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Medicaid expansion costs states billions despite federal aid

According to a report released by the Commonwealth Fund, a non-profit group studying U.S. health care, states that did not do Medicaid expansion under the Affordable Care Act may have increased their risk that some residents in their states will have less access to medical coverage which could increase the health gaps.

"There is money on the table for every state with the potential to close the steep geographic divide," said Commonwealth's senior vice president, Cathy Schoen. "Notably, 16 of the states at the bottom half of the distribution have decided not to participate in Medicaid expansion."

According to a recent report about Medicaid expansion in USA Today, “Utah, Montana, Idaho, Arizona, New Mexico, South Carolina, Florida, Texas, Georgia, Nevada, Louisiana, Arkansas and Mississippi ranked worst in the nation for access and affordability, according to the new report. Arizona, New Mexico, Nevada and Arkansas have expanded their Medicaid programs.”

Why did states refuse Medicaid expansion?


While not limiting Medicaid expansion may limit affordable access to medical care, Governors who chose not to participate have a good reason. According to Alaska's Gov. Sean Parnell when he announced that Alaska would not expand coverage he noted, “The Obamacare Medicaid expansion comes with skyrocketing increases — billions with a 'B.”

The Administration is also not publicizing that while the states may initially miss out on funds for the Medicaid expansion, under Obamacare the money will only be available for the program for a few years and eventually states will be responsible for some the liability, which is unfunded.

Critics of Medicaid expansion are right. The Affordable Care Act tries to increase access to health insurance for the nation’s uninsured residents by allowing states to provide Medicaid to cover low-income adults up to 138 percent of the federal poverty level, which in 2013 was $15,856 for an individual or $26,951 for a family of three in 2013. The government will fund 100% of the costs from 2014 to 2016. Payments, however, will decrease from the federal government steadily over the next several years.

Medicaid already costs too much


While proponents of the expansion argue the amount the federal government will pay should remain close to 90%, they don’t seem to understand that in Texas more than 20 percent of the state budget is already spent on Medicaid. Expansion could add an additional 20 million people to the roles and cost $27 billion over the next ten years. And while the government may provide some of the money to support the expansion, they will not pay for the administrative costs, which could run as high as $12 billion by 2020.

Unfortunately, states have not yet seen the full impact of the Medicaid expansion, which could explode in the next few years. States should be allowed to manage their own budgets, and they should begin to try to find ways to lower health care costs and discretionary spending, not expanding a program that is already too expensive and plagued by fraud.
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