New Study Projects Fiscal Effects of Medicaid Expansion in Georgia

A new study by the Urban Institute and the Robert Wood Johnson Foundation estimates that by expanding Medicaid as outlined under the Affordable Care Act, Georgia could gain additional federal funding of between $45.4 and $51.6 billion, while increasing its costs between $5.2 and %5.5 billion over the period between 2017 and 2026. According to teh report, that would mean receiving between $8.68 and $9.42 for each state dollar spent on the program.

The projected figures take into consideration the fact that expanding Medicare to those earning between 100% and 138% of the federal poverty level would reduce spending on uncompensated care by both the state and federal governments, along with a decrease of federal subsidies given to individuals now enrolled in the state health exchange who move to the Medicaid plan.

Through the end of 2016, the federal government is paying 100% of the costs associated with the expanded program. Beginning in 2017, that matching percentage begins to decline. The study’s authors conclude that the financial benefits to states will continue even considering that the states will begin cost sharing.

In the 19 states that have not yet expanded Medicaid eligibility, a small investment of state dollars would yield much larger infusions of federal resources, even taking into account offsetting reductions in federal marketplace subsidies and uncompensated care savings.

Thus far, expansion states have found that state cost increases resulting from higher caseloads are outweighed by state cost savings and revenue growth that result from expansion. For most states with relevant analyses, net fiscal gains are expected for the foreseeable future, even after states begin paying 10 percent of expansion costs.

But, as reported in Georgia Health News, there are several additional factors to consider prior to expansion. A study committee from the Georgia Chamber of Commerce is preparing to release a study with its recommendations for how to expand healthcare to the uninsured. One consideration is the need to provide healthcare to the Peach State’s rural residents. Several hospitals in rural Georgia have closed or reduced operations because they do not have enough patients paying for 100% of the cost of their care due to low reimbursement rates from Medicare, Medicaid, and some private health insurance.

The 2016 political situation is a factor as well. From the Georgia Health News story:

Republican candidate Donald Trump (like the leading GOP rivals he beat for the nomination) has talked about scrapping the ACA, so it’s hard to say what would happen to Medicaid expansion if he’s elected.

Democratic candidate Hillary Clinton has reiterated her longtime support of the ACA, [Georgia State University’s Bill] Custer noted, and thus Medicaid expansion would be more or less cemented in place on the federal level for four years if she wins the White House.

Before Georgia could participate in the expanded Medicaid program, the legislature would have to vote to approve it.