Just under half the states, including Georgia, will decline to expand Medicaid under the Affordable Care Act in 2014. It is likely, however, that a majority of those states will eventually opt into Medicaid expansion. The return on investment of expansion to state taxpayers is too great to ignore.
In Georgia, the cost of care for the uninsured is well over $2 billion annually. That care is paid for by state and local tax payers, consumers of health care services and consumers of health insurance. That care is often given in the most expensive places (emergency rooms) and at the most expensive time (late in an episode of illness). Expanding access to insurance coverage reduces emergency room visits and hospitalizations.
If Georgia chooses not to expand Medicaid, more than 1.6 million residents will lack health insurance coverage in 2014. Taxpayers will continue to bear the costs of care for Georgia’s uninsured, while their federal tax dollars will help reduce those costs for taxpayers in states that expand their Medicaid programs.
The federal money Medicaid expansion would draw into Georgia would generate new economic activity, increase employment, create income and increase state and local tax revenue. The federal government pays 100 percent of the cost of care for Medicaid expansion in the first three years; the state share for those three years is simply increased administrative costs.
That new federal money, net of Federal taxes paid by Georgians, would amount to more than $40 billion over a decade. It’s estimated that as many as 70,000 new jobs would be created in Georgia as a result of Medicaid expansion. The range depends on the actual costs of care for newly insured Georgians.
There would be an increase in state revenue and a reduction in state spending on a host of programs that would offset state costs of Medicaid expansion. Medicaid expansion would replace behavioral health costs paid by the state, decrease criminal justice costs, decrease state public health costs and increase direct revenue from assessments on health care providers.
Failure to expand Medicaid puts employers in the state at greater risk. Not only will they have a less healthy, less productive workforce, they are more likely to face a tax penalty if they do not offer affordable health insurance to their employees.
Under the Affordable Care Act, employers who have workers eligible for a subsidy in the exchange pay a “shared responsibility” tax. Without Medicaid expansion, more workers would be eligible. Jackson Hewitt estimates that those costs to employers could range from $71 million to more than $107 million if Georgia does not expand Medicaid.
Expanding Medicaid would also increase access to care for all Georgians. Many parts of Georgia have been identified as medical workforce shortage areas. Those mostly rural areas lack the resources to attract and retain physicians and other health care providers. Medicaid expansion increases the resources available to attract physicians and other medical workers.
William S. Custer is director of the Center for Health Services Research at Georgia State University.