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Expanding Medicaid Makes Financial Sense. Plus, Voters Love It.

A sign on a podium says, "Medicaid Matters."
Read the sign. Alex Wong/Getty Images

Voters in Oklahoma approved a ballot measure to finally expand Medicaid under the Affordable Care Act on Tuesday night, making at least 200,000 lower-income residents eligible for health coverage through the program. The initiative, which passed with a slim, 50.5 percent majority, writes the change into the state’s constitution, which should prevent its Republican-controlled Legislature from undoing it, and may well muck up plans by its GOP governor to cap the program’s spending by turning it into a fixed block grant.

Politically, this is above all a reminder that Medicaid is very popular, and that even in conservative parts of the country, Americans are generally in favor of letting more people sign up for it. At this point, 37 states and the District of Columbia have chosen to expand the program through Obamacare, which lets them open it to adults who earn as much as 138 percent of the poverty line. Oklahoma is the fifth state to make the jump through a ballot initiative, along with other GOP bastions Nebraska, Idaho, and Utah, and purple-ish Maine. Even Kansas came within inches of hopping onto the expansion, up until the bipartisan effort flukily got scuttled by a completely unrelated debate over abortion.

Polling suggests this is a winning issue in the remaining holdout states. In February, the Kaiser Family Foundation’s health tracking survey found that 61 percent of adults living in places that had yet to expand Medicaid said that they would support doing so. Seventy-five percent of all Americans said they had a favorable view of the program, including 65 percent of Republicans. Voters simply like Medicaid.

And now would be a good time for Democrats to start laying the groundwork to expand it further. If Joe Biden wins the presidency, health reform will be at the top of the party’s legislative agenda. The issue has become even more urgent as millions of Americans have lost their private health insurance thanks to the coronavirus crisis. Allowing more adults into Medicaid would be a straightforward way to keep people covered through the pandemic, and bring down the uninsured rate long term. Better yet, it would also be extremely cost-effective, both for the government, and for patients.

Because Medicaid keeps payments to doctors and hospitals fairly low, it is actually less expensive on average to enroll Americans in the program than it is to help them buy private coverage on the Affordable Care Act’s exchanges. In its last actuarial report, the Centers for Medicare and Medicaid Services projected that the states and federal government combined would spend about $6,800 per Medicaid expansion enrollee in 2021, a bit under the $7,024 the Congressional Budget Office expects Washington to spend on subsidies per Obamacare enrollee. And where Medicaid patients typically pay zero, or close to it, for their care, ACA coverage comes with premiums, co-pays, and deductibles.

There are some potential downsides to expanding Medicaid further, as well as obvious ways Congress could address them. For starters, some states would likely resist the idea, just like they’re refusing to expand Medicaid now. The feds could potentially overcome those objections by paying the full cost, since it would still be cheaper than subsidizing private coverage. Letting more people into the program might also make it a bit harder for enrollees to find doctors; many physicians don’t accept new Medicaid patients because they don’t feel the program pays enough, and an influx of new sign-ups could make any provider shortages worse. But Congress could address that by increasing rates for primary care providers, or even building out community health centers.

Back in January, I argued that Congress should raise the eligibility line for Medicaid to 200 percent of the poverty line. Last week, the Center for American Progress estimated that doing that, while also allowing the unemployed to sign up, would cost between $89 billion and $101 billion in 2021, while covering about 22 million Americans. It’s unlikely that such a plan will pass while Republicans control the Senate and White House. But Democrats should start making the argument for it now. Americans favor expanding Medicaid. It’d be smart to offer them more of what they want.

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