States that took the Medicaid expansion are seeing slower cost growth and fewer uninsured. The other states are paying a new red state tax.

October 27th, 2014 at 6:45 pm

This deserves more time than I’ve got right now, but be sure to see this post from my CBPP colleague Jesse Cross-Call showing a difference of more than 2 percentage points in projected Medicaid cost growth between states that expanded the program under the Affordable Care Act and those that did not.


To give you a little perspective on that cost difference, if it persisted for say, 10 years, it would mean a 27% savings for the expanders relative to the non-expanders.

As Jesse notes:

While benefiting from slower spending growth, expansion states are making substantial progress in reducing the ranks of the uninsured.  The uninsured rate among non-elderly adults has fallen by 38 percent in expansion states but only by 9 percent in non-expansion states, an Urban Institute survey found.  The fact that the federal government picks up the entire cost of newly eligible individuals under the expansion allows states to expand coverage while limiting their costs.

While the Kaiser report [on which the costs data are based] examined only state Medicaid budgets, it notes that expansion states also expect a more far-reaching positive impact on their overall finances:

“States expanding Medicaid also typically cited net state budget savings beyond Medicaid.  States reported that expanded coverage through Medicaid could allow for reductions in state spending for services such as mental health, correctional health, state-funded programs for the uninsured and uncompensated care.”

So, think of the citizens of the states forgoing the expansion and these commensurate savings as paying an ideological, red state tax. And you thought red states didn’t like tax increases?!

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2 comments in reply to "States that took the Medicaid expansion are seeing slower cost growth and fewer uninsured. The other states are paying a new red state tax."

  1. Peter K. says:

    They don’t mind tax increases on lower income folks. But it will be interesting to see if the good news on the ACA will eventually seep its way into the political consciousness.

  2. Larry Signor says:

    Thank you very much, John Roberts. In Virginia we are foregoing about 2 billion dollars per year in federal funds for Medicaid. We lost by one vote, due to a democrat resigning from the house. There is now a criminal investigation into this “good ole boy deal”.