In addition, the well-being of families and children improves in states that expanded Medicaid. Researchers found that uninsurance rates for mothers fell 4 percent and 1. Around two in five uninsured mothers cited cost as a reason for not having coverage. Others mentioned disruptions in coverage following pregnancy, when Medicaid eligibility becomes significantly more restrictive, particularly in states that have not expanded Medicaid under the ACA.
More than three in five uninsured mothers have incomes at or below percent of Federal Poverty Level , suggesting that lack of eligibility for Medicaid, or lack of awareness among those who are eligible, is one of the primary barriers to connecting more mothers to coverage. In addition, Medicaid expansion helps children keep their care. As child uninsured rates ticked up nationwide from the most recent two-year period for which data is available , the uninsured rate for young children in non-expansion states increased nearly three times as fast as their peers in expansion states.
This decrease in the uninsurance rates for mothers and children reflects the overall decline in uninsurance rates after the passage of the ACA. Improving health care coverage rates provides greater economic stability and security for individuals who gained health insurance, and also strengthens the surrounding economic sectors that intersect with health care. In other words, when low-income adults gain access to health insurance through Medicaid, their financial well-being blossoms, which encompasses their dependents and crosses racial lines.
This is the definition of a rising tide lifting all boats. As the next section will show, expanding Medicaid also fortifies the labor force, countering the harmful myth of low-income adults as listless, careless, and unemployed. Contrary to popular myths, most working-age adults covered by Medicaid are employed. Medicaid expansion further empowers and enables greater workforce participation. Individuals with disabilities are able to work at greater rates because Medicaid expansion removes the need to maintain artificially low income levels to maintain eligibility and access to needed health care.
Medicaid expansion also benefits individuals with behavioral health diagnoses , who were able to perform better at work or seek new employment due to new coverage.
One study notes:. Results of our study indicate that …these substantial changes in insurance coverage were, in general, associated with few significant changes in labor supply. Estimates of the effect of Medicaid on labor supply were, in general, small and not statistically significant, and most were positive.
Overall, there was very little evidence that the Medicaid expansions decreased work effort p. Medicaid expansion also makes it easier for the expansion population to find and maintain new employment because they are able to better manage chronic health conditions. A study on the impacts of expansion in Ohio found that more than half Expansion in Michigan brought similar results: For individuals experiencing homelessness, expansion and the subsequent easier access to insurance had improved their ability to work and maintain stable housing due to better management of health conditions, as well as improved access to other services and programs, including disability services.
With demonstrated evidence that coverage improves the ability to find and keep a job, we can expect that expanding Medicaid will be beneficial for both Oklahoma workers and businesses. The research demonstrates it fosters a more stable workforce with members who are free to pursue opportunities and manage their health and worklife better due to fewer financial constraints.
By , two years after major provisions of the ACA were enacted, individuals and families across demographics had seen increases in access to coverage after the implementation of the ACA. Insurance coverage disruptions declined in expansion states , with men, people of color, and those without chronic illnesses gaining a greater continuity of insurance coverage.
There were a number of other areas of improvement once Medicaid coverage expanded, namely, racial disparities in coverage improved [5] [6] ; however, expansion to additional states would help lower racial disparities even more. Access to care improved in expansion states , reduced socioeconomic disparities in coverage when compared with non-expansion states.
Given that, Medicaid expansion in Oklahoma would increase the range of health care services available to tribal members in our state, while further increasing the federal dollars the state receives. A number of tribal citizens would be newly eligible for Medicaid, and their access to comprehensive health care services through Medicaid would increase.
Their share would completely be covered by the federal government. With approximately , Native Americans in the state, there is a potential that thousands of Oklahomans of Native American heritage will benefit greatly from increased access to the stability of health care through Medicaid.
However, it also dramatically improves state economies. As this section will show, expansion is one of the most effective economic development programs available to states. Medicaid expansion grows state economies in two related but different ways. First, additional federal spending on health care increases jobs, income, and facility expansion in the health care sector.
Second, the federal funds reduce existing state and private spending. Even without Medicaid expansion, beneficiaries would have received some health care.
Medicaid expansion changes who pays for this health care. Without expansion, the state, the federal government, employers, providers, and the beneficiaries themselves all paid for some of the care that is now paid via Medicaid. Expansion has dramatically improved the economy in many states. In New Mexico, new Medicaid spending accounted for percent of all personal income growth in the state.
The gap between the state and national unemployment rates virtually disappeared as a result of expansion. Oklahoma can expect the same economic development from Medicaid expansion. In , the Oklahoma Health Care Authority commissioned Leavitt Partners to project enrollment, costs, state revenues, and economic impact from expansion.
Expansion is not just an economic development program, but one of the most effective economic opportunities available to states. For about the same costs as the capital gains credit, expanding Medicaid would benefit at least 10 times as many Oklahomans and create nearly 30 times as many jobs. Michigan hospitals saw uncompensated costs decline by nearly half after expansion. New Mexico experienced a 30 percent drop in uncompensated care in the first year of expansion. Many other states saw similar declines.
Expansion is particularly important to community health centers , which provide medical services to many low-income families. In Montana, expansion increased revenue and dramatically reduced the number of uninsured patients at these centers.
In Oklahoma, community health centers have hundreds of thousands of encounters with low-income adults and their children, regardless of their ability to pay. Not only are community health centers well-positioned to continue treatment of this population, but the added financial stability from Medicaid reimbursements for care will allow them to increase access and care for their patients.
Oklahoma hospitals, particularly the safety net hospitals and critical access hospitals in rural Oklahoma, will benefit tremendously from expansion after years of a precarious financial picture that has led to the closure of numerous hospitals throughout the state. Like community health centers, safety net hospitals provide care to all regardless of ability to pay, accruing millions of dollars in uncompensated care.
Consequently, as costs for health care increased, higher-income people would generally still be able to increase their consumption of other goods and services, whereas poorer people would probably see their spending for those items decline. Although all long-term economic and demographic trends are difficult to forecast and thus uncertain, future excess cost growth in health care spending during the next century may be particularly so.
Systems of health care and health care financing have existed in their current forms for only a few decades, and medical technology continues to evolve rapidly. The projections in this report will undoubtedly prove to be inaccurate in one direction or another. And judging their accuracy will be difficult even after the fact, because they assume no changes in federal law and such changes are virtually certain to occur.
In the past, technological developments have generally resulted in the expansion of treatment options and greater total spending. Future innovations could accelerate that trend. Alternatively, if future research resulted in the development of inexpensive curative therapies or if the health care sector changed in other fundamental ways, growth could slow. For comparison purposes, CBO projected federal spending for Medicare and Medicaid under varying assumptions about excess cost growth.
A projection for which such growth is held constant at zero, although implausible, is useful because it isolates the effect of the aging of the population see Figure Under such a scenario of zero excess cost growth, projected net federal outlays for the two programs would increase from 5 percent of GDP in to almost 7 percent by ; outlays would then rise gradually to slightly more than 7 percent of GDP by Under a scenario in which excess cost growth was 2.
Notes: Excess cost growth refers to the number of percentage points by which the growth of annual health care spending per beneficiary is assumed to exceed the growth of nominal gross domestic product per capita.
Projections of the balances in the Hospital Insurance Trust Fund offer another way to look at the sustainability of Part A of Medicare. That difference is shown as a percentage of the present value of taxable payroll over the same period. A negative actuarial balance represents the amount by which revenues as a percentage of taxable payroll the income rate could be increased immediately and in every year of the projection period to cover all projected costs and provide the desired balance in the trust fund at the end of the period.
Alternatively, outlays as a percentage of taxable payroll could be reduced by an equivalent amount. The income-rate increase required to meet that goal would be 6. For example, one way to increase revenues by that amount would be to increase the HI payroll tax rate from its current 2.
In the nearer term, the required income-rate increases would be smaller: for a year projection period, 1. Percentage of taxable payroll. Note: The income and cost rates are the present values of annual revenues and costs over the relevant time period divided by the present value of taxable payroll over that period after adjustments for the initial trust fund balance and target balance at the end of the relevant time period.
The actuarial balance is the present value of revenues minus the present value of costs divided by the present value of taxable payroll over that period. The trustees estimate that an income-rate increase of 3. The difference arises largely because the trustees assume a lower rate of excess cost growth.
In particular, they assume that such growth will decline gradually from the 25th through the 75th year of the projection period so as to produce a year to actuarial balance that is consistent with one generated by using an excess cost growth assumption of 1 percentage point for each year.
However, current law leads to unsustainable outcomes for the federal budget and the overall health care system. Key Issues in Analyzing Major Health Insurance Proposals provides extensive background information and explains how CBO would approach the analysis of numerous issues that could arise as the Congress seeks to enact major changes in the health insurance system.
Because such proposals generally focus on options for providing coverage to and reducing costs for the nonelderly population, their direct effects on federal health care spending would probably be through changes to Medicaid.
Budget Options, Volume 1: Health Care presents discrete options that encompass a broad array of issues related to the financing and delivery of health care. The volume includes some options that would reduce spending and others that would increase it together with changes that would reduce or raise revenues.
National health expenditures in totaled It excludes two categories of spending that are part of national health expenditures: amounts invested in research and in structures and equipment.
Those figures are net of premiums paid by Medicare beneficia ries and amounts paid by the states representing part of their share of the savings from shifting some Medicaid spending for prescription drugs to Part D of Medicare. Some of those classified as having employment-based insur ance will also have directly purchased coverage. Out-of-pocket payments do not include the premiums that peo ple pay for health insurance because premiums fund the payments that insurers provide, which are already included in the measure of private spending.
Certain other drugs are also covered under Part B, including oral cancer drugs if injectable forms are available, oral antinausea drugs that are used as part of a cancer treatment, and oral immunosuppressive drugs that are used after an organ transplant.
The standard premiums are set each year to cover 25 percent of projected average expenditures under Part B. Since , higher-income beneficiaries have been required to pay higher premiums. CBO estimates that about 5 percent of beneficiaries will pay the higher premiums in Mandatory spending does not require annual appropriations, and the available funding is not limited. Mandatory Medicare spending includes the cost of benefits and certain administrative activities, such as those for combating fraud.
Discretionary Medicare spending includes the costs of operating the program, which cover administration, research, and claims processing. Some low-income or medically needy individuals who are eligible for Medicare are also eligible for some level of assistance from their state Medicaid program.
Such assistance may include help in paying for Medicare premiums and cost sharing as well as the coverage of benefits not offered under Medicare. Kaiser Family Foundation, June , p. The enrollment figure of 62 million includes anyone who was enrolled in Medicaid at any time during Average monthly enrollment during that year was about 50 million.
The effect of general inflation is removed from excess cost growth because the growth of spending for health care is measured relative to the growth of per capita GDP, both of which are affected by general inflation. That methodology for Medicaid is consistent with the way CBO projects its spending, in that CBO separately accounts for projected changes in the numbers of different types of beneficiaries.
To adjust for that shift, CBO set excess cost growth in for both Medicare and Medicaid to equal the average of excess cost growth in the two programs for that year. Of all types of health insurance, Medicaid is the most successful in reducing poverty rates. On a person-level basis, Medicaid coverage at different points during the lifespan has been tied to economic mobility across generations and higher educational attainment, income, and taxes paid as adults.
Studies by states and independent researchers have shown the positive impact of the Medicaid expansion on state budgets and economies , largely driven by increased federal spending in the state as a result of the enhanced federal match for expansion adults 93 percent in and 90 percent thereafter.
States are required to fund the remaining costs of expansion 7 percent in and 10 percent thereafter. Expansion states have experienced budget savings, and in many cases, these savings offset at least some of the cost of the state share—as federal Medicaid dollars replace prior state spending—most notably with respect to behavioral health, public health services, and the criminal justice system. Expansion states also reported budget savings as previously covered populations e.
States have raised revenue for the state share using a variety of strategies, including state general revenue; provider taxes; health plan taxes; tobacco or liquor taxes; and intergovernmental transfers.
Some states cite concerns about covering the state share as a reason not to expand. The impact of expansion has been shown to reach beyond state budgets. This open-ended financing structure provides spending flexibility but makes federal outlays less predictable and driven by state spending decisions. To control federal spending, over the years some policymakers have called for restructuring the financing arrangement to cap federal spending by block granting federal spending or imposing other limits.
Block grants generally provide fixed federal allotments to states that are based on current expenditures trended forward using a pre-determined growth rate. The implications of any block grant or cap would depend on funding levels, inflation adjustments and many other details. However, analysis of past proposals has showed that these changes could result in substantial shifts in costs to states, beneficiaries or providers or reductions in coverage or benefits if, to reduce federal spending, Medicaid funding is set below expected levels.
The economy has a strong effect on Medicaid enrollment and therefore spending. Medicaid spending and enrollment are affected by a number of factors — health care inflation, policy changes, etc. However, one of the largest drivers of Medicaid spending and enrollment trends is changes in economic conditions.
Medicaid is a countercyclical program. During economic downturns, individuals lose jobs, incomes decline and more people qualify and enroll in Medicaid which increases program spending. As economic conditions improve, Medicaid enrollment and spending growth tend to slow.
Over the past 15 years, Medicaid enrollment increased substantially during two major recessions, with annual growth peaking in SFY at over 9 percent, and again at nearly 8 percent in SFY Figure 6 While economic downturns increase demand for these program, they also negatively affect state tax revenues.
This places additional pressure on state budgets as demand for other forms of assistance i. During economic downturns, states face difficulty balancing these pressures and affording their share of Medicaid spending increases. The most significant source of fiscal relief to states in ARRA was the temporary increase in the federal share of Medicaid costs. Over those two years, average spending also slowed, but the end of the ARRA enhanced match rates at the end of SFY shifted state spending patterns as states tried to mitigate the loss of federal dollars in SFY resulting in a dip in spending in SFY With economic conditions improving, the largest driver of Medicaid enrollment and spending growth during SFYs and has been related to the implementation of the ACA.
Figure 6: Medicaid spending and enrollment are affected by changes in economic conditions and policy. The influx of federal dollars from Medicaid spending has positive effects for state economies. Both the direct and indirect effects induce changes in household consumption and tax collection primarily due to household income fluctuations. Employees of Medicaid health care providers that are directly affected or the employees of businesses that are indirectly affected may change their spending patterns according to increases or decreases in income — the change in income triggers the household to increase or decrease spending on consumer goods.
Due to changes in personal income and, subsequent spending, sources of state government revenue — including income and sales taxes — would be affected as well. Similar to previous findings, a review of economic analyses of the Medicaid expansion show that new funds as a result of the Medicaid expansion are anticipated to have a noticeable and sustained increase in state economic activity.
Since the federal government fully pays for the cost of coverage for newly eligible beneficiaries for the first three years, a new surge of federal funds not otherwise available will flow into states with relatively little additional state costs. A December study found that the amount of federal funds estimated to come into states by if they decided to expand will be substantially higher 1. The magnitude of the impact depends on the level of current and anticipated new Medicaid funding and the economic conditions within the state.
A program as large as Medicaid will always be a focus of budget scrutiny at the state and federal levels. This open-ended financing structure allows federal funds to flow to states based on actual costs and needs as economic circumstances change. Enhanced Matching Rates. In some instances, Medicaid provides a higher matching rate for select services or populations, the most notable being the ACA Medicaid expansion enhanced match rate.
For those states that expand, the federal government will pay percent of Medicaid costs of those newly eligible from to
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