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Expand Medicaid? YES: The facts will speak for themselves

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Posted: Sunday, August 18, 2013 12:00 am

A lot of facts are getting overlooked or distorted in the debate over whether more Virginians should have access to health insurance through Medicaid.

In Virginia, Medicaid is well-run, with highly efficient administrators who control costs better than private insurance companies. In addition, a full accounting of the savings the state would realize from expanding Medicaid under the Affordable Care Act shows that the expansion would pay for itself. Despite claims to the contrary, Virginia can — and should — make this important and cost-effective service available to more people who need it.

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Recently, opponents have claimed that expanding Medicaid will increase doctor and hospital visits without making people healthier, citing a study published in The New England Journal of Medicine. But these claims downplay the health benefits attributed to Medicaid in the very same study, which found that new Medicaid enrollees had “robust improvements in mental health.”

In addition, the study concluded that expanding Medicaid increased the detection, diagnosis and management of diabetes and increased use of other preventive services. Early detection and proper management of chronic diseases are critical to halting them before they become more serious and more costly. And the whole point of preventive medicine is to protect patients from illness down the road, so it’s no wonder that all the benefits of that preventive care didn’t show up in the time period of the study.

Critics also ignore the finding that Medicaid is an effective insurance tool. The role of insurance is to protect people from catastrophic costs, and Medicaid does this very well. In fact, that same study found that the newly insured saw “enormous reductions in financial strain and hardship.” Dismissing the importance of this finding is not only misleading but also insulting to the hardworking men and women in Virginia who can’t afford insurance and can’t get the care they need to stay healthy and productive. For those folks, getting sick can mean missing work, massive medical bills and financial ruin.

Then there is the question of how much expanding Medicaid will cost. By the state’s own estimates, it would result in significant state budget savings. But a full accounting of the savings shows that Medicaid expansion will pay for itself entirely. That’s because the federal government will pay 90 percent or more of the cost to cover the newly eligible.

The state would also be able to use federal dollars to pay for some existing programs that serve the uninsured and are now paid for with state dollars. Plus, using Medicaid to reduce the number of uninsured Virginians would result in slowed growth in premiums for the health insurance program of state employees because the marked reduction in the number of uninsured in Virginia would bring declines in the kind of “cost shifting” that currently happens. This is an area of savings that has not been widely discussed by the current administration.

All told, the state would see $1.64 billion in savings through 2022, more than offsetting the costs of expansion.

Finally, there are the ancillary benefits of Medicaid expansion — support for tens of thousands of well-paying health care jobs. The annual average of $2.6 billion in federal funds for expansion would support, at the very least, about 23,000 jobs. These workers will pay state income and sales taxes to the tune of $530 million over the next nine years. That’s close to $500 million for key priorities such as education and public safety and more than $30 million for transportation. While this additional revenue shouldn’t be booked as savings, since it is based on projections of future economic activity, it is definitely the icing on the cake.

The 10 state legislators on the Medicaid Innovation and Reform Commission (MIRC), which meets again Monday, have an incredibly important charge — to authorize Medicaid expansion. They should have the best available information so it can be done well and in a cost-effective manner. Once they have all the facts, the only decision they can make is to expand Medicaid as soon as possible.

Massey Whorley, senior policy analyst at The Commonwealth Institute for Fiscal Analysis, can be reached at Massey@thecommonwealthinstitute.org.

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