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Medicaid expansion will…expand.

As governors look more closely at the benefits – and costs (political and financial) of the Medicaid expansion slated to begin next January, more and more are deciding it isn’t such a bad thing after all.  Ohio’s governor has been pushing his supporters in this direction for some time, and Gov Kasich is joined by several of his fellow GOP governors including Michigan, Arizona, Nevada, New Mexico and North Dakota.  I’d expect Florida will also join the list; I listened to Gov Rick Scott uncomfortably listen to a Florida hospital CEO make his pitch in a meeting last fall, and a compelling pitch it was.

While this may be politically distasteful for some, it’s simply common sense, with a big dose of fiscal reality thrown in.  The reality is this: taxpayers from every state will finance the expansion, with their federal tax dollars paying for 100% till 2017 and 90% thereafter.  So, states that don’t accept the expansion will be providing funding for those that do.

Second, hospitals in particular are screaming for support.  For those who would decry Medicaid expansion as yet another entitlement we can’t afford, the hospitals respond that they are the ones hurt by this noble stance, as they’re providing care to the uninsured.  With the number of uninsured around the 50 million mark, those without insurance get much of their care at hospital emergency rooms.   Medicaid expansion will add about 8 million more people to the insured rolls, greatly lessening the burden on hospitals. It will also add about $300 billion over a decade to hospital revenue.

With those kind of dollars floating around there’s no doubt more states will join Kasich et al and agree to Medicaid expansion. 

So what does this mean?

A few things.

Providers will protest the low, and decreasing, reimbursement for Medicaid recipients. Something is far better than nothing, so safety-net providers will grudgingly accept the deal. The savvy ones – and there are many – will realize that fee-for-service reimbursement is a loser’s game, and push very hard to adopt and prove out different models of delivering care and paying for it.

This is a very good thing.

More coverage for more people lessens the need for providers to shift costs to private insureds, workers’ comp claimants, and auto/liability claimants.




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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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