As more states consider expanding Medicaid under the Affordable Care Act, along comes another independent study showing increased government insurance for low-income Americans pays for itself.
Take the state of Montana, which expanded Medicaid in 2016 to more than 90,000 people. A study out this month from the University of Montana’s Bureau of Business and Economic Research shows the expansion of Medicaid generates a half-trillion dollars a year in healthcare spending. Of that, 70%, or $350 million to $400 million, is “new money circulating in Montana’s economy.”
The Montana report comes as Missouri, Nebraska, Idaho and Utah are working to put Medicaid expansion on this November’s general election ballot and as legislatures in other states like Virginia and Utah are moving Medicaid expansion bills forward.
Already, 32 states have expanded Medicaid since the U.S. Supreme Court in 2012 gave states a choice in the matter. There were initially only about 20 states that sided with then-President Barack Obama’s effort to expand the health insurance program for poor Americans, but it’s gradually become a more bipartisan issue, particularly when economics are taken into consideration.
The funding of Medicaid is a better deal for states than before President Obama signed the ACA into law in 2010. From 2014 through 2016, the ACA’s Medicaid expansion population was funded 100% with federal dollars. Beginning this year, states gradually began to pick up some costs, but the federal government still picks up 90% or more of Medicaid expansion through 2020.
Before the ACA, Medicaid programs were funded via a much less generous split between state and federal tax dollars.
“It’s new money into the economy,” University of Montana’s Bryce Ward, the study’s author, said of Medicaid expansion in an interview. “In 2020, the state has to pay its full 10% share, but you get the 90% from taxpayers in other states.”
Some states, like Texas and Florida, have said even the smaller share their taxpayers have to contribute to expand Medicaid isn’t worth it. But the payoff has been worth it to most states, particularly states that had a high number of uninsured residents before the ACA’s Medicaid expansion took effect. University of Michigan researchers said “state budget gains outweigh the added costs for at least the next five years.”
And in Montana, economists say it’s been a win for that state’s economy as well.
“Medicaid expansion has a positive fiscal impact on the state budget. Medicaid expansion reduces state spending in some areas (e.g., traditional Medicaid). It also increases economic activity and, as such, increases state revenue,” Ward and fellow researcher Brandon Bridge wrote in their University of Montana study. “Combined, the savings and increased revenues are sufficient to more than cover the Montana’s share of Medicaid expansion costs (10% in 2020 and beyond).”
Republican-leaning states like Montana have used the economic argument to help win over skeptics.
In Nebraska, supporters of Medicaid expansion launched their campaign earlier this month to gather enough signatures to get an initiative on the November general election ballot. Nebraska’s petition drive joins those of other Republican-leaning states, including Idaho, Missouri and Utah that are working to place Medicaid expansion on the November ballot.
The University of Montana study also bolsters other research showing economic benefits to Medicaid expansion. Last year, the University of Michigan said “ripple effects” from Medicaid expansion created more than 30,000 new jobs, including 85% in the private sector.