There’s general consensus between policy makers, elected officials and health care advocates that Medicaid has a big price tag. But what are the actual costs? Bryce Ward aimed to find out. He’s an economist in Missoula, Montana who published a study of the first two years of Medicaid expansion in that state. KUER’s Erik Neumann spoke with Ward about what lessons might be used in Utah.
This conversation has been edited for length and clarity.
Erik Neumann: You’ve studied Medicaid expansion in a very detailed way. Could you describe your study in Montana that was published last year?
Bryce Ward: When you choose to expand Medicaid you bring a whole bunch of money into your state from outside. When you bring money into an economy, that money then ripples around the state and creates additional jobs and income. What we find in Montana is that after Medicaid expansion plateau's it'll bring about $600 million dollars a year into the state from outside. So that's a really big economic development program, effectively.
Then you have to ask ‘well what is it going to cost?’ Because the states do have to pick up a share of Medicaid expansion, and by 2020 that's supposed to be 10 percent. What we found here in Montana is a little bit more than half of that 10 percent, the state picks up just by savings in other areas. So they can transfer people from traditional Medicaid into Medicaid expansion, and you save money when you do that. Every state differs in terms of what those savings are, but everybody who's looked at it has found pretty substantial savings to the state from Medicaid expansion, and you basically end up with this much smaller actual price.
EN:Well one of the criticisms that I hear from lawmakers is that it is pretty difficult to account for all those different economic impacts. So have you seen those specific savings that you described in the first two years that Medicaid was actually in place in Montana?
BW: Yeah, so the savings — particularly to traditional Medicaid to the prison system — those are all documented savings. People at the Department of Health and Human Services sat down and said 'Well who would have been in traditional Medicaid that's now on Medicaid expansion in the prison population?' What they did was they said ‘look here's what we were spending on care for the couple of years before and here's what we spent after,’ and it was a roughly three million dollar documented reduction in average spending. So those things are very tangible.
EN: And so the big concern here in Utah — and then also in Idaho where they've also recently passed Medicaid by ballot initiative and the legislature is now considering ways of changing that plan that the voters came up with — is their fear is that there's going to be cost overruns. What has been proven out in other states that have expanded?
BW: I think we were really bad at trying to project Medicaid expansion enrollment, at least initially. So in Montana, and I think in most states, enrollment in Medicaid turned out to be higher than people expected. Now I don't know you know at this point, hopefully people are getting better so I don't know how they projected enrollment in Idaho or Utah but, like I said, you end up saving enough. And at least in Montana, saving enough and bringing enough additional economic activity into the state that it seems likely that it's going to pay for itself.
That's the case here — we actually report a positive effect. You know, you expand Medicaid, you pay your 10 percent but you end up with more tax revenues and more savings to the state government. So you actually have money over. So even if we're wrong, even if for some of it's not quite right, the fraction of the cost is much less than that sticker price.
EN: I find it kind of ironic because Utah really prides itself on being a fiscally prudent state, and it seems like the fiscal argument in this case is unconvincing to some members of the legislature. Are there any other convincing arguments that you can make for the benefits of expansion?
BW: I can understand somebody being ideologically opposed to Medicaid expansion on the federal level. You know, 'I don't believe in the program'. But once the Federal Government says 'The money is there if you want it.' I don't understand not taking it. Particularly with something this large. There's just a lot of benefits here and I don't understand what the costs are. Nobody has made a compelling argument. The money is there, it comes from the taxpayers in other states. You're bringing it into your economy and getting benefits for it. So I really don't understand the opposition.
