The Case for Medicaid Expansion

In a state best known for horses, bourbon, and poverty, a quiet transformation is taking place. Kentucky ranks in the bottom five for almost every health statistic imaginable. It’s also been among the most vigorous of state actors in implementing the Affordable Care Act. That combination makes it an interesting case – what happens when a poor, unhealthy state does its best to take advantage of the ACA?

The short answer is that over a half million people – in a state of only 4.4 million – sign up for healthcare. About 75 percent of those who signed up didn’t previously have health insurance, so the uninsured population has dropped by 42 percent and the uninsured rate has gone from more than 20 percent to less than 12 percent.

Although the health-care exchanges that were created by the Affordable Care Act have gotten most of the news coverage so far, it’s the expansion of Medicaid that has had the biggest impact, with about 80 percent of the newly insured in Kentucky getting coverage through Medicaid.

In the Supreme Court’s June 2012 decision upholding the constitutionality of the Affordable Care Act, the court ruled that states could opt out of the Medicaid expansion without losing any of their current Medicaid funding. Many policy analysts didn’t think the ruling would have a major impact, since the federal government is paying for the entire expansion for the first three years and gradually reducing to 90 percent in 2020. As MIT healthcare economist and Affordable Care Act architect Jonathan Gruber put it, “When the Supreme Court decision came down, I said, ‘It’s not a big deal. What state would turn down free money from the federal government to cover their poorest citizens?’”

More than a few, as it turns out.

Only 27 states and the District of Columbia have opted into Medicaid expansion.  In Kentucky’s case, it found that expansion would actually save money, delivering a $15.6 billion boost to the economy while creating almost 17,000 jobs—all while insuring its most vulnerable citizens. As Governor Steve Beshear wrote in a New York Times op-eddefending the decision, “…to those more worried about political power than Kentucky’s families, I say, ‘Get over it.’ … and get out of the way so I can help my people. Here in Kentucky, we cannot afford to waste another day or another life.”  Hecalled the reform “the single most important decision in our lifetime for improving the health of Kentuckians” and said the state would “come out ahead in terms of both health outcomes and finances. In fact, if we don’t expand Medicaid, we will lose money.”

In contrast, as Gruber notes, the states choosing not to expand Medicaid “are not just not interested in covering poor people, they are willing to sacrifice billions of dollars of injections into their economy in order to punish poor people. It really is just almost awesome in its evilness.”

The non-expansion states already have, on average, poorer health outcomes and large uninsured populations, and now they will fall even further behind healthier states. The difference is already visible in survey data, according to Gallup.

Gallup uinsured graphic

If the 23 states that haven’t expanded Medicaid were to instead opt-in, nearly 7 million additional people would likely receive coverage. These states are also passing up on more than $400 billion in federal funding.

This slow expansion of Medicaid is not unprecedented. In 1966, when federal funds for Medicaid were first available, only 26 states had programs up and running by the end of the year. By 1970, however, 48 states offered Medicaid. It wasn’t until 1982 that the last hold-out, Arizona, finally opted-in.

One of the tricks for providing healthcare in states where Obamacare is politically unpopular is—well, not too tricky: call it something else. Although ‘Obamacare’ remains unpopular in Kentucky, ‘Kynect’—the name of the state’s health insurance exchange—is popular.

The faith community is also playing a major role in pushing for expansion, arguing that it is a moral issue, and noting Jesus’ role as a healer. Rev. Raphael Warnock, the Senior Pastor of Ebenezer Baptist Church in Atlanta, reminded policymakers that the millions of people caught in the Medicaid gap “are not numbers, these are our church members and family members. So for us, this is a matter of life and death.” Towards the end of August, the Moral Monday Movement marched on 12 state capitols urging governors and legislators to expand Medicaid.

In my own church in Kentucky, I have already seen the benefits of expansion.  One of our members who works for wages that are too low to afford health insurance, but were too high to qualify for Medicaid prior to expansion, finally has access to healthcare. For the first time she stopped worrying about what would happen to her if she were to get sick before she was old enough to qualify for Medicare.

The Robert Wood Johnson Foundation and the Urban Institute have provided a state-by-state breakdown of what opting-out of Medicaid expansion is costing in both human and financial terms. Find out what your state is missing out on, and then urge your decision-makers to follow Kentucky’s lead.RWJ consequences of not expanding Medicaid

Author’s note: I originally published this on I am grateful to them both for helpful suggestions in the editing process and for allowing me to re-post it here.


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