Medicaid Expansion Could Have Reduced COVID-19 Uninsurance

January 27, 2021 - If the remaining 14 states that have not expanded their Medicaid programs had decided to pursue Medicaid expansion in 2020, their decision could have helped reduce uninsurance during the pandemic, an Urban Institute study discovered.

“A growing body of literature shows Medicaid expansion has benefits beyond increasing health coverage, such as saving lives and increasing financial security,” the researchers pointed out.

“Expanded Medicaid eligibility has also resulted in net savings to many of the states that have expanded, which is even more important now given the strain the pandemic has placed on state and local budgets. And because states that have recently expanded Medicaid have often done so relatively quickly, it is not too late to expand eligibility during this time of increased need.”

The researchers used the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM) to analyze the data. At the time of the study, 36 states had expanded their Medicaid programs, leaving 14 that had not done so.

The economic impacts of the coronavirus pandemic remain unclear, which is a limitation for the study. Additionally, the estimates were based on the assumption that Medicaid uptake after expansion in the states that have not yet expanded would be similar to the rates witnessed in other states after Medicaid expansion, the study acknowledged.

If the remaining 14 states had expanded their Medicaid programs in 2020, 4.4 million people might not have been uninsured, the study found. Even without the pandemic, 3.8 million people might not have become uninsured had those Medicaid programs expanded.

These insurance gains would have been most significant for young people, who are more likely to be uninsured (27.5 percent uninsured). Uninsurance among young adults would have dropped by 45.8 percent. The impact would be the highest in Alabama and Mississippi, with uninsurance among adults dropping 59.7 percent and 57.2 percent respectively.

The study estimated that for 13 percent of the young people who might have gained insurance through Medicaid expansion, someone in their families lost a job due to the pandemic.

Texas—the state with the highest uninsurance rate—could have seen a 24.6 percent drop in uninsurance if it expanded its Medicaid program. Alabama, which has a much lower uninsurance rate than Texas, could have seen a 44.1 percent decrease in uninsurance under Medicaid expansion.

Around one-third of the young adults who would remain uninsured after Medicaid expansion were most likely noncitizens, the study noted.

One of the major hurdles that states face when considering Medicaid expansion is passing this solution through state legislatures that do not want to increase Medicaid spending. This is the case in states like North Carolina, where the debate over the financial impact of Medicaid expansion has long forestalled any expansion attempts.

However, the Urban Institute study pointed out that Medicaid expansion is not merely another outpouring of state dollars, but rather expanding the program could spur positive budget trends as well.

“Medicaid expansion would not necessarily increase overall state spending; though spending on Medicaid claims would increase because of higher caseloads, states could see both substantial savings and new revenue,” the researchers stated.

States may experience savings and they may be able to offset spending in various ways.

The researchers offered some suggestions for how Medicaid expansion could improve states’ healthcare spending.

Medicaid expansion could lead to a reduction in uncompensated care. States also receive federal assistance in covering beneficiaries under Medicaid expansion, beneficiaries whom the states would have been covering on their own through pre-Affordable Care Act Medicaid eligibility. Medicaid expansion has also boosted some state economies.

The researchers assured Medicaid officials in states that have not yet expanded that it is not too late. Some states have received CMS approval to expand their Medicaid programs in as short a timeframe as three weeks, though that does not factor in the time spent receiving approval from the state governor and legislature.

For example, Oklahoma and Missouri adopted Medicaid expansion during the pandemic.