaid expansion

April 5, 2013

With nine months until the Affordable Care Act goes into full effect, many states are still undecided about expanding their Medicaid programs to help achieve one of the health reform law’s central goals: lowering out-of-pocket medical expenses for low-income families.

 

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One reason behind the fence-sitting in state houses and governors’ mansions is that many suspect the provisions scheduled to roll out in 2014 will be more effective in some states than in others.

It’s complicated to forecast because myriad factors determine how much income the population of a given state will spend on medical treatment. To name just a few:

  • States with relatively little competition between medical providers, hospitals, and HMOs typically have higher costs for medical treatment.
  • Residents of states with relatively small low-income populations tend to spend a lower portion of their income on health care.
  • In states with relatively large upper-income populations willing to pay more for medical treatment, the cost of care is often driven up for everyone else.
  • The share of each state’s population that is covered by insurance, and the general health of each state’s residents, vary widely.
  • States that already have robust Medicaid programs tend to have low-income populations that pay relatively fewer out-of-pocket health expenses.

A research paper published this week by the Urban Institute’s Health Policy Center provides an important first step toward understanding the different financial burdens that medical spending puts on populations living in the 50 states as well  as the District of Columbia.

We used survey data to look at state residents who currently face large out-of-pocket medical expenses without the help of Medicaid coverage, but would be eligible under the 2014 provisions if their state opts to expand the government-sponsored health insurance program.

In doing so, we got a good look at which states have the most to gain for their citizens by expanding Medicaid.

In general, mountain region and east south central states would gain the most because their low-income populations have the highest health care–driven financial burdens. On the other end of the spectrum, mid-Atlantic states have low-income populations with the lowest level of burdens.

Overall, states’ nonelderly populations with high burden levels, low income, and no Medicaid or CHIP coverage vary by a sizeable margin. Over 8 percent of Nevada’s population falls into this category while only 3 percent of Vermont’s population does. Among the five states with the highest medical care burden among low-income residents, Nevada and Montana have decided to expand their Medicaid programs while Mississippi and Louisiana have declined to do so. Arkansas has asked to use private insurance plans to cover its low-income populations.

Only time will tell the impact of these decisions, but our analysis suggests that states like Nevada and Montana will fall out of the ranks of highly burdened low-income populations as their low-income citizens access newly available benefits.

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