Talk about sweetening the pot. Today, the White House announced that President Obama’s Proposed 2017 Budget will create a new incentive for the remaining 19 states to close the coverage gap and insure millions of Americans. President Obama’s proposal would reimburse each state for the full cost of covering the newly eligible for the first three years after it closes the coverage gap – regardless of when it closes the gap. This means that states that close the gap this year, next year, or any time in the future will get as good a deal as states that closed the gap on January 1, 2014.
We know from states that have already closed the coverage gap that it is a fiscal win. As states draw down billions of federal dollars to help cover the uninsured, they reduce their own spending on the costs of treating the uninsured – resulting in net fiscal gains. Study after study confirms that states like Kentucky reduced their state spending, while providing health security to more working families. The flow of billions of federal dollars into these states also has broader economic benefits, adding thousands of jobs in local economies.
The budget savings and economic benefits are just two of the many reasons why the pool of states that have not yet closed the gap keeps shrinking. Earlier this week, Louisiana’s new Governor announced that Louisiana will be the 31st state (plus D.C.) to extend Medicaid coverage to all families earning just above the poverty level. Governor Bentley is hinting that he’d like to make Alabama the 32nd state. And he’s got competition from South Dakota, Wyoming and Virginia – their Governors have all included this option in their budget submissions.
By ensuring that they would benefit from three full years of 100 percent federal match rate for the newly eligible, the president’s proposal gives these and other states an even stronger incentive to do the right thing and extend health care coverage to working families. Unless Congress acts to ensure this fiscal benefit for the remaining 19 states, these states will have to contribute a small share of the costs of covering the newly eligible in the first three years of expansion – the federal match rate for the newly eligible falls to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and then 90 percent in 2020 and beyond. While state projections have shown that state savings will still outweigh the state costs, the president’s proposal makes a sweet deal even sweeter.