Health law a good deal for states, report says

Ricardo Alonso-Zaldivar / The Associated Press /

Published Nov 29, 2012 at 04:00AM

WASHINGTON — States will receive more than $9 in federal money for every $1 they spend to cover low-income residents under President Barack Obama’s health care law, according to a nonpartisan analysis released Monday.

Expanding Medicaid to cover about 20 million more low-income people will cost over $1 trillion nationally from 2013 to 2022, said the joint report from the Kaiser Family Foundation and the Urban Institute. But the analysis found that states will pay just $76 billion of that, a combined share of roughly 7 percent. The feds will pay the other $952 billion.

Republican governors have resisted the Medicaid expansion, saying it adds an unacceptable burden to already strained budgets. And the Supreme Court handed the governors a victory this summer, ruling that states are free to reject the Medicaid deal.

Medicaid is one of the two main ways that Obama’s law expands coverage to most of the 50 million uninsured U.S. residents. As a broader Medicaid safety net picks up more low-income people, new health insurance markets called exchanges will offer subsidized private coverage to the middle class. Both parts of the strategy take effect in 2014, at the same time that most Americans will be required to carry health insurance or pay a fine.

The new analysis was unlikely to change the minds of state leaders who have already rejected the Medicaid expansion, but it may help shape the debate in a majority of states still on the fence. The choice will come into sharp focus early next year as state legislatures meet.

“It’s hard to conclude anything other than this is pretty attractive and should be pretty hard for states to walk away from,” said John Holahan, head of the Urban Institute’s Health Policy Research Center and the main author of the study, which used computer models of population, income and insurance coverage.