The Uncertainty of Medicaid Expansion

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EXECUTIVE SUMMARY

As a result of the U.S. Supreme Court decision upholding the federal Affordable Care Act, Florida policymakers are forced to decide whether or not they should expand the state’s Medicaid program to cover individuals earning up to 138 percent of the federal poverty level.

Whichever decision they reach will impact the state’s long-term finances, overall patient health, and taxpayers’ bottom line. The decision is made even more difficult due to a lack of consistent projections related to costs (both short and long term), participation rates, and per person spending.

Myriad academic and advocacy groups have generated projections on the impact of Medicaid expansion in Florida. However, the projections lack consistency—varying widely from one another. This should be a red flag to policymakers.

  • Over the next ten years, Florida will spend $270 billion on Medicaid if the state does not expand. Spending climbs to $341 billion over the decade if expansion occurs.
  • In other states, providing Medicaid coverage for childless adults costs anywhere from 67 percent to four times the cost of providing coverage to parents.
  • Looking at expansion scenarios for Florida given the actual experiences in other states leads to a wide range of possible costs for the expansion population ten years out—from a lowest cost projection of $3.7 billion to a highest cost projection of $19.5 billion.

Without a clear understanding of how Medicaid expansion will affect patients and taxpayers, the best decision for Florida policymakers would be to reject expansion. At the very least, they should delay their decision until they can see the results of expansion in other states.

Florida lawmakers are faced with a choice. The federal Affordable Care Act (ACA) urges states to expand their Medicaid programs to those earning up to 138 percent of the federal poverty level. However, a recent decision by the U.S. Supreme Court makes the expansion voluntary for Florida, and all states.

The Urban Institute predicts the optional Medicaid expansion would add 1.3 million people to Florida’s Medicaid program by 2022. Expanding eligibility would increase the Medicaid program’s costs by $71.5 billion between 2013 and 2022.

Future projections depend entirely on assumptions of participation rates and costs per person. Many studies have attempted to quantify the impact of optional expansion, each with different results. The varied results illustrate how even minor changes to assumptions can result in widely different estimates.