Twenty-four governors (including Gov. Inslee) currently support Medicaid expansion. Whether or not to expand is a complicated question, as Charles Blahous of the Mercatus Center explores in a new study: “The Affordable Care Act’s Optional Medicaid Expansion: Considerations Facing State Governments.” In a blog post yesterday, he wrote,

Setting aside the larger question of whether the ACA’s ambitious coverage expansion is good national policy, several competing factors now bear upon the states’ incentives. These include individual state budget circumstances, the 2012 Supreme Court decision, federal Medicaid financing support levels, the federal government’s own fiscal problems, and interactions between Medicaid and the ACA’s new health exchanges, among many others. . . . There are powerful incentives operating against expansion as there are incentives in favor of it; the diversity of state decisions is to be expected even assuming that all governors behave wholly pragmatically.

Blahous’ findings:

1. “For states generally, expansion is a very close call.”
2. “States face substantial Medicaid cost increases even before budgeting for the optional coverage expansion.”
3. “After the Supreme Court decision, states face a common incentive to decline to cover childless adults with incomes above the FPL under Medicaid.” (Because they would be eligible for federal subsidies through the exchanges, and would have “access to potentially more generous health insurance coverage” than under Medicaid.)
4. “States’ toughest decisions pertain to covering childless adults with incomes below the FPL.”
5. “Future federal cost-shifting to states is virtually certain though the amount is unknown.”
6. “Given the difficulty of the decision, state negotiations with the federal government could tip the balance.”

He concludes,

The bottom line is that Medicaid expansion brings additional federally-financed health benefits to the states while exposing state budgets to higher costs. It is reasonable for state governors to reach different conclusions as to which is the overriding factor. Perhaps the only common incentive clearly facing all states is to shift their childless adults above the FPL from Medicaid to the ACA’s new health exchanges and to let the federal government absorb the full cost of their subsidies. Beyond that, much decision-making will depend on whether the states believe they can negotiate satisfactory terms to justify shouldering the costs of expansion, and on how states believe the troubled federal fiscal picture will ultimately be resolved.

In December, I wrote about a Kaiser Family Foundation/Urban Institute study on the costs of Medicaid expansion to the states. From 2013-2022,

Washington’s state Medicaid expenditures would be $60.1 billion under the ACA with no expansion. With expansion, that number increases by $121 million. But, according to the study, savings in uncompensated care would reduce that spending by $119 million.

The study only provides the aggregate numbers over the time period. Yesterday, the Heritage Foundation looked at the costs and savings to each state in each year of the time period.

The Heritage microsimulation model was used to replicate the Kaiser/Urban study—applying the same assumptions and using the same data sources—but reported the results in disaggregated form.

Their numbers for Washington show that savings would exceed expenditures until 2019. Additional expenditures would jump from about $2 million in 2016 to about $14 million in 2018. Here is their graph: