Today’s Managing Health Care Costs Number Is 14%
Kaiser Health News reports that Medicaid costs rose 14% in 2014 – 6% in those states which did not expand Medicaid, and 18% in those states which did expand Medicaid. Increased Medicaid costs are largely footed by the federal government, so this represents a massive shift of dollars from poorer red states to wealthier blue states.
Of special interest is that the net cost of Medicaid increases in states that expanded Medicaid was only 3.4%, while the net cost to states that did not expand Medicaid was 6.9%. I suspect that’s in part because the states that expanded Medicaid already had aggressive programs to expand past enrollment, and there were more newly eligible in states that did not expand that heard of the benefit as part of the controversies around Obamacare. The nonexpanding states got no federal aid for newly-enrolled Medicaid beneficiaries. KFF says that the increases for nonexpansion states was due largely to formula-driven changes in federal matching.
It’s important to focus on what a good deal Medicaid expansion has been
1) The cost per new Medicaid enrollee is small overall – and the cost for states for each enrollee in states that expanded Medicaid is smaller still.
2) Medicaid expansion leads to more vibrant safety net hospitals – vital to the health security of our communities. Not expanding Medicaid leads to financial insolvency for safety net providers when coupled with decrease of disproportionate share payments
3) Medicaid represented 45% of all deliveries in the US in 2012 – before the ACA expansion took place. South Carolina Medicaid has shown how a state Medicaid agency can dramatically improve the quality of maternity care, especially when working with a large commercial insurer.
We still have plenty of opportunities to improve Medicaid. The Obamacare increase in primary care cognitive fees has already expired, and in some states access is a challenge due to low fee schedules. We haven’t figured out how to implement market-based private plans for the sickest on Medicaid, including duel eligibles. Medicaid has become an even more important part of health care finances, and many conservative governors recognize the importance of expanding Medicaid further.
