Expanding Medicaid is Even Cheaper for States Than We Thought

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A new study from the Congressional Budget Office (CBO) shows that Medicaid expansion is an even better deal for states than previously thought.

The original estimates had the federal government picking up 90 percent of the tab for states expanding Medicaid. Now it appears that the federal government will actually cover closer to 95 percent of the cost.

That means that states will spend only 1.6 percent more on Medicaid if they accept the expansion than they would have spent without. It's fully one-third less than the earlier projections.

Read why, and what it could mean for Texas, after the jump. Here's why the projections are lower: the federal government covers the full cost of individuals who are newly eligible for Medicaid because of the expansion for the first three years, and at least 90 percent of the costs for every year after that. The state covers the cost of enrolling people who were previously eligible for Medicaid before the expansion.  And the CBO now expects fewer people who were previously eligible to enroll, compared to more people who are newly eligible.

Texas has over 1 million people stuck in the Medicaid coverage gap – people who are below the threshold to qualify for federal health care subsidies, but whose incomes are too high to qualify them for Medicaid. There are 5 million people who fall into this group nationwide, meaning Texas is responsible for a completely inordinate share.

It also means that by increasing the state's Medicaid expenditures by only 1.6 percent, Texas could enroll 1 million more people.

Rick Perry's hatred for Obama and Obamacare is becoming a poorer and poorer excuse for his refusal to expand Medicaid each day.

Gubernatorial candidate Greg Abbott isn't any better. Abbott has taken as hard a line on Medicaid expansion as Rick Perry, based on dubious reasons, such as, “We're going to be stuck in this expanded Medicaid system forever. And that means that we would be making a deal with a federal government that is already almost $17 trillion in debt.” This is, of course, not true, and also begs questions about whether Greg Abbott is opposed to making any “deals” with the government that, like it or not, Texas is part of.

But more and more red states, like Arizona and Arkansas, are flipping – as they realize the practical needs for their states to accept the expansion. Hopefully it won't be too long before Texas realizes what it could gain by following suit.    


About Author

Emily Cadik

Emily is a Texas ex-pat and proud Longhorn living in Washington, DC, where she remains connected to the Lone Star State through her work on BOR and her enthusiasm for breakfast tacos. She works on affordable housing policy, and writes about health care, poverty and other social justice issues.

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