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Shunning Medicaid expansion will cost 14 states $8.4 billion

NEWS IN BRIEF — Posted June 17, 2013

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More research is projecting the impact of not expanding Medicaid under the Affordable Care Act. A study conducted by the RAND Corp. and published in the June issue of Health Affairs determined that 14 states that are not expanding the program in 2014 would give up $8.4 billion in federal payments, and 3.6 million of their low-income residents would remain uninsured because of the decision (link).

Any state that expands eligibility for its Medicaid program up to an effective rate of 138% of the poverty level will receive an enhanced federal matching rate to cover additional insurance costs, receiving 100% federal support for the first three years of expansion. According to the RAND study, states that still hadn't expanded by 2016 will spend $1 billion more on uncompensated care costs than if they had chosen to increase eligibility.

“Our analysis shows it's in the best economic interests of states to expand Medicaid under the terms of the federal Affordable Care Act,” said Carter Price, a RAND mathematician and the study's lead author, in a statement. Price noted that states still would be subject to the ACA's revenue provisions, such as taxes and fees, “without reaping the benefit of the additional federal spending.”

The RAND study highlights 14 states whose governors have said they aren't interested in expansion. Another recent analysis by Avalere Health projected that 26 states would not expand their Medicaid programs in 2014. This includes 19 states that have rejected expansion and seven that are leaning against it.

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