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States to Lose $8.4 Billion Without Medicaid Expansion

Photographer: Andrew Harrer/Bloomberg

The health law makes all Americans eligible for Medicaid if their incomes don’t exceed 138 percent of the federal poverty level, or about $32,500 for a family of four this year. Close

The health law makes all Americans eligible for Medicaid if their incomes don’t exceed... Read More

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Photographer: Andrew Harrer/Bloomberg

The health law makes all Americans eligible for Medicaid if their incomes don’t exceed 138 percent of the federal poverty level, or about $32,500 for a family of four this year.

Texas, Louisiana and 12 other U.S. states that are declining to expand Medicaid under President Barack Obama’s health overhaul will lose at least $8.4 billion in federal funding in 2016 alone, a study found.

About 3.6 million people who would have been eligible for Medicaid coverage under the Affordable Care Act will be left without health insurance, costing the 14 states an additional $1 billion in uncompensated care, according to research from the Rand Corp. published in the journal Health Affairs. States “would do best to expand Medicaid,” the researchers said.

“State policy makers should be aware that if they do not expand Medicaid, fewer people will have health insurance and state and local governments will have to bear higher costs for uncompensated care,” wrote Carter Price and Christine Eibner, researchers with the Rand Corp. in Arlington, Virginia.

About 25 million Americans are projected to gain insurance under the health-care law, including 13 million through the state-federal Medicaid program for the poor and the rest through new marketplaces selling subsidized health plans to people who don’t get coverage at their jobs. Most Republican governors have balked at the Medicaid expansion, citing costs to their states despite the federal government’s plans to cover 100 percent of the tab for the first three years and at least 90 percent in the years following.

‘Hollow’ Promise

“The federal government’s promise of billions of dollars in the coming years is hollow,” said U.S. Representative Joseph Pitts of Pennsylvania, a Republican who chairs the health subcommittee of the House Energy and Commerce Committee. “These projections are based on a government already trillions of dollars in debt finding a way to pay for a massive expansion of state programs.”

Pennsylvania has so far chosen not to participate in the Medicaid expansion.

Texas Governor Rick Perry, a Republican, has resisted calls to expand Medicaid in his state, where a higher proportion of the population is uninsured than anywhere else in the country. The expansion would cost taxpayers too much, he said.

“They tell us to take the money -- in the case of Texas, $4 billion -- because it’s free,” Perry said in a speech on March 14 in Washington. “But there is nothing free. This is our money, or at least money that we’ve tacked onto the national debt either by borrowing from China or by pulling it right off the printing presses.”

While the Rand researchers assume 14 states would refuse to expand Medicaid, as many as 20 have yet to act, according to data from the Kaiser Family Foundation, a nonprofit group based in Menlo Park, California, that tracks the progress of the health law.

Eligibility Rules

The health law makes all Americans eligible for Medicaid if their incomes don’t exceed 138 percent of the federal poverty level, or about $32,500 for a family of four this year. In states that don’t expand the program, people earning poverty-level wages and higher who don’t get insurance at their jobs will be able to buy policies on the new health exchanges. To help pay premiums, they’ll get subsidies that diminish as their income rises to 400 percent of the poverty level, or about $94,200 for a family of four.

Working-age adults who earn less than the poverty line and live in states that don’t expand Medicaid are unlikely to qualify for the program because of “restrictive eligibility requirements,” the Rand researchers said yesterday in their report. Most states currently don’t offer Medicaid to childless adults.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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