Giving Healthcare to the Poor Lowers Health Costs for Everyone
Expanding Medicaid allows low-income people to move into the workforce
July 24, 2012
The federal government has long allowed many states to let lapse basic healthcare for the poor, even as states handed out billions in unnecessary corporate tax breaks. Meanwhile, the middle class picks up the cost of providing care to the uninsured through taxes given to hospitals for uncompensated care and higher insurance costs.
Under the Affordable Care Act, President Barack Obama finally attempted to meet the challenge of stopping these hidden middle-class costs. By expanding Medicaid eligibility to 133 percent of the federal poverty level (or $25,390 for a family of three in 2012: two adults each working about 30 hours a week at minimum wage), very low-income people can move into the workforce without fear of losing coverage for their children. Simultaneously, the hidden tax of uninsured care and higher private insurance costs will decline as the population receives more preventive and primary care in place of ultra-costly emergency room treatments.
Expansion of Medicaid in Florida is estimated to cost $2.2 billion per year over the next decade, with nearly all of the expense—about $2 billion a year—available from the federal government. However, the middle class and those with private insurance already pick up that cost because it's currently received through high-cost hospital care.
Floridians pay $600 million each year in special property taxes for hospitals to mostly cover uninsured care. The state gives nearly $1 billion every year to hospitals through low-income pools. The federal government gives nearly $1 billion every year to safety net hospitals in Florida. Local governments spend millions more.
Even with all that tax money, the Center for American Progress estimates that $1,100 of annual premiums for an insured family in Florida goes to cover costs of uninsured hospital care—a total of more than $2.3 billion per year. To ensure that lowering private insurance costs for the uninsured is passed on to consumers, the Affordable Care Act also requires insurance companies to spend at least 80 percent of premiums on actual care of patients. Already this year, this has resulted in an estimated $123 million in rebates to 1.2 million Floridians. Of course, Gov. Rick Scott also opposed those rebates as well—showing that he puts profits over patients.
So currently, uninsured care costs Floridians at least $5 billion per year—not including what hospitals just write off. Providing coverage to 1.3 million working poor in Florida will cost $2.2 billion. In other words, expanding Medicaid to Florida's working poor will not cause taxes to increase. Rather, it will cut other tax costs while also lowering the price of insurance.
Further, Florida can well afford to provide for its citizens, not just corporations. Over the last decade, Florida's Republican-led state government has authorized more than $14 billion in corporate tax breaks that now cost the state roughly $4 billion a year. If Scott is worried about how poor people's healthcare will impact the state budget, he should focus on helping create good-paying jobs for Floridians and raising the minimum wage—steps that will surely reduce the cost of Medicaid.
The Book of Proverbs states: One man gives freely, yet gains even more; another withholds unduly, but comes to poverty. By giving healthcare to the poor, we gain even more by lowering health costs for everyone. The same people who propose to withhold healthcare would drive us all into poverty when our own family members fall ill.