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December 08, 2016
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Expanding Medicaid; Health insurance for low-income households

The clock is ticking in Pennsylvania (PA) for state government to decide whether to accept federal funds to expand Medicaid to cover an estimated 613,000 uninsured Pennsylvanians now eligible under Obamacare, aka the Patient Protection and Affordable Care Act (ACA), which will be fully implemented nationwide in 2014. As this month winds down, PA lawmakers are working to complete a state budget for the coming fiscal year, and what the budget looks like in the end will depend on whether there is an influx of federal Medicaid funds or not. Governor Corbett also is a key player in determining whether Pennsylvania will opt to expand Medicaid.

We urge the governor and state lawmakers to approve Medicaid expansion because it will benefit Pennsylvania.

As originally passed, the ACA would have required states to expand Medicaid to their uninsured citizens and would have penalized states that did not. However, last June, the U.S. Supreme Court ruled that states do not have to expand Medicaid, leaving the door open for them to implement the expansion fully, to decline to expand Medicaid, or as some governors are doing, to negotiate with the Obama administration for how to satisfy Obamacare’s provisions in a way that suits their states. Reportedly, Governor Corbett, who earlier resisted Medicaid expansion, is among those governors who are negotiating. One option Corbett has discussed publicly is channeling some federal Medicaid expansion funds to the purchase of private insurance for some of the uninsured.

Currently in PA, 31% of poor adults are uninsured. Under ACA, many more people will be eligible for Medicaid if the state opts for expansion.

First, a word on how ACA Medicaid expansion funding will work: (1) It would cover newly eligible childless adults with incomes up to 133% of the federal poverty guidelines—$15,302 for an individual and $31,155 for a family of four; (2) For the first three years of Medicaid expansion, the federal government will pay the full bill for the new pool of eligible citizens. After that, federal contributions would gradually decrease to 90% after 2020, but the states would never have to pick up more than 10% of the expansion cost. Some states, mostly with Republican statehouses and/or legislatures, call this cost a burden and are currently among 18 states that so far say they will not participate. Some of these may change their minds. Why? Two significant studies that have crunched the numbers indicate a net gain to participating states instead of a net loss, when cost savings are factored in.

A study by the Rand Corporation shows that if Pennsylvania were to participate in Medicaid expansion, “in 2016, federal [funding] inflows… are estimated at $4.7 billion without Medicaid expansion and $.7.2 billion with expansion,” an influx of $2.5 billion in annual federal dollars; this in turn, the study predicts, would fuel a $3 billion increase in economic growth and sustain more than 35,000 jobs in the Commonwealth. A study by Families USA draws similar conclusions, projecting even greater positive economic effect and larger jobs creation numbers; it also emphasizes how ACA would increase a state’s savings by removing the burden to fund numerous public health services that Obamacare would pay for. A third study looks at the particular needs of rural Pennsylvanians, where workers have less access to employer-sponsored insurance, where disability rates are 80% higher than in urban areas, and where Medicaid is a major source of payment for long-term care (covering seven of 10 nursing home residents). In addition, the report points out the importance of health care services as an economic contributor to PA’s rural economy, creating 15 to 20% of rural jobs.

As we see it, the benefits of accepting Medicaid expansion far outweigh any downside for Pennsylvania. First, as more Pennsylvanians receive essential health benefits, including preventative care, prescription drugs, chronic disease management and mental health benefits, the potential for a healthier population increases. Secondly, the high cost of finally treating long-neglected health issues when people are uninsured will reap savings in the long run, and the amount of uncompensated care will decrease. Thirdly, the benefit of accepting these federal funds to the wider economy and in jobs creation is a gain for all Pennsylvanians.

Accepting Medicaid would be a win-win for Pennsylvania; not accepting it would be a mistake.