Medicaid Expansion Now an Even Better Deal For States


Need some more good news on Obamacare? How about some mixed news instead? Here it is:

Congressional Budget Office (CBO) estimates released last week show that health reform’s Medicaid expansion, which many opponents wrongly claim will cripple state budgets, is an even better deal for states than previously thought….CBO now estimates that the federal government will, on average, pick up more than 95 percent of the total cost of the Medicaid expansion and other health reform-related costs in Medicaid and the Children’s Health Insurance Program (CHIP) over the next ten years (2015-2024).

The good news is obvious: the Medicaid expansion is an even better deal for states than we thought. The federal government will pick up nearly the entire cost of expansion, and when you account for money that states will save from reduced amounts of indigent care and greater help with mental health costs, the net cost of expansion gets very close to zero.

The mixed nature of this seemingly good news comes from the reason for CBO’s more optimistic budget projection: it’s because they think the program will cover fewer people than they previously projected. There had always been a fear among states that lots of people who were already eligible for Medicaid—but had never bothered applying for it—would hear the Obamacare hoopla and “come out of the woodwork” to claim benefits. Since these folks weren’t technically part of the expansion, states would be on the hook to cover the bulk of their costs.

CBO now believes this fear was overblown. Apparently most people who didn’t bother with Medicaid before Obamacare took effect aren’t going to bother with it now either. That’s good for state budgets, but obviously not so good for all the people who could be getting medical care but aren’t.

For what it’s worth, this is a tradeoff we’re going to see a lot of. Unless the actual cost of medical care comes down, the budget impact of Obamacare is always going to depend on how many people benefit from it. If lots of people sign up, that’s good for public health but costly for taxpayers. If fewer people sign up, then government spending goes down but fewer people receive medical care. There aren’t very many ways around this iron law.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend

Latest