Southern states stand to lose out on billions of dollars by blocking Medicaid expansion

The 20 states refusing to expand Medicaid coverage to more low-income residents under the Affordable Care Act (ACA) will forgo billions of dollars in federal funds -- but their residents will still help pay for the cost of other states' expansions through federal taxes.

The Commonwealth Fund, a New York-based health policy think tank, has calculated the net loss to states blocking expansion -- and it turns out that the biggest losers are all in the South.

The five states with the highest estimated net losses are Texas at $9.2 billion, Florida at $5 billion, Georgia at $2.9 billion, Virginia at $2.8 billion, and North Carolina at $2.6 billion.

"No state that declines to expand the program is going to be fiscally better off because of it," says Sherry Giled, co-author of the study with Stephanie Ma. "Their tax dollars will be used to support a program from which nobody in their state will benefit."

The other 15 states that have refused to expand Medicaid are Alabama, Alaska, Idaho, Kansas, Louisiana, Maine, Mississippi, Missouri, Nebraska, Oklahoma, South Carolina, South Dakota, Utah, Wisconsin and Wyoming.

Under the ACA, the federal government pays 100 percent of the total cost of expanding Medicaid to residents with incomes at or below 138 percent of the federal poverty level through 2016. (Prior to ACA, Medicaid coverage for low-income adults was very limited.) The federal contribution for the expansion will drop from 100 percent to 90 percent by 2020 and stay at that level. But a 2012 Supreme Court ruling that upheld the constitutionality of the ACA also made expanding Medicaid voluntary for the states.

Efforts are underway to get states that have declined Medicaid expansion to reconsider. In North Carolina, for example, Moral Monday activists are calling on Gov. Pat McCrory (R) to convene a "Special Redemption Session" of the legislature to revisit Medicaid expansion, though McCrory has said such a session is "out of the question." This week, the White House joined in the chorus asking North Carolina leaders to reconsider, with spokesperson Josh Earnest joining in a news conference on the matter and calling Medicaid expansion "a smart choice for states."

"Our residents are really missing out on an opportunity here," said Durham, N.C. Mayor Bill Bell during the news conference. "By not participating, North Carolina's just becoming a donor state."

Also this week, the Obama administration released a brief on the benefits Medicaid expansion would bring to African Americans. It notes that under ACA, 6.8 million uninsured African Americans would be eligible to access new options for health coverage next year. Of that number, 2 million would qualify for Medicaid or the Children's Health Insurance Program.

The brief also documented the five states with the greatest number of uninsured African Americans eligible for help under ACA. They are Florida with 10 percent of all eligible uninsured African Americans, Georgia and Texas with 9 percent each, North Carolina with 6 percent, and New York with 5 percent. Among those five states, New York is the only one expanding Medicaid.

Commonwealth Fund President Dr. David Blumenthal said that, in light of the billions of dollars states will lose by rejecting Medicaid expansion and the fact that millions of their most vulnerable resident won't be able to get health insurance as a result, "it seems likely that non-expanding states will face increasing pressure over time to reconsider their decisions."