Medicaid Expansion has been a political football for the past decade. Despite the controversy and political partisanship, there’s one thing that we know for certain from this decade of experience (and myriad of studies): Medicaid Expansion is good for business.
As a small business owner and proponent of Medicaid Expansion, I think it is well past time for other business leaders to understand and engage in this issue, informed by facts and evidence.
There are three reasons that business leaders should be proponents of Medicaid Expansion:
- Market Efficiencies
- Impact on the State Economy
- Effect on the Labor Market
First, for those who do not know what Medicaid Expansion is, a brief recap.
Medicaid is a public insurance program that provides health insurance to
certain individuals with low incomes. In 2010, the Affordable Care Act mandated expanded Medicaid coverage to
all individuals with incomes below 138% of the Federal Poverty Limit. Then in 2012, the Supreme Court ordered that Medicaid Expansion had to be at the option of the state. (For those who’d like to read more on this issue please see
A Call to Understand and Expand Medicaid This Year.)
This led to the division of “expansion” states and “non-expansion states.” To date, 38 states and the District of Columbia have expanded Medicaid while 12 states (almost entirely in the Southeast) have not expanded. Non-expansion states, including North Carolina, have provided an interesting control group against which researchers have been able to quantify the impact expansion has on an economy and communities (Great for research and empirical validation – not so great as a lived experience).
If North Carolina were to expand Medicaid, estimates show that between 500,000 and 1 million people would gain access to coverage. These are people who are often working in
industries that do not provide access to employer sponsored insurance. This means they have no meaningful access to affordable health insurance coverage.
Since states began expanding Medicaid in 2014, there have been over 400
studies evaluating the impact of expansion with the vast majority of these studies demonstrating significant benefits. Let’s look at these arguments in detail.
Market Efficiencies
Expanding Medicaid makes health care more affordable for everyone and improves the sustainability of health care providers. This is because Medicaid (and specifically the Federal government) covers the cost of those least able to afford insurance premiums and most likely to forego on insurance. Just because someone isn’t insured doesn’t mean that they don’t utilize health services, although that care is likely to be (expensive) crisis care. Balancing out uncompensated care is a challenge for many hospitals, particularly smaller, rural and non-profit hospitals.
Consequently, hospitals and providers in states that have expanded Medicaid experience an increase in operating margins and overall financial performance. Between 2013 and 2015 alone in the states that had expanded Medicaid, uncompensated care was reduced by $6.2 billion. This improved financial sustainability results in fewer hospital closures, particularly in rural areas. There is also evidence of a reduction in private insurance premiums on the ACA Marketplaces and greater regional stabilization in pricing.
Impact on State Economy
Medicaid Expansion comes with a substantial influx of federal dollars into the state. If North Carolina had expanded Medicaid in 2019, the state would have received almost $12 billion in federal dollars between 2020 and 2022. This is because the federal government will pay 90% of the cost of expanding Medicaid. This federal funding supplants certain state spending, creating significant
savings for the state, freeing up state dollars to be spent elsewhere.
In addition to state budget savings, this influx of federal funding also will infuse money into the state’s economy. Take Louisiana as an example. After expanding Medicaid, Louisiana
saw $3.48 billion in business activity, over 19,000 new jobs, and about $1.2 billion in new personal earnings. If North Carolina expands Medicaid, estimates show there will be an influx of almost
40,000 new jobs, an increase in Gross State Product between $2 and $3 billion, and an increase in state and county revenue over a three year period. In New Hanover County,
estimates show that expanding Medicaid would result in almost $200 million in new economic activity and almost $3 million in new county revenue.
It is hard to argue with numbers like that.
Effect on the Labor Market
Finally, Medicaid Expansion has been shown to increase employment and employees have fewer missed days of work. Medicaid Expansion increases the health of people and improves their financial security. When employees are healthier and not concerned with issues of financial insecurity such as eviction and food insecurity, they are better able to work. Further, improved access to substance use or opioid use disorder treatment enables working age adults to receive the treatment they need and return to the workforce. In the Greater Wilmington area — one of the areas in the country hit hardest by the opioid epidemic — this is critically important.
As a small business owner, I call on my fellow business owners and leaders to get educated on this issue and work to support Expansion. It’s not only good for your community, but also your business.
Michealle Gady, JD, is Founder and President of Atromitos, LLC, a boutique consulting firm headquartered in Wilmington, North Carolina. Atromitos works with a variety of organizations from health payers and technology companies, to community-based organizations and nonprofits but their work reflects a singular mission: creating healthier, more resilient, and more equitable communities. Michealle takes nearly 20 years’ experience in health law and policy, program design and implementation, value-based care, and change management and puts it to work for Atromitos’ partners who are trying to succeed during this time of dramatic transformation within the U.S. healthcare system. Outside of leading the Atromitos team, Michealle serves as a Board Member for both the Cape Fear Literacy Council and A Safe Place and is a member of the American College of Healthcare Executives and American Health Law Association.
