Medicaid Expansion Can Have Impacts Beyond State Borders

One state's rejection of Medicaid expansion can hurt health-care systems in another state, according to a new study.
by | June 10, 2016
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Just how valuable is Medicaid expansion? According to a new study, it can be the difference between a state with a thriving health-care system and one with a fledgling system.

Georgetown University’s Center for Children and Families published a report this week that looked at hospital systems and federally qualified health centers (FQHC) in three states that had not expanded Medicaid and four that had. The report's major takeaways echo findings that have already been well-documented but also show that a state's decision about whether to expand Medicaid can impact other states.

The report found that making more lower-income people eligible for Medicaid drops the uninsured rate and the amount of uncompensated care that hospitals and health centers foot the bill for. In effect, some health systems that were struggling financially have become profitable.

One FQHC reported having an end-of-year loss of $2.5 million before its state expanded Medicaid. The very next year, after expansion, it had a surplus of $2.5 million. This extra money can be the difference between investing in health infrastructure projects or being forced to lay people off, according to Paul Taylor, CEO of Ozarks Community Hospital system, a safety-net provider with clinics in both Arkansas (an expansion state) and Missouri (a nonexpansion state).

In the case of Ozarks Community Hospital systems, Missouri's rejection of Medicaid expansion hurt Arkansas.

“I had to cut 100 full-time employees in both states because of the losses in Missouri. If I hadn’t done that, the whole system would be endangered," said Taylor. “Missouri is benefitting from Arkansas’ expansion simply because we’ve been able to continue operations. It’s been a very real, horrific experiment to live through. But at least we are holding on."

There's also a medical brain-drain occurring in states that chose not to expand. According to the report, doctors are increasingly worried about layoffs and cuts in nonexpansion states and moving to places with more opportunities.

According to the Georgetown researchers, this is an example of two health-care systems existing in America.

“On the one hand, we are seeing states where providers are becoming more integrated and holistic. And then there are states where the status quo is being maintained,” said Adam Searing, senior fellow at Georgetown University’s Center for Children and Families.

For the 19 states that haven’t expanded Medicaid -- nearly all of which are led by Republicans -- it's likely going to stay that way.

South Dakota Gov. Dennis Daaugard could still call for a special session this summer on Medicaid expansion, but he appears to be the last governor open to negotiation. Other governors have either stood firm against it or have legislatures opposed to the idea. 

The opposition to expanding Medicaid typically revolves around money. Governors and legislatures believe that while the federal government is footing the bill for expansion now, it won't be a sustainable option once federal money starts to be phased out. In 2020, the feds will start paying 90 percent (opposed to 100 percent) of states' Medicaid expansion costs.

It's not a perfect system, not even in states that have expanded. Some doctors still either refuse to see Medicaid patients or cap their number of Medicaid recipients because it tends to pay less than private insurers. This means long wait times to see a specialist, or worse, not being able to find care at all. 

But Georgetown’s researchers hope that reports like this will push politicians to realize that an insured population is better for not just their state but others.

“Getting people covered is just the first step to a better and more coordinated health system,” said Searing. “I hope that soon the differences between expansion and nonexpansion states will be so overwhelming that compromises can be made."