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Medicaid Expansion Supporters Build Case on Potential Savings

Senate panel urges Christie to increase eligibility for low-income program.

Advocates for expanding eligibility for Medicaid in New Jersey are attempting to make their case in financial terms, but it remains to be seen whether they’ve developed enough evidence to convince a skeptical Gov. Chris Christie.

Several policy experts endorsed a resolution that was advanced by the Senate Health, Human Services and Senior Citizens Committee on Monday that urged Christie to support the expansion. Committee Chairman Sen. Joseph Vitale (D-Middlesex) sponsored the resolution.

Ray Castro, senior policy analyst for New Jersey Policy Perspective, said the expansion is “financially a great deal” because the federal government would cover the entire cost of the expansion for the first three years, before the state share would gradually rise until it reached 10 percent of the expansion’s cost in 2020.

“It seems to me to be a no-brainer,” Castro said of the decision.

The expansion would affect residents whose incomes are above the maximum allowed for the state’s General Assistance program, or $2,520 per year for single person who isn’t disabled, but below the level at which they can participate in a health-benefit exchange. That level is 133 percent of the federal poverty line, or $15,415.

January Angeles, a senior policy analyst for the Washington, D.C.,-based Center on Budget and Policy Priorities, pointed to Urban Institute estimates that New Jersey would spend 1.2 percent to 2.5 percent more on healthcare with Medicaid expansion than it would have without the federal Affordable Care Act, while increasing the number of adults eligible for Medicaid by between 390,000 and 568,000.

Angeles added that the state would save money from Medicaid expansion, since new enrollees will reduce state costs for uncompensated hospital care, as well as for mental-health and substance-abuse treatment.

Angeles also cited a study by the American Academy of Actuaries showing that states that don’t expand Medicaid will see private insurance premiums rise by 2 percent. This results from previously uninsured people who would have been eligible for Medicaid under an expansion instead buying private insurance. This group is more likely to seek medical care.

“A Medicaid expansion, on the other hand, would mean far fewer gaps in coverage, lower premiums for insurance in the individual market (in general), and greater predictability for commercial insurers operating in the state,” Angeles said, adding that the Affordable Care Act’s risk adjustment system would be more effective at compensating insurers that take on higher-risk populations because costs will be more predictable and there will be less adverse-selection risk.

Along with the financial impact, much of the case for expansion has focused on making healthcare more accessible.

David Knowlton, president and CEO of the New Jersey Health Care Quality Institute, said the Medicaid expansion presents an opportunity to move the focus for primary care for many low-income residents from emergency rooms to primary-care doctors.

Knowlton also pointed out that many residents who would be eligible for the Medicaid expansion won’t be eligible to participate in the health-benefit exchange, which is cut off at a the federal poverty line, currently $11,170 for a single person.

“It’s a Catch-22 that will especially impact the newly unemployed,” Knowlton said.

Continue reading on NJSpotlight.com.

NJ Spotlight is an issue-driven news website that provides critical insight to New Jersey’s communities and businesses. It is non-partisan, independent, policy-centered and community-minded.

Jake November 26, 2012 at 12:52 PM
The feds will pay for the first and then the people of new jersey will have to pick up the tab. Sounds like when the state said they would pick up free lunches for the "poor" kids(where are there parents) and then after two years the local municipalities would have to foo the bill. Say no to this idea. No more taxes of any kind.

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