Study: Medicaid Expansion Key Factor in Obamacare Effects

A new study finds states that opt into Medicaid expansion will benefit most from Obamacare.

The U.S. government health insurance exchange website, healthcare.gov.
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How much will the Affordable Care Act affect your state's economy? It depends on how much your state buys into the programs. A new study attempts to quantify which states will benefit most and least from implementation of the ACA and finds that states that opted to take part in the law's federal expansion of Medicaid are likely to benefit the most. That conclusion, from financial analysis website WalletHub, looks at a wide variety of indicators like changes in health insurance premiums, consumers' out-of-pocket expenses, states' returns on taxpayer investment, and changes in state uninsured rates.

Below are the 10 states the study says would benefit the most from the ACA expansion, as well as those states' hypothetical rankings if all states opted into the Medicaid expansion plan offered under ACA.

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Rank

State  Medicaid Opt-In? Rank If All States Opted In
1 New  York Y 4
2 West Virginia  Y 1
3 Vermont Y 7
4 Kentucky Y 3
5 Ohio Y 8
6 Rhode Island Y 11
7 Maryland Y 25
8 New Hampshire Y 18
9 North Dakota Y 23
10 Connecticut Y 33

Note: New Hampshire is still considering Medicaid expansion.

In addition, here are the 10 states that are set to benefit the least from the law, as well as hypothetical changes in their rankings if all states were to opt into Medicaid expansion.

Rank State Medicaid Opt-In? Rank If All States Opted In
51 Georgia N 37
50 Utah N 42
49 Idaho N 35
48 South Dakota N 32
47 Arizona N 51
46 Texas N 36
45 North Carolina N 22
44 Iowa N 44
43 Florida N 20
42 Kansas N 48

Note: Utah is still considering Medicaid expansion.

The Medicaid expansion was originally mandated for all states, but the Supreme Court's June 2012 ruling on the ACA determined that states could opt into or out of the expansion. Under that section of the ACA, the federal government will pay states to expand eligibility for the health insurance program, which currently serves children, pregnant women, the disabled, and the elderly, among others. The expansion would bring in all adults under 138 percent of the federal poverty level.

"It seems like there will be benefits in the short term, and one of the main drivers of the extent to which states will benefit is their decision on Medicaid expansion," says John Kiernan, the study's primary author. "There just seems to be a ton of free money essentially coming from the federal government from the states that do expand Medicaid."

Of course, these rankings attempt to distill a variety of data down to one integer, meaning plenty of information gets obscured in the process. For example, there is a wide-ranging extent to which premiums might go up or down under the ACA. Nevada is expected to see premiums go up by nearly 180 percent, according to WalletHub's calculations, while in New York, premiums could drop by 40 percent. However, those totals don't take into account subsidies that could lower premium payments dramatically for some applicants. In addition, says Kiernan, even customers paying higher subsidies might see those costs offset by lower out-of-pocket costs.

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In addition, no ranking can capture some of the states' arguments against expanding Medicare. States that have chosen to opt out of the expansion, which overwhelmingly tend to be red states, have argued on different terms – that it is bad policy. Some opponents have called Medicaid a "means-tested welfare program" that disincentivizes work. Ideological factors like this are not captured under this study's ranking system.

Though the system shows what the effects of the Affordable Care Act might be in the coming months, Kiernan acknowledges it could be much longer before applicants understand whether they personally have benefited from the exchanges.

"I think people won't understand whether this is a net benefit or net positive to their wallet for a few years," he says.

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