13 Biggest Medicaid Expansion Pros and Cons

Medicaid is a health insurance program offered in the United States. It is jointly funded by the federal government and each state. It is provided for individuals who qualify based on income, age, or health need. Those who receive Medicaid are usually children, adults with a disability, or a low-income older Americans.

There are several Medicaid expansion pros and cons worth considering, so here are the key points to the debate.

List of Medicaid Expansion Pros

1. Not every low-income individual actually qualifies for Medicaid.
States are in control of the qualification levels for Medicaid, so each one is a little different. Individuals with disabilities who earn more income than the cutoff levels may have their application rejected. In the State of Texas, a family of 4 must have a monthly income of $4,172 or a yearly income less than $50,058 to qualify. Expanding Medicaid would allow more people to qualify.

2. Expansion would support local economies.
Medicaid may have a positive effect on state economies, especially if there is some flexibility built into the local structure. According to Health Affairs, the multiplier effect could be as high as 2.0 for Medicaid expansion. That means for every $0.80 spent in federal Medicaid funding, the state economy would benefit from up to $1.60 in activity.

3. It offers people a level of financial protection.
Low-income individuals with Medicaid are able to worry about other expenses since their medical care is covered by this program. Individuals with disabilities may even qualify for payments to help take care of their daily needs. Medicaid may also cover long-term care costs, employment training costs, and other needs that certain individuals may have so they can pursue their own version of the American Dream.

4. Medicaid expansion drops the uninsured rate.
More than half of all Americans receive health insurance coverage from their employer. The biggest group of uninsured individuals are low-income, self-employed workers in the United States. Keiser Health News reports that with changes to the healthcare market and Medicaid expansion, uninsured rates dropped to 8.8% in 2016 – the lowest level of uninsured individuals in U.S. history since rates have been tracked.

5. The cost of expansion is minimal for the states.
The goal of Medicaid expansion was to expand its coverage for adults living within 133% of the poverty line. The U.S. Supreme Court ruled that each state could choose expansion or reject it. From data collected by the Kaiser Foundation, Mississippi would have the highest costs of implementation at 0.44% of 2011 GDP. Four states would experience monetary savings through expansion. The State of Delaware would have a $3 million net increase in spending. In comparison, Federal spending would be 20 times greater – or more. In Mississippi, the federal spending would be 10.09% of Mississippi’s 2011 GDP.

6. Expansion would reduce cost shifting issues within the economy.
Cost shifting occurs when insured patients are charged more for services than uninsured patients. This financial process means that insured patients pay for the losses that are caused by uninsured patients who cannot pay at reduced costs. Medicaid expansion would provide monetary coverage for the group of people who may normally incur bad debt for a medical provider, which would limit the costs for the insured while also limited costs for those covered by the expansion effort.

7. There is an ethical argument to consider.
Providing healthcare coverage for those in need may seem like “welfare” or social spending to some. To others, caring for those who do not have the financial resources to care for themselves is what a society should do. The Golden Rule would say that providing support to others is the right thing to do because that’s what the average person would want for themselves.

List of Medicaid Expansion Cons

1. Free health insurance is usually available to those who need it.
Hospitals are required to provide care if someone needs it. That may mean visiting an emergency room to receive regular care, though it can be done. Medical providers offer sliding scale rates, based on income, for those who do not have formal health insurance as well to limit their costs. For many who would qualify under Medicaid expansion, their coverage would already be a low- or no-cost solution.

2. It could create delays when trying to visit a doctor.
When the Affordable Care Act first came into effect, wait times exploded around the United States. General care appointments went from 30 days in advance to 180 days in advance, and sometimes even longer, in rural areas. Although practitioners reserved spots for urgent care, insurance expansion showed there was a shortage in care providers across the country. Expanding Medicaid would create even larger rifts in the care system, creating longer delays for a visit with a professional.

3. Doctors are not required to accept patients on Medicaid.
Slate reports that many doctors refuse to accept patients that have Medicaid coverage because of how the compensation program operates. About 1 in 3 doctors in the United States will not accept new Medicaid patients. It all comes down to dollars and cents. Doctors make more when they treat someone with private insurance or no insurance compared to treating someone with Medicaid. Expanding Medicaid could mean more people struggle to find the care that they need.

4. It only benefits specific segments of the population.
In the United States, in general terms, those with more wealth tend to support the Republican Party and those with less wealth tend to support the Democratic Party. There are exceptions to this generality, of course, but this principle applies to Medicaid expansion. The districts and states which benefit the most from expansion are Democratic areas. That means expansion would likely translate to votes for the Democratic party in the next election, even if Republicans authorized the expansion.

5. Expansion would stop the benefits of private insurance.
Private insurers often negotiate with medical providers to obtain specific rates for services. Covered individuals cannot be charged the maximum rate for a service provided because the provider has already agreed to take patients with that specific private insurance. Under Medicaid, the government sets the rules for compensation, so doctors attempt to maximize services – potentially through unneeded diagnoses.

6. It is still an expensive proposition for states.
Even with federal assistance, some states would not come out ahead. As many as 29 states might find that they are spending more money on healthcare coverage with expansion. In a time when state budgets are already tight, those with balanced budget amendments could find themselves struggling to meet financial demands.

These Medicaid expansion pros and cons are just the beginning of the debate. It is a localized issue that each state must consider to provide for the best interests of the population. There may be added costs, but there is added economic activity as well, and better health can translate into more individualized productivity.

Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.