Medicaid Expansion is a Very Good Deal for Kentucky

The 2014 expansion of Medicaid in the Affordable Care Act will benefit Kentuckians substantially, while the federal government will largely pick up the bill. According to one analysis, Kentucky will see a 37.3 percent increase in Medicaid enrollment at only a 3.5 percent increase in state Medicaid costs.

A major way in which the Affordable Care Act will increase health insurance coverage is by expanding Medicaid to adults with incomes up to 138 percent of the federal poverty line ($26,344 for a family of three in 2012). That could mean health coverage for up to 61 percent of Kentucky's uninsured. Currently in Kentucky, the only adults eligible for Medicaid (besides adults with disabilities, pregnant women and seniors in nursing homes) are parents with extremely low incomes—below 59 percent of the federal poverty line ($11,263 for a family of three).

Under the Affordable Care Act the federal government will pay all of the cost for the first three years of making all adults (not just parents) eligible for Medicaid with, as mentioned, incomes up to 138 percent of poverty. Thereafter, the federal government's share phases down to 90 percent of the cost in 2020.

That’s a good deal for Kentucky—a large expansion of health insurance coverage to the working poor at only a small increase in state costs. And the increase in costs doesn’t reflect the savings Kentucky will realize in lower uncompensated care costs for the uninsured. Providers across Kentucky will benefit as well from the increase in regular, paying patients--meaning jobs for nurses and other health professions.

From 2014-2019, the federal government will pay for an estimated 95.8 percent of the cost of the expansion and inject $11.9 billion into the Kentucky economy over that period.

But won't it drive up the deficit if the federal government has to pick up the costs of this expansion? No. The entire Affordable Care Act includes various cost savings measures and new revenue, thereby actually reducing the budget deficit by $143 billion over the years 2010-2019.

Moving forward on the Medicaid expansion, along with the implementation of a health insurance exchange, will allow Kentucky to take full advantage of the critical health and economic benefits that the legislation offers.