BUSINESS

Pennsylvania's Rejection Of Medicaid Expansion May Cost The State Millions: Study

03/29/2013 01:42 pm ET

Pennsylvania Governor Tom Corbett (R) announced last month that he would reject Medicaid expansion -- a key provision of President Barack Obama's health care reform law that would have made health care available to many more of the state's poorest residents.

A new study has found that Corbett's decision might end up costing the state hundreds of millions of dollars.

Expanding Medicaid in Pennsylvania would have increased the annual amount of money the state receives from the federal government by around $2 billion, adding about $200 million in state revenue every year, according to a new study by the RAND Corporation, the nation's largest independent health policy research program.

The study's findings contradict remarks made by the governor during his budget address last month when he said that “without serious reforms, [Medicaid expansion] would be financially unsustainable for the taxpayers."

Medicaid expansion, which the Supreme Court ruled states could opt in or out of, would increase medical coverage to families that earn up to 138 percent of the federal poverty level. Many Republican governors have opposed the measure.

Had Pennsylvania opted into Medicaid expansion, the state would have received around $6 billion in federal funding for health care programs in 2014, according to the study. That's $2 billion more than it will receive without expanding Medicaid. The increase in funding would have added 35,000 jobs and provided a $3 billion boost in economic activity, according to the study.

“This is money that is coming into the state that wouldn’t otherwise,” RAND mathematician and lead study author Carter Price told The Huffington Post. “There are certainly substantive benefits, in that you have more people covered, more revenue coming in the state and more jobs.”

But Price cautions that the economic benefits of Medicaid expansion under Obamacare will eventually come with a cost. Starting in 2017, the federal government will begin to pay less of the state costs of the expansion, causing Pennsylvania's revenue increases to decline over time.

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