The Commonwealth Fund Blog

Reflecting on Health Reform: Buckeye Bellwether?

October 30, 2013

Tags: health insurance Medicaid Reflecting on Health Reform

David Blumenthal

By David Blumenthal

Last week, Ohio became the 26th state to choose to expand its Medicaid program under the Affordable Care Act (ACA).  That is good news for 275,000 low-income Buckeyes. The result of strong advocacy by a Republican governor, Ohio’s action suggests that we may be reaching a tipping point, as reluctant states seriously reckon with the economic, political, and human costs of failing to expand Medicaid.

The slow rollout of the ACA’s Medicaid provisions results from the Supreme Court’s decision that the statute’s original language, which made Medicaid expansion virtually mandatory, was unconstitutional. (Under the law, states would lose federal funding for the entire program if they didn’t participate in the expansion.) The Court’s ruling left it to individual states to decide whether to take advantage of the very generous federal financial support—100 percent of the extra costs through 2016, phasing down to 90 percent in 2020—offered for opening Medicaid to residents with incomes at or below 138 percent of poverty ($31,809 for a family of four).

The fact that 24 states have not yet embraced the ACA’s Medicaid expansion constitutes a significant threat to the law’s goal of insuring all Americans. A total of 7 million potential Medicaid beneficiaries reside in holdout states, which include the populous states of Texas and Florida.

As Ohio’s action suggests, however, remaining state opposition to Medicaid expansion may not be carved in stone. History illustrates this point. After Medicaid was originally enacted in 1965, most states dribbled into the program gradually over a six-year period. Arizona, the last to join, didn’t come aboard until 1982. Of the 24 current holdouts, 10 failed to participate for at least two years after Medicaid became law. Florida waited until 1970.

The economic incentives to participate in the new Medicaid expansion are also compelling. Ohio’s decision means it will collect $53 billion in extra federal Medicaid monies over the next decade. The 24 remaining holdouts are forgoing a total of $388 billion over the same period. These funds benefit not only the physicians, clinics, and hospitals that directly receive them, but also, through what economists call the “multiplier effect,” the general economy of the state. Monies flowing into the health sector generate health care jobs. Newly employed health workers buy more homes, cars, furniture, and groceries, thus generating economic activity in other sectors of local economies. State and local tax revenues grow. Studies of several states show that the full economic benefits far exceed any additional costs to states of paying for expanded Medicaid benefits.

From a political standpoint, a recent Commonwealth Fund survey found that 68 percent of adults nationwide are strongly or somewhat in favor of making Medicaid available to more residents in their states. The ongoing, strong support of local hospitals for expanding Medicaid will also figure in the calculations of elected state officials going forward.

And finally, there are the health consequences. The health care literature has shown repeatedly that Medicaid saves lives and improves health. The Commonwealth Fund State Scorecard for Low-Income Populations has demonstrated that there are now “two health care Americas.” One America experiences health and health care that equals or exceeds anything on earth. But the other America has fallen far behind. Many holdout states are in the latter category. If they fail to expand Medicaid, there is every reason to expect that they will fall further and further behind the rest of the United States, and even some countries in the developing world. For political leaders who take pride in their states’ national and international standing, watching their states become second-rate health care territories cannot be a pleasant prospect, quite apart from its real human cost.

It may take some time for these economic, political, and human facts to sink in among leaders in many parts of America. However, history suggests that the attractions of Medicaid grow on initial opponents over time. Ohio—epitome of the American heartland and reliable predictor of the outcome of presidential elections—may someday be seen as the bellwether of things to come.

Read other posts in David Blumenthal's "Reflecting on Health Reform" series:

The Presidential Health Care Curse: Why Do They Bother?

A Tale of Two IT Procurements

The Marketplace Experience: Month One

Two Weeks in October

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Stephen Somers of Center for Health Care Strategies says:
November 1, 2013

We too were very pleased to see that the Buckeye State has become the 26th to opt for expanding Medicaid under the Affordable Care Act. And we feel compelled to add that the sooner these decisions get made the better for the states heading in this direction. The most obvious reason to move quickly is that the clock starts ticking on January 1, 2014 in terms of getting the three full years of 100% federal support. But the other factor is that once the policy decision gets made, based on our work with multiple state Medicaid leaders, we know that there are many design and planning tasks ahead before the first newly eligible beneficiary gets covered: e.g., outreach and enrollment strategies; benefit design; aligning with the new insurance marketplaces to mitigate the effects of churn; procurement; and many others.