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CHART: States That Block Medicaid Are Giving Up a Lot of Money

Joe Raedle/Getty Images

It’s easy to recognize the human toll of refusing to expand Medicaid. It’s not so easy to recognize the economic toll. Maybe this chart will help:

It comes from the Georgia Budget and Policy Institute and looks at the implications of that state’s decision not to expand Medicaid eligibility, as the Affordable Care Act’s architects intended. Georgia is one of 23 states, heavily concentrated in the Deep South, where officials have said no to a bigger Medicaid program.

The outcome of Tuesday’s election could change that. As my colleague Alec MacGillis noted recently, for example, 70,000 low-income residents in Maine could get coverage if the incumbent Republican loses. Georgia’s Republican governor could also lose, although it would take a change of heart by the legislature, as well, to expand Medicaid there.

And maybe that’s where the chart, or at least the argument it represents, might help. In Georgia, according to the Kaiser Family Foundation, about 409,000 people fall into what wonks call the “coverage gap”—in effect, too poor to buy even subsidized private insurance, but ineligible for Medicaid because Georgia won’t offer it except to people who fit into a few, narrowly defined categories. The failure to expand Medicaid is a big reason that the overall uninsured rate in Georgia is declining so slowly, relative to states that have expanded the program.

But the state officials who have blocked expansion aren’t simply depriving some people of health insurance. They are depriving the entire state of federal funds. Under the Affordable Care Act, the federal government picks up 100 percent of the expansion cost for the first three years, then scales back its support to 90 percent.  At that point, states will have to find the money to cover that remaining 10 percent. It’s real money. But it’s tiny compared to what they get in return. The federal money goes is a huge influx of cash, which goes first to providers and suppliers of health care. That money, in turn, generates additional economic activity.

How much? The graph represents one estimate. It comes from Tim Sweeney, from the Institute, who used numbers generated by William Custer, director of the Center for Health Services Research at Georgia State University. I can’t vouch for the specific numbers in Custer’s projection, or the methods he used to get them. But I can tell you that the basic gist is consistent with what many other economists have found. States that turn down the Medicaid expansion are worse off because of it. This is the basic point thatKevin Drum and my colleague Brian Beutler were making in recent weeks. 

Conservatives like to point out that the federal dollars don’t materialize out of thin air—they come from the federal treasury. That’s true. But there’s a net transfer of money here, from the very rich (who pay higher taxes under the health care law) to the poor and middle class (who get either Medicaid or tax credits for buying private insurance). That’s perfectly consistent with a program that fosters growth, particularly at a time of low demand, since it’s taking money from rich people (who might otherwise save it) and puts it right back into the economy.