Strengthening Medicaid Makes Financial Sense for Pennsylvania
In its June 2012 ruling on the Affordable Care Act (ACA), the U.S. Supreme Court said that states cannot be required to expand their Medicaid programs to cover people with incomes up to 138 percent of the federal poverty line (currently $15,856 per year for single people; $32,499 per year for a family of four).
Governor Corbett recently broke with Republican Governors in states like New Jersey, Ohio, Michigan, Arizona, and Florida, saying that he “cannot recommend” accepting federal funding to expand Medicaid “at this time” because he fears that expansion will be too expensive. In fact, it will both save Pennsylvania money through a mix of savings and increased tax revenue and avoid the devastating loss of federal funds that threatens hospitals and health care jobs.
Ø The federal government will pick up the entire cost of Medicaid expansion for the first three years (2014 to 2016). It will continue to cover at least 90% of the cost after that. The Medicaid expansion will bring an estimated $38 billion in additional federal Medicaid dollars to Pennsylvania between 2014 and 2022.
Ø Medicaid expansion would cover an estimated 700,000 uninsured Pennsylvanians, creating a healthier, more productive workforce. In exchange, state spending on the federal Medicaid program between 2014 and 2022 would grow only 1.4% (by $2 billion) over what Pennsylvania would spend without expansion, once state savings on uncompensated care for hospitals are factored in.
Ø Pennsylvania currently spends more than $300 million per year in state dollars on state-funded Medical Assistance programs and county-based mental health services. Much of this spending would become unnecessary if uninsured Pennsylvanians were covered by Medicaid expansion, freeing up state funds to fill other critical budget holes.
Ø The ACA provides significantly less funding for hospitals to treat the uninsured, because lawmakers assumed that most people would be covered by Medicaid or private insurance. Pennsylvania hospitals and health systems will lose almost $9 billion in federal funding through 2021 without Medicaid expansion. These losses could cripple the Pennsylvania health care industry, and may even cause some hospitals to close. The Hospital and Healthsystem Association of Pennsylvania strongly supports Medicaid expansion.
Ø By one estimate, in 2016 alone, Medicaid expansion will create 41,200 new jobs in the health care sector and beyond. New employees will pay state taxes and spend their wages in their local economies. But without expansion, loss of federal funds will lead to catastrophic job loss just as Pennsylvania begins to recover from the Great Recession.
For more information, please contact Kristen M. Dama, Staff Attorney
1424 Chestnut Street, Philadelphia, PA 19102 s (215) 981-3782 s
Updated February 2013