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States that decided not to expand Medicaid to lose billions

Dec. 5, 2013 at 10:11 AM   |   Comments

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NEW YORK, Dec. 5 (UPI) -- The 20 states that did not expand Medicaid under the Affordable Care Act help pay for the expanded Medicaid program in other states, a U.S. non-profit says.

A Commonwealth Fund Study found Texas, Florida, Georgia,and Virginia were the biggest losers among states not expanding Medicaid because they are forgoing billions of dollars in federal funds, while residents in their states are contributing to the cost of the expansions in other states.

Sherry Glied and Stephanie Ma of New York University's Wagner Graduate School of Public Service calculated the net cost to taxpayers in states turning down the Affordable Care Act's Medicaid expansion.

Using data from the Urban Institute projecting Medicaid enrollment and spending under the law in the year 2022, Glied and Ma estimated the effects of states' decisions about whether to accept the health reform law's expansion of the Medicaid program to residents with incomes at or below 138 percent of the federal poverty level -- $32,499 for a family of four.

The researchers explained federal funds that pay for state Medicaid programs are raised through federal general revenue collection -- taxes paid by residents in all states -- whether or not they participate in the program.

Therefore, taxpayers in states not participating in the Medicaid expansion will bear a share of the overall cost for Medicaid, without benefiting from the expanded program in the 20 states. Glied and Ma estimated the net loss of federal funds to states that do not expand Medicaid by using projected federal Medicaid spending in each state and calculating the federal Medicaid-related taxes paid by each state.

The expansion of Medicaid, which became voluntary for states after the Supreme Court's 2012 ruling, is mostly financed by the federal government, which pays 100 percent of the total costs through 2016. The federal contribution will decline from 100 percent to 90 percent by 2020, and stay at 90 percent after that, Glied and Ma said.

After taking into account federal taxes paid by state residents, states with the highest net losses include Texas, which will see a net loss of $9.2 billion in 2022; Florida, which will lose $5 billion; Georgia, which will lose $2.9 billion and Virginia will lose $2.8 billion, the study said.

Meanwhile, in states that chose not to expand Medicaid, hospitals are planning budget cuts because of the loss of patients that expanded Medicaid would have provided.

For example, Grady Memorial Hospital -- Georgia's largest trauma center -- faces a $45 million funding loss due to the loss of federal funding for hospitals that care for the uninsured and use the hospital without paying, WSB-TV, Atlanta, reported. Federal funding for hospitals that cared for the uninsured was cut in the Affordable Care Act because expanded Medicaid and the newly insured were to offset those losses in federal funding.

"If Georgia were to expand, we estimated we'd have an additional 40,000 patients that would be eligible under the new rolled out expansion of Medicaid," John Haupert, president of Grady, told WSB-TV. "The impact to Grady when it's fully implemented will be a loss of $45 million a year in funding."

For many years, Grady operated in the red as it treated the poorest and the most critically ill in downtown Atlanta, but the hospital privatized in 2008 and made money in 2012 largely due to the hospital converting a higher percentage of uninsured patients to Medicaid, the Atlanta Business Chronicle reported.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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