Not expanding Medicaid in Texas will cost the state’s hospitals nearly $25 billion in reimbursement between 2013 and 2022, according to a Kaiser Family Foundation analysis. Without expansion, Medicaid is projected to pay Texas hospitals $86.9 billion, compared with $111.7 billion with the Medicaid expansion.
If Texas eventually decides to expand Medicare under the Affordable Care Act, the state would spend an additional 3.5 percent on the program for the newly eligible, while the federal government would boost its contribution by 27 percent, according to the analysis. In terms of dollars, the state would spend an additional $5.7 billion between 2013 and 2022. Meanwhile, the U.S. would spend $65.6 billion during that period.
Factoring in the costs for the estimated increase in new enrollees who are already eligible, the state would spend an additional 6 percent, while the federal government would spend 34 percent more. In dollars, that means Texas would spend an additional $9.6 billion and the U.S. would spend an added $77.3 billion.
The updated Urban Institute analysis, conducted for the Foundation’s Commission on Medicaid and the Uninsured, shows that if all states were to expand their programs, state Medicaid spending nationally would rise by $76 billion from 2013 to 2022, an increase of less than 3 percent, while federal Medicaid spending would increase by $952 billion, or 26 percent. As a result, an additional 21.3 million individuals could gain Medicaid coverage by 2022 and, together with other coverage provisions of the ACA, that would cut the uninsured by almost half. Without Medicaid expansion, the Texas uninsured rate would be cut by about a third because of the ACA.
Texas has the highest uninsured rate in the nation, so its expansion costs would exceed the national average, according to the Urban Institute.
Under the health care law that President Barack Obama signed in 2010, the federal government would fund 100 percent of the cost of Medicaid expansion for three years. After that, the amount would drop to 90 percent. Gov. Rick Perry has said Texas will not participate in expanding the state’s Medicaid program.
The analysis also points out that Medicaid enrollment and spending is expected to rise even in states that elect not to expand coverage. That is because other ACA provisions, including the requirement to simplify enrollment and the implementation of the exchanges, are expected to increase Medicaid enrollment of some adults and many children who are already eligible for the program but not enrolled.
If coverage were expanded, Texas would also see a decline in uncompensated care. According to the analysis, the state would recoup $1.7 billion of the $5.7 billion it would spend on the newly eligible, creating a net increase in Medicaid program costs of 2.3 percent during the 10-year period.
If Medicaid expansion was adopted by all states, they could save an estimated $18 billion from 2013-2022. According to the Kaiser study, that “would help to mitigate further the incremental costs of implementing the Medicaid expansion, particularly for states in the South, which tend to spend more on uncompensated care relative to their current spending on Medicaid than do states in other regions.”
Steve Jacob is editor of D Healthcare Daily and author of Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few Doctors and Skyrocketing Costs Are Taking Us. He can be reached at [email protected].
