WHAT OTHERS SAY: Time for Nixon, legislature to embrace Medicaid expansion

Friday, November 30, 2012 | 4:02 p.m. CST

Missouri lawmakers love to talk about leveraging state dollars. When offering tax incentives to businesses, for instance, Republicans and Democrats alike claim that every state dollar increases outside investment, usually from corporations, sometimes from the federal government.

The results, the argument goes, are jobs and economic development. Usually the argument is even true.

So why doesn’t the same argument apply to health care?

It should. And perhaps it will, after lawmakers in the Missouri Legislature and other state capitals read a pair of reports issued this week about the economic realities of expanding Medicaid coverage.

The first report, by the Kaiser Commission on Medicaid and the Uninsured, analyzes how implementation of the Affordable Care Act will affect state budgets across the country. The bottom line is no surprise. Adding more people to Medicaid will cost states money.

But the payoff is huge.

That’s the conclusion of a second report, this one commissioned by the Missouri Hospital Association from the University of Missouri. It predicts the expansion of Medicaid in Missouri will create 24,000 jobs in the state, more than any other economic development proposal on the horizon.

The Keiser report makes two points that every skeptical Republican who still thinks he can stop Obamacare should study.

First, the biggest cost-driver for states will not be the expansion of Medicaid eligibility to include adults making 138 percent of the federal poverty line (a paltry $26,344 for a family of three). States’ costs for Medicaid will rise mostly because of other elements of the ACA. As more Americans become aware than they must have insurance, many will realize that they qualify for Medicaid.

The Keiser report, done in conjunction with the Urban Institute, says that even if no states increased Medicaid eligibility, states’ Medicaid costs would rise a total of $68 billion between 2013 and 2022. That’s a lot of money, but it actually represents an increase of less than 1 percent, on average, of state Medicaid budgets.

Second, some states will actually see a net decrease in health care costs because the high cost of uncompensated care (people without health insurance seeking care in more expensive emergency rooms) will significantly decrease.

For lawmakers, the question is simple: Do you want get $10 back from the federal government for every state dollar you invest?

In Missouri, for instance, Kaiser predicts state Medicaid costs under the ACA will rise by $2.8 billion over the 10-year period, a 6 percent increase. In Illinois, state Medicaid costs will go up $6.4 billion in the next decade.

Most of the increase will result from people who are eligible for Medicaid now, but either don’t know it or haven’t bothered to sign up. Under the ACA, they’ll have to sign up.

Some of these increased costs will occur whether states expand Medicaid coverage to more adults or not, Kaiser predicts.

But if states like Missouri and Illinois expand Medicaid as called for in the ACA, the federal government agrees to pick up most of the costs. So for an incremental difference ($1.5 billion over 10 years in Missouri), the Legislature will leverage an additional investment of nearly $18 billion in federal dollars over the same period.

The Keiser report, if lawmakers read it, resets the health care narrative in a post-Obamacare world.

Most Missouri Republicans, for instance, supported the efforts of Ameren Corp. to seek a $450 million federal matching grant to create the next generation of nuclear power generators. The federal government announced last week that it was choosing Tennessee instead of Missouri.

But the Legislature supported the idea in Missouri because state funds would be used to leverage a similar amount of money from private investors — who no doubt would have asked the state for tax incentives to locate their new manufacturing plant in Missouri.

Those lawmakers, Democrats and Republicans alike, saw jobs, jobs, jobs, in the speculative proposal.

That’s why the Missouri Hospital Association and other medical professionals are pointing to the University of Missouri study as the key document to drive the Medicaid expansion debate when the legislature convenes in January.

Missouri lawmakers have the power to bring that investment to Missouri. In St. Louis, Kansas City, Springfield and Columbia, the health care industry is one of the top drivers of the economy.

“This isn’t a political issue,” said Joe Pierle, CEO of the Missouri Primary Care Association. “The economic well-being of the state isn’t blue or red. This is the real world.”

In the real world, Gov. Jay Nixon, a Democrat, and the Republicans who run the Legislature already would be pushing this jobs program, as they did on the much more speculative nuclear deal. As it is, Mr. Nixon has been painfully silent on the issue and many Republicans have continued to campaign against Obamacare.

It’s time they both re-entered the real world. If the governor ever intends to accomplish something truly important, now would be a good time.

The federal government is promising a 10-to-1 return on investment in health care if states kick in a fractional increase in their Medicaid budgets.

It is time to say yes, Missouri. Yes to jobs. Yes to investment. Yes to a healthier future.

Copyright St. Louis Post-Dispatch. Reprinted with permission.

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