Back to School: Medicaid Math 101

Sharpen your #2 pencil and dust off your three-ring (Lisa Frank) binder. It’s time for a quick math lesson!

Let’s breakdown some simple math that’s summarized nicely in this infographic. Medicaid expansion has the potential to connect nearly 90,000 people in the Health Forward service area with health insurance, bringing $325 million to the area for health care. This sounds expensive, right? Astoundingly, Medicaid expansion will actually save the state of Missouri money.

Let’s take a closer look at how this is possible.

Missouri Medicaid covers health care costs for people who are low-income and fit one of the following eligibility categories: children, parents, pregnant women, people who are disabled, blind or over 65. These costs are split between the state (38 percent) and federal (62 percent) governments. Parents and children are relatively cheap to cover — in fact, it costs four times more to care for someone who is blind, disabled, or elderly as it does parents and children.

States have the option to expand their Medicaid programs to anyone low-income (up to 138% FPL), regardless of whether they fall into a specific eligibility category. Practically speaking, this means the state would cover more healthy and working adults.

Right now, the federal government is paying 100% of the costs of caring for those who are newly-eligible. The match reduces over time so that by 2020, the federal government pays 90 percent of costs and the state pays 10 percent. Health Forwards infographic and the math below focuses on the budgetary impact in 2020 and beyond since that’s when the federal match is at its lowest.

$189 million spent
That’s the state’s 10% share for expanding Medicaid.

$202 million saved
If Missouri expands Medicaid, some of the people currently receiving Medicaid benefits that are covered 62 percent by the federal government will be covered 90 percent by the federal government. This includes pregnant women, some who are disabled, people with breast/cervical cancer, and some children. The lingo on this is that “current eligibles” will be moved to the “enhanced rate.” Right now, Missouri’s provides behavioral health services to people who are uninsured and the state pays these costs entirely. If those who are uninsured become eligible for Medicaid which includes mental health services, it will save the state about $22 million a year.

$20 million saved
Most proposals to expand Medicaid system include some cost-saving and necessary reforms, such as fraud detection, care coordination and health homes.

$40 million in revenue
Medicaid expansion will bring nearly $2.4 billion per year into Missouri’s economy for health care services. These dollars will be used to pay doctors, hospitals, pharmacies, therapists, and nurses. These dollars will be subject to income and sales taxes.

TOTAL: $73 million in savings
All told, Medicaid expansion would cost the state $189 million and generate $262 million in savings, ultimately improving Missouri’s bottom line by $73 million and improving the health of Missourians along the way.

Safety Net

Health Forward Foundation
2300 Main Street, Suite 304
Kansas City, MO 64108
(816) 241-7006