The Proven, Credible Benefits of ACA Medicaid Expansion — Part 1

February 1st, 2022 by Tom Lynch

According to the Department of Health and Human Services (HHS), there were 48 million uninsured in 2010 when the Affordable Care Act (ACA) became law. Over the next nine years, 38 states, using ACA funding, expanded their Medicaid programs. During that time, the numbers of uninsured fell to 28 million before rising to 30 million in the first half of 2020 due to policy changes to the ACA by the Trump Administration that made it harder to qualify for coverage.

There are now twelve states left that have refused to take advantage of the ACA’s provisions to expand Medicaid, a move that would significantly lower the number of uninsured people within their borders.

The states in orange are the states that have refused to accept Medicaid expansion and the significant federal dollars that go with it. The orange states are all “red” states.

The ACA was passed in 2010. We now have 404 studies in the seven year period 2014 through 2020 producing 440  findings resulting from Medicaid expansion (A number of studies looked at more than one area).

There have been five studies concluding ACA Medicaid expansion has brought negative results in two areas ―  Provider Capacity and Positive Health Outcomes; remember that; they’re the ones in orange in the chart below (Good luck finding them). This is opposed to 435 findings of positive results in eight areas. These include 25 positive findings in Provider Capacity and Positive Health Outcomes (compare to the five mentioned above). The Kaiser Family Foundation summarized the studies in this chart:

There are three overarching benefits to Medicaid expansion nearly all experts agree on:

Expanding Medicaid helps low-income families’ health and financial well-being, especially those in which someone has lost a job.

In states that expanded Medicaid under the ACA, unemployed workers experienced large gains in coverage. Further, there are spillover benefits for economic well-being: lower debt and better credit scores. Physical health and financial health are inextricably linked. Expanding Medicaid improves both for low-income families. This has been doubly so in the time of COVID.

Expanding Medicaid reduces hospitals’ uncompensated care.

I write from experience. I was once a Director at a Massachusetts major hospital system. At one meeting, I asked our CEO what the system did when an indigent person showed up in the ER very sick or injured. By law we had to take care of them. So, given that, how did the system get paid? He replied, “We charge them the most we possibly can.” I said, “But they can’t pay.” He said, “That’s right, but the state’s Uncompensated Care Pool can.” This was a big drain on Massachusetts, eye-opening to me, and an obvious wrinkle in health care policy. Medicaid expansion dramatically reduces this burden for hospitals. In Michigan, uncompensated care was cut in half after Medicaid expansion in 2014. In 2016, Dranove, Garthwaite and Ody, publishing in Health Affairs, found uncompensated care decreased at hospitals in Medicaid expansion states but not at hospitals in non-expansion states. Moreover, in April 2021, Karpman, Coughlin and Garfied found significant reductions in uncompensated care in ACA expansion states:

Reflecting a significant decline in the share and number of people who were uninsured at any point in the year, the average annual share of nonelderly individuals who had any uncompensated care costs fell by more than a third following ACA implementation, going from 7.3 percent in 2011-2013 down to 4.8 percent in 2015-2017. This change represents a decline in the number of people with uncompensated care costs from 20.2 million to 13.1 million.

Correspondingly, the aggregate annual cost of uncompensated care provided to uninsured individuals dropped by a third following implementation of the ACA’s coverage provisions, from an average of $62.8 billion per year in 2011-2013 to $42.4 billion in 2015-2017. The cost of implicitly subsidized uncompensated care—or care that had no payment source, including a non-health insurance source—dropped from $21.6 billion to $15.1 billion per year on average before and after the ACA, respectively.

Expanding Medicaid is a highly effective form of economic stimulus.

An often-overlooked benefit of Medicaid expansion is that it creates jobs. During a recession, the infusion of federal spending gives a boost to a state’s economy. Evidence from the Great Recession shows that Medicaid spending is a highly effective form of stimulus: for every $100 000 of additional federal Medicaid spending, two workers gained a year of employment.

There are other intangible benefits, but we won’t go into them here, because they’re fuzzy, and it will give naysayers a hook, albeit a painted one, on which to hang their negative opinions. Let’s just say that being able to provide health care for your family, not having to forgo necessary care for you or your child because you need that money to eat, is psychologically significant. Contrast this with a recent statement from Senator Ron Johnson (R, WI): “People decide to have families and become parents. That’s something they need to consider when they make that choice. I’ve never really felt it was society’s responsibility to take care of other people’s children.” Compassion like that is disgustingly reminiscent of Ebenezer Scrooge before the spirits arrived.

Tomorrow, we’ll dive into the reasons governors and legislatures give for rejecting ACA funding to expand Medicaid in the remaining 12 non-expansion states. Hint: There are three reasons most often cited. They are opinions only without any credible supporting data, but in those orange collared states in the map at the beginning of this column, that doesn’t seem to matter.

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