There was a fascinating news report out of Arizona this past week that embracing the ACA Medicaid expansion will result in $8 billion in new federal dollars flowing into the state over four years – in return for an investment of $1.5 billion from the state.
That looks pretty good on the surface, and the 435,000 people who will become insured as a result are a nice bonus.
What many people don’t recall is that Arizona was the last state to enroll in the Medicaid program. So a report such as this from a state whose embrace of Medicaid was a long time coming is especially noteworthy.
After seeing numbers like that, I can’t help but wonder what might happen if the state decides not to expand Medicaid. Its residents could lose a lot of money in return.
This is what Florida is facing.
We can calculate just how much money every resident of Florida will lose by reviewing what Florida Attorney General Pam Bondi wrote to the Supreme Court this past January:
Florida estimates that, as a result of the ACA, its share of Medicaid spending will increase by $1 billion annually by the end of the decade. Florida anticipates spending approximately $351 million on its share of the cost for newly eligible program participants who are presently uninsured and $574 million on the currently eligible but unenrolled.
Setting aside for the moment the $574 million she attributed to currently eligible people – who will be entitled to Medicaid whether or not the expansion goes through – let’s accept her calculation that the expansion population will cost the state $351 million annually “by the end of the decade.”
This means that the federal government will be sending at least $3.2 billion to Florida annually in 2020 if Florida accepts the Medicaid expansion.
That comes to $168 Florida will forfeit per person per year if it rejects the expansion, which represents a 90% share of the cost of the expansion. And the forfeit is even higher in the years before 2020.
These are dollars that Florida residents will have to pay out of pocket if the federal funds don’t flow.
Here’s why. Estimated Medicaid expenditures represent just that – projected actual health care expenditures, not insurance premiums or some other indirect cost.
So the $3.5 billion will be spent, one way or the other. In the absence of Medicaid expansion, it will be paid by state and local taxes, offset in part through charitable giving, or financed through private insurance premiums (with an additional 15% administrative overhead).
In other words, the $3.5 billion won’t just disappear into the atmosphere somewhere.
When Mitt Romney, who along with Florida Governor Rick Scott opposes the Medicaid expansion, was asked for an alternative, he must have felt put on the spot. Because he suggested that hospital emergency rooms could take up the slack, although he knows that hospital ERs are the last place a community wants to provide indigent care. This is because the cost is so high.
I’m not happy about having to cough up $1,244 over the next seven years so that my governor can make a point that he doesn’t like a federal law.
I already get that, and understand that he and the six other governors who are thinking like him are probably a lost cause to my way of thinking.
But most of our state legislators are running for office this fall, and they may actually care what we think. I think we can do a lot of good with $3.5 billion. So I’ve got a question for them.
Who’s got a better idea than expanding Medicaid for paying this $3.5 billion bill?
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