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Report Says Early Years of Medicaid Expansion in NJ Won't Break the Bank

Advocates argue that expanded eligibility is a bargain and a 'no-brainer,' even when state is paying its full share.

A report issued this week by the Kaiser Family Foundation sees little impact to New Jersey for expanding Medicaid eligibility -- at least in the early years of enrollment. For instance, it will cost an additional $15 million in 2016, the third year of the expansion.

By 2022, the state will see an additional $273 million in costs, according to the state-by-state analysis by Urban Institute researchers. The expansion would add 291,000 state residents to Medicaid, at a cost of $938 per new enrollee .

The report “shows what we thought all along: it’s a cost-effective means [of extending coverage] for a lot of people who don’t have it now,” said Jeff Brown, coordinator of policy advocacy and communications for New Jersey Citizen Action, a nonprofit that advocates for healthcare access.

Brown said that even at the 2022 cost level, “if you look at what we get in return, which is insurance for roughly 300,000 people, it’s a small price to pay.”

Joel Cantor, director of Rutgers University's Center for State Health Policy, was struck by the relatively small fiscal impact on the overall state budget. In 2022, the additional spending would equal 0.6 percent of the state’s budget, according to the report.

From 2013 -- the year before an expansion would kick in -- through 2022, the total additional cost to New Jersey would be $1.49 billion. But that total is reduced to $1.19 billion once $296 million in estimated charges for unreimbursed care to previously uninsured residents is factored in.

Cantor, however, believes that the $296 million in reduced state spending on unreimbursed or charity care is conservative.

The final decision whether or not to expand Medicaid rests with Gov. Chris Christie.

If he decides in favor, he is essentially opening the Medicaid rolls to 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 138 percent of the federal poverty line, currently $15,415.

The growth in costs over the 10-year period reflects the increasing share of state spending for the newly eligible population.

While the federal government is picking up all of these costs from 2014 through 2016, the state will also see some increase during that period.

“For example, parents gaining eligibility are more likely to seek coverage and are thus more likely to enroll their children, who would already be eligible,” report coauthor Michael Buettgens explained in an email. He added that prior Medicaid expansions have resulted in similar increases.

Under the Affordable Care Act, the state share of Medicaid expenses for the newly eligible would increase to 5 percent in 2017, 6 percent in 2018, 7 percent in 2019 and 10 percent in 2020 and all future years.

The report’s authors wrote that their estimates are conservative and that state costs could be lower -- and savings higher -- once the economic impact of additional federal Medicaid spending in the state is considered.

New Jersey Healthcare Quality Institute President and CEO David Knowlton calls the decision to expand Medicaid eligibility “a no-brainer.”

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.

Joe R December 02, 2012 at 03:56 PM
Every other advanced democracy (Israel, Sweden, Norway, Denmark, Finland, Australia, Japan, Taiwan, Canada, France, Austria, Switzerland, New Zealand, Germany, Holland, etc.) has some form or version of universal health care; everyone is covered and no one goes bankrupt from medical expenses as they do in the US. A national health care system was part of the 1912 campaign platform of Teddy Roosevelt. Truman tried to institute a national health care system throughout his presidency but was defeated by the GOP, the AMA and the one percenters. By some miracle, LBJ managed to enact Medicare and Medicaid in 1965. Without these programs, we would have about 100 million uninsured; we currently have 48.8 million uninsured according to the US Census. We have tens of millions more with inadequate crap insurance with high deductibles and many out of pocket expenses. When is enough enough in the US? We should have Medicare for all or a single payer health care system. Instead of that, we are talking about cutting and gutting Medicare and Medicaid. It's just stupid and nuts.

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