The Rule of 9 and the ACA Medicaid Expansion

There’s a simple way to calculate just how much a state will save in the long term by expanding the Medicaid program under the Affordable Care Act.  Just multiply whatever it says it will cost by 9.

That’s because the federal government will contribute at least $9 worth of match for every dollar a state spends on Medicaid expansion.

By now, we’ve all heard just how big some of the match numbers will be.  Based just on the estimates provided by the state itself in its January 2012 Supreme Court brief, Florida, for example, would gain at least $3.2 billion annually.

But Florida’s Governor has openly fought the expansion until recent weeks, and has yet to say whether or not he will support it in any form. 

He’s not the only one.  A weekend article in the Washington Post reported that as many as thirteen states may be leaning against the expansion, versus 17 plus the District of Columbia that are pursuing it.

According to the analysis on which the article was apparently based, the governors of 8 of the 13 anti-expansion states have recently reiterated their opposition to the expansion.  These include six – Georgia, Louisiana, Mississippi, Texas, South Carolina, and Oklahoma – that have been in the “rejection” category since the summer, and two –Maine and Alabama – whose governors added their states to the rejecting list in mid-November.

These governors typically cite the cost of the expansion as the reason to reject it.

However, a report released last week by the Kaiser Family Foundation took a close look at these costs over the next ten years and came to a different conclusion.  During a decade when the federal match will range from 90% to 100% for newly covered populations, the first column in the table below represents the incremental cost of the expansion over ten years for each of the eight current rejecting states.  And the second column represents the increased federal revenues each state will receive if it changes its mind:

Alabama             $1.1 billion          $14.3 billion

Georgia               $2.5 billion          $33.7 billion

Louisiana             $1.2 billion          $15.8 billion

Mississippi          $1.0 billion          $14.5 billion

Texas                  $5.7 billion          $55.6 billion

South Carolina   $1.2 billion           $15.8 billion

Oklahoma           $689 million        $8.6 billion

Maine                 ($570 million)      $3.1 billion

That comes to over $160 billion in lost revenue to these eight states alone.

Those lost billions represent money that will reimburse hospitals, nursing homes, community health centers, doctors, nurses, and behavioral health providers for care they will have to provide anyway.   

It’s especially hard to imagine what the Governor of Maine could be thinking.  Its $3.1 billion in new federal Medicaid revenue would actually be accompanied by a reduction in state Medicaid spending over the next ten years. 

The same is true in Connecticut, Delaware, Massachusetts, New York, Hawaii, Maryland, Iowa, Vermont, and Wisconsin.  With the exception of Iowa and Wisconsin, the others are all – logically – working toward expansion.

By the rule of 9 alone, it would seem that Medicaid expansion would be as close to a policy no-brainer as a state could get.

But just as there is a reason beyond the headlines why some states are reluctant to embrace setting up state health insurance exchanges under ACA, there is a reason why they don’t want to expand Medicaid, too.

It is because – just as in the case of rejecting ACA health insurance exchanges – states that are thinking of rejecting the Medicaid expansion just don’t do a very good job of protecting the health and mental health of their population.

On average, the thirteen states embracing the Medicaid expansion rank just under 17^th in the Best States for Your Health ranking, while the eight current rejecting states rank 39^th – a huge difference despite the presence of Maine, ranked 8^th overall, on the rejecting list.

And on average, the thirteen states embracing the Medicaid expansion currently average 20^th overall in spending on mental health services, while the rejecting states together average 36^th. 

Some state governors saying no to expansion claim that the reason is because they are worried that the federal government will someday cease to fulfill its end of the bargain to pay 90% of the costs. 

But what I think they are really communicating is something else.  They personally reflect the view that health and mental health are not priorities in their state.  And they still hope to elect more people like them to Congress in the coming years to kill the expansion.

It’s cynical to hope for this, and it won’t happen.