News Feature | February 25, 2015

Kentucky's Medicaid Expansion Will Have A $30 Billion Economic Impact

Christine Kern

By Christine Kerncontributing writer

Medicaid Expansion Uninsured

A Deloitte study reveals a positive impact of Medicaid expansion for Kentucky economy.

A Deloitte study has confirmed Medicaid expansion will have a significant economic impact on Kentucky, demonstrating that it was “overwhelmingly” the right choice for the state and will generate more than sufficient funding to pay for the state’s out-of-pocket expansion costs. The report is online at Governor.ky.gov.

Kentucky’s Medicaid expansion will add 40,000 jobs and some $30 billion to the state’s economy by 2021, according to a press release. The study, conducted by Deloitte Consulting LLC and the University of Louisville’s Urban Studies Institute, found that expansion will also net nearly $820 million to state and local government budgets.

The report further found estimated out-of-pocket costs for expansion would be more than offset by savings and new revenues down the line and not expanding would have resulted in as much as $100 million in costs.

“For all the naysayers who claimed that expanding Medicaid was a budget-busting boondoggle, take a look at the facts. It’s working, and it’s literally paying off. The state is saving money, hospitals are earning more, and our people are getting healthier,” Governor Steve Beshear said in the release. “The facts are overwhelming. We would have lost money in the state budget and lost opportunities for job growth, not to mention allowed our people to suffer continued poor health, if we had allowed this opportunity to pass.”

Governor Beshear made the expansion decision in May 2013 and the first enrollment period added more than 310,000 Kentuckians to the Medicaid program, nearly double the expected number. By the end of 2014, more than 375,000 Kentuckians were enrolled in Medicaid through the expansion.

As a result of Kentucky’s huge rates of enrollment, a Gallup poll indicated Kentucky saw the second largest decrease of any state in its uninsured rate, dropping from 20 percent to less than 12 percent. This is a 42 percent reduction in the rate of uninsured Kentuckians.

Full costs of healthcare for individuals covered by Medicaid expansion is paid by the federal government for the first three years of implementation. States subsequently are required to contribute a percentage match, reaching the maximum 10 percent in 2021. Deloitte projected expected costs to the state as well as savings, new revenues, and broad economic impact.

“Hospitals and medical providers are strong economic drivers for our communities. With the infusion of Medicaid spending, many facilities are in a stronger financial position than ever before,” said Beshear. “This is an opportune time for medical providers to adapt their business models to the changing demands of health care, to a model that is focused on preventive care instead of expensive emergency room visits or in-patient procedures.

“Bottom line, we made the right choice for Kentucky when we expanded Medicaid. I’m excited about the enormous gains we’re seeing already, and even more excited about the long-term implications for our state’s health.”